HDB Loan vs Bank Loan in Singapore
When buying an HDB flat in Singapore, homeowners usually finance the purchase using either an HDB housing loan or a bank housing loan. While both serve the same purpose, they operate under very different systems, which affects how they work in practice.
HDB flats are public housing developed and sold by the Housing and Development Board. They are the main housing option in Singapore, with about 75% of residents living in HDB flats. Because of this, HDB loans are designed around standardisation and policy stability, while bank loans follow commercial and market-driven models.
Understanding these structural differences helps homeowners set realistic expectations before committing to a long-term loan.
HDB housing loan interest rates are set administratively.
They are pegged at 0.1 percentage points above the CPF Ordinary Account interest rate, making them policy-driven rather than market-priced.
In contrast, bank housing loan interest rates move with broader interest rate conditions.
Historically, this has played out as follows:
- 2009 to 2021: Bank loan rates were commonly below 2.6% per annum
- 2022 to 2024: Rates generally rose above 3.0%, at times approaching 4.0%
- 2025 to early 2026: Many bank loan rates fell below the HDB loan rate of 2.6%
As a result, a HDB loan could be lower or higher than bank loan rates depending on the interest rate environment at any given time.
Structurally:
- Bank loans may be floating-rate, typically pegged to benchmarks such as SORA
- Or fixed-rate for a period of time between 1 to 5 years, before reverting to floating rates
This difference explains why bank loan rates fluctuate, while HDB loan rates remain relatively stable.
Loan Quantum and Downpayment Requirements
Both HDB and bank housing loans allow homeowners to borrow up to 75% of the lower of the purchase price or property valuation. The difference lies in how the remaining amount is funded.
Bank housing loans
- Minimum downpayment: 25%
- At least 5% must be paid in cash
- The remaining downpayment is funded using CPF Ordinary Account savings, subject to bank terms
HDB housing loans
- Downpayment can be paid using:
- CPF Ordinary Account savings
- Cash
- Or a combination of both
- CPF Ordinary Account savings
- For resale flats:
- $1,000 cash to obtain the Option to Purchase
- $4,000 cash to exercise the Option
- CPF cannot be used for these option payments
- CPF is used for the remaining downpayment
- $1,000 cash to obtain the Option to Purchase
All HDB downpayment requirements remain subject to prevailing HDB rules and purchase conditions.
CPF Ordinary Account Usage Rules
CPF usage differs clearly between the two loan types.
Under an HDB housing loan
- Applicants must use available CPF Ordinary Account savings
- Up to $20,000 may be retained in the CPF OA
- This usage requirement is part of the standard HDB loan framework
Under a bank housing loan
- CPF usage is optional
- Borrowers decide:
- How much CPF to use
- Or not to use CPF at all
- How much CPF to use
- CPF utilisation is based on borrower preference, not a fixed rule
Lock-In Periods, Early Repayment, and Refinancing
HDB housing loans
- No lock-in period
- No penalties for early repayment
- Homeowners reduce or fully repay the loan at any time without charges
Bank housing loans
- Typically include a lock-in period of one to three years
- Early repayment or refinancing during this period results in penalties, depending on loan terms
Refinancing rules:
- An HDB loan is refinanced into a bank loan, subject to bank approval
- Once refinanced into a bank loan, it cannot be converted back into an HDB loan
- A bank housing loan cannot be refinanced into an HDB loan
Loan Tenure Limits
HDB housing loans
- Maximum loan tenure: 25 years
- This limit applies uniformly
Bank housing loans for HDB flats
- Standard maximum tenure: 25 years when borrowing up to 75%
- A longer tenure of up to 30 years may apply only if:
- Loan-to-value ratio does not exceed 55%
- Subject to lender terms and prevailing regulatory limits
- Loan-to-value ratio does not exceed 55%
The applicable tenure therefore depends on both the loan amount and current regulations.
Eligibility Requirements for Borrowers
Eligibility rules differ between HDB and bank loans.
HDB housing loans
- At least one applicant must be a Singapore Citizen
- Citizenship is a core eligibility requirement
Bank housing loans
- Available to:
- Singapore Citizens
- Permanent Residents
- Eligible foreign applicants
- Singapore Citizens
- Subject to bank assessment
Where HDB loan eligibility is not met, the purchase must be financed using a non-HDB loan, subject to lender approval.
Property Types Eligible for Each Loan
HDB housing loans
- New HDB flats
- Resale HDB flats
Bank housing loans
- New HDB flats
- Resale HDB flats
- Executive Condominiums
- Private residential properties
This broader coverage reflects the commercial scope of bank housing loans.
Summary Table: HDB Loan vs Bank Loan
| Feature | HDB Housing Loan | Bank Housing Loan |
|---|---|---|
| Maximum loan quantum | Up to 75% of purchase price or valuation | Up to 75% of purchase price or valuation |
| Minimum downpayment | CPF OA, cash, or combination | 25% total, with at least 5% cash |
| Interest rate structure | Administratively set, pegged to CPF OA | Floating or fixed (then floating) |
| Lock-in period | None | Typically one to three years |
| Early repayment penalty | None | Applies during lock-in period |
| Maximum loan tenure | 25 years | Up to 30 years |
| Eligible property types | New and resale HDB flats | HDB flats, ECs, and private properties |
Conclusion
Housing loans are long-term arrangements shaped by fixed structural rules rather than short-term preferences. While these rules are clearly defined, how they affect homeowners can vary depending on timing and personal circumstances.
Understanding these differences allows homeowners to approach the decision with clearer expectations. In this context, firms such as The Loan Connection can help explain how these frameworks apply in practice, without altering the underlying loan structures.
