7 Common Mortgage Mistakes First-Time Buyers Make in Singapore | Homejourney

Common mortgage mistakes first-time buyers make can lead to rejected loans, financial stress, or overpaying on interest. In Singapore's competitive market, understanding TDSR, MSR, HDB loans vs bank loans, and CPF rules is crucial for first time home buyer Singapore success.

This new buyer guide focuses on mortgage pitfalls, building on our pillar content First Time Home Buyer Singapore Mortgage Guide 2026 | Homejourney First Time Home Buyer Singapore Mortgage Guide 2026 | Homejourney . Homejourney prioritizes your safety with verified bank rates and instant eligibility calculators at https://www.homejourney.sg/bank-rates, helping you make confident decisions.

Why Mortgage Mistakes Hurt First-Time Buyers

First-time buyers often rush into their first property mortgage without grasping Singapore's strict regulations from MAS and HDB. The Total Debt Servicing Ratio (TDSR) caps property payments at 55% of gross income, while HDB's Mortgage Servicing Ratio (MSR) limits it to 30% for public housing[1][2]. Ignoring these can result in loan rejections after paying option fees ($1,000-$5,000 for resale HDB flats).

Hidden costs like Buyer's Stamp Duty (BSD)—1% on the first $180,000, 2% on $180,001-$360,000, and 3% above—add up quickly. For a $600,000 flat, BSD alone is $13,200. Homejourney's beginner mortgage guide helps by letting you calculate affordability instantly via our mortgage calculator at https://www.homejourney.sg/bank-rates#calculator.

Mistake 1: Ignoring Loan Eligibility and TDSR/MSR Rules

Many assume banks lend whatever they need, but TDSR assesses all debts (credit cards, car loans) against income. A $5,000 monthly income buyer might qualify for $800,000 HDB loan under MSR but less under TDSR if they have $500 credit card debt[1].

Actionable Step: Get an Approval-in-Principle (AIP) from multiple banks early. On Homejourney, compare DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and more at https://www.homejourney.sg/bank-rates. Use Singpass for instant verification.

Mistake 2: Not Understanding HDB Loan vs Bank Loan

HDB loans offer stability at 2.6% pegged to CPF Ordinary Account rates, up to 75% LTV (Loan-to-Value). Bank loans can go to 75-90% LTV but tie to fluctuating SORA (Singapore Overnight Rate Average), currently around 3% for 3-month terms[2]. First-timers eligible for HDB grants (up to $80,000) often overlook this safer option.

Pro Tip: See our detailed comparison in HDB Loan vs Bank Loan: First-Time Buyer Guide | Homejourney HDB Loan vs Bank Loan: First-Time Buyer Guide | Homejourney . Fixed-rate bank packages from DBS or OCBC might suit if SORA rises.

SORA is the key benchmark for most Singapore mortgages. The chart below shows recent interest rate trends in Singapore:

As shown, 3M SORA has hovered at 3.0-3.2% in late 2025, impacting floating rates. Track live rates on Homejourney.

Mistake 3: Overstretching Monthly Instalments

Banks approve maximum loans, but comfort matters. A $4,000 income buyer might get $550,000 approved, but $2,500 repayments leave no buffer for rising rates or family needs[1][3]. Factor conservancy fees ($50-100/month for HDB) and utilities.

Decision Framework:

Keep housing <30% net income.
Buffer for 1% rate hike (adds ~$200/month on $500k loan).
Use Homejourney calculator to stress-test.

Mistake 4: Wiping Out Savings on Down Payment

HDB requires 25% down (5% cash minimum), condos 25% (5% cash). A $500,000 BTO flat needs $25,000 cash + CPF, depleting emergency funds[2]. This risks debt for renovations ($30k-$80k).

Avoid It: Save 6 months' expenses post-downpayment. Read Saving for First Home Down Payment: Homejourney Complete Guide Saving for First Home Down Payment: Homejourney Complete Guide .

Mistake 5: Choosing Wrong Loan Type Without Comparison

Accepting the first offered loan ignores better packages. Fixed vs floating: Fixed (e.g., HSBC 2-year at 3.2%) protects short-term; floating SORA+P (0.5% spread) cheaper long-term[3].

Compare on Homejourney: Submit one app via Singpass, get offers from 10+ banks like CIMB, RHB, Public Bank. Link to BTO Buyer Complete Financing Guide: Homejourney 2026 BTO Buyer Complete Financing Guide: Homejourney 2026 .

Mistake 6: Forgetting Hidden Costs and Renovations

Beyond purchase: Lawyer fees ($2k-$3k), insurance ($200/year), renovations. A Tengah BTO might need $50k reno[1].

Checklist:

Budget 10-15% extra for fees/stamp duty.
Get reno quotes pre-option.
Search budget-fit properties on https://www.homejourney.sg/search.

Mistake 7: Going Solo Without Guidance

Navigating without pros leads to errors. Improve odds with tips from How to Improve Your Loan Approval Chances | Homejourney How to Improve Your Loan Approval Chances | Homejourney .

Homejourney connects you to mortgage brokers for personalized advice—apply securely at https://www.homejourney.sg/bank-rates. We verify data for trust.

FAQ: Common Mortgage Questions for First-Time Buyers

Q: What's the difference between MSR and TDSR?
MSR (HDB, 30% income) applies to public housing; TDSR (55%, all debts) for private. Both enforced by MAS[1].

Q: Can I use CPF for downpayment?
Yes, Ordinary Account for downpayment/repayments, but leave $20k+ buffer. Check eligibility on Homejourney calculator.

Q: How do I compare bank rates safely?
Use Homejourney's tool for real-time DBS/OCBC/UOB rates—no spam, Singpass-secured.

Q: Is now a good time for a first home loan?
With SORA stable, yes—but get AIP first. See our pillar guide for full 2026 outlook.

Q: What if my loan is rejected?
Reduce debts, boost income proof. Homejourney brokers help reapply multi-bank.

Disclaimer: This is educational; consult professionals for advice. Rates as of Feb 2026; verify current data.

Ready for your first home loan? Start safely with Homejourney's bank rates comparison and property search. Compare now and link back to our First Time Home Buyer Singapore Mortgage Guide 2026 for complete coverage.