What a resale flat really costs to buy

The price is the biggest cost but not the only one. Several others have to be paid by completion, and only some of them can come from CPF.

Say you have agreed $600,000 for a four-room flat. Most of that is a loan you repay over many years, so you do not need $600,000 now. On the other hand, some costs that are not part of the price, such as stamp duty, the option fee and legal fees, have to be paid upfront. And for each cost, it matters whether it can come from CPF or has to be paid in cash.

Here is the same $600,000 flat, split into what you pay and where each part comes from.

Leaving out the loan, it takes roughly $164,000 to complete on a $600,000 flat, and for first-time buyers grants can cover a large part of that. The more useful question, though, is how much has to be cash rather than CPF, because that is where buyers most often come up short.

Costs that must be paid in cash

Most of the large amounts (most of the downpayment, the stamp duty and the legal fee) can be paid from your CPF Ordinary Account. A few costs cannot, and need cash in the bank.

When you take the Option to Purchase, you pay the seller an option fee of up to $1,000. When you exercise it, you top that up to a deposit of up to $5,000 in total under HDB's rules, all in cash. The Request for Value (HDB's valuation) costs $120, also in cash. If you use a buyer's agent, their commission, commonly around 1% plus GST of the price or roughly $6,500 here, is cash as well. Together these can come to over $10,000 that CPF will not cover.

Your loan and your CPF use are both based on the lower of price and valuation, and anything above that is paid in cash. That is why the price you offer matters so much. The guide on how to tell if an asking price is fair covers how to judge it.

The downpayment

You can borrow up to 75% of the price (or the valuation, if lower), so the downpayment is 25%, or $150,000 on this flat. With an HDB loan at 2.6%, all of that 25% can come from CPF. With a bank loan, at least 5% of the price (about $30,000 here) must be cash, and the rest can come from CPF or cash.

So the minimum cash you need depends on the loan. With an HDB loan and enough CPF, a first-time couple could complete on this flat paying only the deposit, the $120 valuation fee, any agent fee and any cash over valuation from their bank account. With a bank loan, add the 5%. The affordability calculator works out the highest price your income and savings can support under the MSR, TDSR and LTV rules.

Stamp duty

Buyer's Stamp Duty is charged on the higher of price and valuation, at tiered rates. On $600,000 it comes to $12,600:

For most HDB purchases that is all the stamp duty there is. Additional Buyer's Stamp Duty is 0% for a Citizen buying their first property, and in general you cannot own another property while buying an HDB flat. If ABSD does apply to you, the stamp duty calculator works out both parts.

Grants are paid into CPF

For first-time buyers, grants can reduce the net cost a great deal. A first-time Citizen couple buying a four-room resale flat, within the income ceiling, can get the CPF Housing Grant of up to $80,000, an income-based Enhanced CPF Housing Grant of up to $120,000, and a Proximity Housing Grant of $20,000 to $30,000 if they buy near or with their parents or children.

Grants are paid into your CPF, not to you directly. They can cover much of the downpayment, but they do not help with the cash costs above. Which grants you get, and how much, depends on who is buying, the flat size and your income. The grant checker applies the published rules, and your HFE letter confirms the exact Enhanced Grant amount.

To put your own figures through this, the affordability calculator takes your income, savings and CPF and works out the price you can support.