10 Things You Should Know For HDB Homeowners

The above article is written with reference from SPS2020 webinars, organized by PropNex in collaboration with Mediacorp and 99co.

Last updated: 

January 24, 2021

It comes as no surprise that the Covid-19 pandemic has affected every corner of Singapore’s economy in one way or another. But, you may be curious to know that amidst the economic slowdown, the HDB property market has remained strong and stable; and is, in fact, steadily growing! 

This is good news for those of you interested in purchasing your first homes or looking to make your way up the property ladder. According to PropNex KEO, Lim Yong Hock, HDB flats are the preferable choice for first-time buyers due to their overall affordability. 

Buying a home can be a daunting prospect and requires long term financial commitment. So to help you get started, here are 10 things you should know if you’re planning to own an HDB flat.

1. HDB Eligibility

It is important to note that different Housing and Development Board (HDB) flats will have varying eligibility requirements. Factors such as citizenship, age, monthly household income and who you are buying with will all play a part in determining your eligibility. To own an HDB flat, you must meet all the HDB policies' requirements

There are multiple HDB priority schemes which you can choose from as first-timer applicants. You may even consider applying under several schemes at once; however, not all schemes are applicable to all types of HDB flats. Our team of Property Giant agents (link to contact page) will be more than happy to break down the details and advise you on which priority schemes are the right fit for you.

2. Resale Eligibility 

The requirements to own a resale are similar to that of owning a Build-to-order flat (BTO). The difference being, you are not limited to flats in non-mature estates, which enables you to purchase flats of any size. 

Generally, there must be two Singapore Permanent Residents for resale eligibility or at least one Singapore Citizen listed in the flat application.

3. Housing Grants

The Enhanced CPF Housing Grant (EHG) is eligible for first-time buyers, however, the grant amount will vary depending on the total household income. First-time applicants for new flats with a household income of $9,000 are eligible for a grant of $80,000, while first-time singles can enjoy a grant of up to $40,000. This is based on the average gross monthly income assessed over the months worked during the assessment period. 

For resale flats, in addition to the CPF Housing Grant of up to $50,000 and Proximity Housing Grant of up to $30,000, first-time applicants are qualified for an EHG of up to $80,000. Meaning they can enjoy a total of up to $160,000!

4. HDB Loans or Bank Loans?

Most suggest that a bank loan is preferable to an HDB loan as they generally have lower interest rates. Nevertheless, keep in mind that bank loan interest rates are usually subjected to macroeconomic factors and fluctuate over time. If there is an increase in the  Singapore Interbank Offered Rate (SIBOR), you will see an increase in your interest rate.

When taking out a bank loan, homeowners will need to pay a downpayment of 20%. In contrast, you only need to pay a downpayment of 10% if you take out an HDB loan and no minimum loan amount. 

5. Mortgage Servicing Ratio (MSR)

The MSR refers to a limit set by the Monetary Association of Singapore (MAS) on the amount you can borrow when taking out a loan to purchase either an HDB or Executive Condominium (EC) property. It only applies to HDB and EC buyers purchasing directly from developers. 

MSR is calculated based on your monthly gross income and is capped at a maximum of 30%. A shorter loan tenure means greater monthly repayments for the same loan amount. Along with a lower MSR, this means home buyers will borrow far less. 

The MSR has resulted in some buyers being able to clear their HDB loans and cancel credit cards for a higher loan quantum. We can help you calculate your MSR so contact us now (link to contact page) to get a thorough financial consultation from our team of property consultants. 

6. HDB Market Condition

HDB prices tend not to be greatly affected as they are supported by government policies. Though slow, prices remain stable and are still increasing. The drop in rental rate and sellers lowballing one another however may cause pressure on resale flat prices. All things considered, resale HDB flat transactions are still lower by 11.3 percent compared with 2019 due to the pandemic.

7. BTO or Resale?

Construction delays of BTOs may cause potential buyers to turn towards resales instead. Similarly, projects of a smaller supply of new condos after 2020 may increase demand for resale condos. 

Many buyers prefer resale HDBs simply because they want to move in as soon as possible. There is less expenditure on renovations as resales tend to come in ready-to-move-in condition. To be safe, make sure to visit the property first and familiarise yourself with the neighbourhood before purchasing. 

8. To Upgrade or Downgrade?

This decision is entirely up to you as it solely depends on your future goals and, most importantly, your current financial standing. 

75% of owners choose to stay in an HDB property because it’s more affordable. However, some buyers will opt for ECs instead of private properties as their existing property loan is not required in the Total Debt Servicing Ratio (TDSR) calculation.

MSR does allow homeowners who are considering an HDB flat, i.e. private property, to receive a higher housing loan amount. 

9. Cash or CPF To Purchase an HDB?

You can use a combination of both cash and CPF to pay for your home based on your financial resources and goals. When choosing to pay by CPF, you need to pay back the return CPF funds with accrued interest upon your property's sale. You can avoid this if paying in cash. 

Additionally, using cash for your purchase can also prevent you from digging too far into your CPF funds, much needed for a happy retirement!

10. Preserve Your Assets

With BTO launches rising in the resale market, so are the number of HDB flats that will reach their 5-year Minimum Occupancy Period (MOP). 

Higher supply means more options for buyers leading to greater negotiating power. Before making any major property moves, it’s important to do a comprehensive reassessment of your financial position to make a well informed decision


It’s tempting to join in the crowd but don’t let the pandemic rush you to invest. If you’re uncertain and need assistance on your investment plan, contact Property Giant Singapore for consultation, and our agents will be happy to help!

The above article is written with reference from SPS2020 webinars, organized by PropNex in collaboration with Mediacorp and 99co.

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