HDB loan or bank loan?
One is a fixed 2.6% that never moves and asks for no cash down. The other can be cheaper today, but wants 5% in cash and can rise tomorrow. The choice is really certainty against opportunity.
Assuming you qualify for both, the decision comes down to a handful of real differences - and one of them you can never undo. Here they are side by side, then what each one actually means.
| HDB loan | Bank loan | |
|---|---|---|
| Interest rate | 2.6%, fixed by formula, never changes | Market rate, fixed or floating - moves over time |
| Cash downpayment | None - the full 25% can be CPF | At least 5% of price in cash |
| Maximum loan | 75% of price or valuation | 75% of price or valuation |
| Income ceiling | $14,000 a month (families) | None |
| Who qualifies | At least one Citizen, no private property, up to 2 HDB loans in a lifetime | Anyone eligible to buy the flat |
| Maximum tenure | Up to 25 years | Up to 30 years |
| Early repayment | No penalty | Often a penalty during the lock-in period |
| Switching later | Can refinance to a bank loan | Cannot switch back to an HDB loan |
The rate: a fixed 2.6% versus a moving target
The HDB concessionary rate is 2.6%, set at 0.1% above the CPF Ordinary Account rate, and it has sat there for years. Its virtue is not that it is the lowest number you will ever see - a bank package can undercut it in a soft-rate stretch - but that it is certain. It does not reset, it has no lock-in, and it never springs a surprise at the end of a teaser period.
A bank loan is a bet on rates. Take one when packages are cheap and you can pay noticeably less; but the rate can climb when your fixed period ends, and staying competitive means refinancing every few years. Cheaper on average, quite possibly - but only if you actively manage it, and only if rates behave.
The cash gap: none versus 5%
This is the difference that decides it for many buyers. On an HDB loan the entire 25% downpayment can come from CPF - a household with a healthy Ordinary Account can complete without a cash downpayment at all. A bank loan requires at least 5% of the price in cash - about $30,000 on a $600,000 flat - that CPF cannot touch. If your savings are mostly in CPF rather than the bank, the HDB loan is the gentler path. How this fits the rest of the upfront money is laid out in what a resale flat really costs to buy.
Who can even take the HDB loan
The bank loan is open to almost anyone eligible to buy the flat. The HDB loan is not: your household needs at least one Singapore Citizen, a monthly income within the $14,000 ceiling for families (higher for extended families, lower for singles), and you must not own or have recently disposed of a private property. There is also a lifetime cap of two HDB concessionary loans. For many first-timer households all of this is a formality - but if your income is above the ceiling, the choice is made for you.
The one-way door
The switch only runs in one direction. Start on an HDB loan and you can later refinance to a bank if rates tempt you - keeping the HDB loan as a safe default you can leave when it suits. Start on a bank loan and you cannot move back to an HDB loan later. That asymmetry is a quiet argument for the HDB loan when you are unsure: it preserves the option to change your mind.
Take the HDB loan for certainty and a cashless downpayment, with the freedom to refinance later. Take the bank loan for a lower rate today, if you have the cash and will actively manage it. The one thing you cannot buy back is the HDB loan, once you have passed it up.
How to decide
- Check eligibility first. Over the income ceiling, not a citizen household, or holding private property? The bank loan may be your only option, and the question answers itself.
- Count your cash, not just your CPF. Thin on cash but strong on CPF? The HDB loan's cashless 25% downpayment is worth a lot. A bank loan needs 5% of the price in actual cash.
- Decide how much certainty you want. The HDB 2.6% never moves. A bank rate can be lower now and higher later - fine if you will refinance on schedule, costly if you set it and forget it.
- Value the escape hatch. HDB now, bank later is allowed; bank now, HDB later is not. When in doubt, the reversible choice is the HDB loan.
- Stress-test the instalment, not today's rate. Size the loan so the monthly payment is comfortable even a couple of points higher. Our tool qualifies a bank loan at a 4% floor for exactly this reason.
See what each loan supports
Put your income, savings and CPF through the affordability calculator - it applies the HDB and bank rules, the 75% cap and the 5% cash floor, and shows the price each path can carry.