If you are a first time home buyer Singapore, the fastest way to decide between an HDB loan vs bank loan is this: HDB loans offer higher stability, lower cash downpayment and more flexibility to repay; bank loans usually offer lower interest rates today but come with more conditions, higher cash outlay and rate uncertainty in future.[3][6]
In this cluster guide, we focus narrowly on First Time Buyer: HDB Loan vs Bank Loan as part of Homejourney’s wider beginner mortgage guide series. For a full step-by-step roadmap from budgeting to key collection, see our main pillar guide: First-Time Home Buyer Singapore: 2026 Mortgage Guide by Homejourney First-Time Home Buyer Singapore: 2026 Mortgage Guide by Homejourney .
Quick comparison: HDB loan vs bank loan for first-time buyers
Here is a concise comparison using 2026 rules and common packages for a first property mortgage on a typical 4-room HDB in a mature estate like Toa Payoh or Queenstown, priced around S$650,000 (resale) based on recent transaction ranges reported in public data and media coverage.[3][6][7]
- Interest rate
HDB loan: Fixed at 2.6% p.a., pegged at CPF OA rate + 1.0%.[3]
Bank loan: Around 1.9%–2.4% p.a. for popular SORA or fixed packages in early 2026, below HDB’s 2.6% according to recent media reports.[4][6][7] - Maximum loan-to-value (LTV)
HDB loan: Up to 80% of price or valuation, whichever is lower.[1][3]
Bank loan: Up to 75% of price or valuation, whichever is lower.[1][3] - Downpayment
HDB loan: 20% (can be fully from CPF OA, no cash required if CPF sufficient).[1][3]
Bank loan: 25% (minimum 5% must be in cash, remaining 20% can be from CPF and/or cash).[1][3] - Lock-in / flexibility
HDB loan: No lock-in, no penalty for partial or full early repayment.[1][3]
Bank loan: Typically 2–3 years lock-in with 1.5% penalty on redeemed amount if you prepay or refinance within lock-in.[1][2] - Eligibility
HDB loan: Only for eligible buyers of HDB flats, with income ceilings and at least one Singapore citizen; stricter usage rules.[3]
Bank loan: Available for HDB and private properties, including PRs and foreigners, but subject to credit score and Total Debt Servicing Ratio (TDSR).[2][3]
In short, HDB loans are more forgiving and predictable, while bank loans can be cheaper but require stronger cash flow discipline and risk tolerance. Homejourney’s role is to help you compare safely and transparently, using verified bank data and calculators so you avoid costly mistakes.
How interest rates work: stability vs savings
The biggest factor for your first home loan is the interest rate, because it determines your monthly instalment and total interest paid over 20–30 years. For a first-time buyer in estates like Sengkang or Yishun, that difference can easily reach S$40,000–S$80,000 over the full loan tenure if you choose the wrong package.[4][6]
HDB loan interest: fixed 2.6% p.a.
HDB’s concessionary loan has been fixed at 2.6% p.a. for more than a decade, pegged at 0.1% above the CPF OA interest rate.[3][4] This means:
- Your monthly instalment will barely change over the years, making budgeting simple.
- You will not need to monitor interest rate cycles closely.
- You may pay more interest overall if bank rates stay below 2.6% for a long period.
Bank loan interest: SORA and fixed packages
Most banks in 2026 offer two main types of packages for home loans:[2][3][4]
- Fixed rate packages – Rate is fixed for 1–3 years, then usually converts to a floating SORA-pegged rate.
- Floating SORA packages – Rate is expressed as 3M SORA or 1M SORA + a fixed spread (e.g. 3M SORA + 0.80%).[3][4]
Because global rates have fallen from their peak, several banks now price their headline home loan packages below the 2.6% HDB rate, according to recent coverage of 2025–2026 home loan trends.[4][6][7]
The chart below shows recent interest rate trends in Singapore:
From the 6-month rate movements, you can see why many HDB owners are refinancing to banks as rates dip below the HDB concessionary rate.[6][7]
Practical example: 4-room flat in Sengkang
Let’s use a real-world style example that mirrors common transactions in towns like Sengkang or Punggol, where many young couples buy their first resale flat near MRT stations like Sengkang (NE16) or Punggol (NE17).
Scenario: You buy a 4-room resale flat at S$650,000, taking a 25-year loan.
- HDB loan (2.6% p.a.)[3]
- Max LTV: 80% → Loan amount: S$520,000
- Downpayment 20%: S$130,000 (fully payable with CPF OA if sufficient)
- Estimated monthly instalment: around S$2,360–S$2,400
- Bank loan (e.g. 2.1% p.a. average over tenure)[4][6]
- Max LTV: 75% → Loan amount: S$487,500
- Downpayment 25%: S$162,500 (of which at least S$32,500 must be cash)
- Estimated monthly instalment: around S$2,060–S$2,120 (if rate stays near 2.1%)
In this simplified illustration, the bank loan saves you roughly S$250–S$300 per month in instalment, but you must be comfortable with:
- Higher upfront cash outlay (S$30,000+ in cash).
- Potential rate increases after the fixed period or when SORA cycles up.
- Lock-in penalties if you sell or refinance early.
Use Homejourney’s affordability and eligibility calculator Mortgage Rates to model your exact monthly payment for different banks and interest rate scenarios, instead of relying on rough estimates.
Eligibility: who can take HDB loans vs bank loans?
For a first time buyer: HDB Loan vs Bank Loan, your eligibility will often decide your options before preference.
HDB loan eligibility (HLE)
To take an HDB concessionary loan, you must meet HDB’s HLE (HDB Loan Eligibility) criteria, which include:[3]
- At least one applicant is a Singapore citizen.
- Household income within HDB’s income ceiling for the chosen flat type.
- No private property ownership in the last 30 months.
- Not owning more than one market/hawker stall or commercial/industrial property (or if you do, you must operate the business yourself and have no other income source).
If you are a young couple in Jurong West earning a combined S$7,000–S$10,000 and staying with parents while buying your first BTO in Tengah, you will usually qualify for an HDB loan if you do not own any other property and meet other criteria. Always verify via the official HDB site or HDB Hub at Toa Payoh, which is about a 5–7 minute sheltered walk from Toa Payoh MRT (NS19).
Bank loan eligibility
Bank loans are assessed mainly on your ability to repay and your credit profile:[2][3]
- Age: Typically 21–65 years old (varies slightly by bank).
- Income: Minimum monthly income (e.g. S$2,500–S$3,000 per borrower is common, higher for foreigners).
- TDSR: Total monthly loan repayments across all debts (credit cards, car loan, personal loans, etc.) must not exceed 55% of your gross monthly income, as set by MAS.
- Credit history: A healthy bureau score with no recent defaults or serious arrears.
If your credit score is weak or you have high existing debts, you may qualify for an HDB loan but face difficulty getting a good bank rate. In such cases, Homejourney’s mortgage brokers can help you understand whether to improve your credit first or adjust your loan quantum: apply via our bank rates page Bank Rates to connect with them safely.
Cash vs CPF: how much should you lock up?
Many first-time buyers in towns like Woodlands or Bedok underestimate the importance of cash flow. As someone who has seen many couples stretched after renovation and furnishing, my key advice is: protect your emergency cash buffer first.
When HDB loan makes more sense
Consider prioritising an HDB loan if:
- You have limited cash savings (e.g. under S$30,000 after renovations and moving costs).
- You prefer to use more CPF and keep cash liquid for emergencies or future plans (children, job changes).
- You value certainty of monthly instalment over potential savings.
Because HDB requires no minimum cash portion of the downpayment, you can fully use CPF OA, which is a big relief for many younger buyers fresh from NS or just a few years into their careers.[1][3]
When bank loan may be better
A bank loan may be preferable if:
- You have strong cash savings and stable income (e.g. both working in professional roles in the CBD or Changi Business Park).
- You are comfortable monitoring rates and refinancing when needed.
- You want to minimise interest paid, especially if you plan to sell or upgrade in 7–10 years.
To check your safe cash buffer after downpayment and renovation, use Homejourney’s affordability calculator Mortgage Rates and property search Property Search to find flats that match both your monthly instalment comfort level and your remaining cash reserves.
Risk checklist: 5 questions every first-time buyer should ask
Before you decide on HDB vs bank loan for your first property mortgage, run through this simple safety checklist. This is drawn from patterns Homejourney sees among successful first-time buyers across Singapore, from Punggol to Clementi.
- If my income drops 20%, can I still comfortably pay the instalment?
Use Homejourney’s mortgage eligibility calculator Mortgage Rates to simulate lower income scenarios. - How many years do I realistically plan to stay in this flat?
If you plan to move or upgrade within 5–8 years, a lower-rate bank loan plus later refinancing may make sense. - Do I have at least 6–12 months of expenses in cash after paying for downpayment and renovation?
If not, prioritise HDB loan or a smaller loan amount to reduce stress. - Am I disciplined enough to track interest rate changes?
If not, HDB’s fixed 2.6% may be safer than a floating rate you don’t monitor. - Am I prepared to accept penalties if I change my mind?
Bank loans usually have lock-in penalties; HDB loans do not.[1][2]
For more common pitfalls, see our dedicated guide: 5 Mortgage Mistakes Singapore First-Time Buyers Must Avoid | Homejourney 5 Mortgage Mistakes Singapore First-Time Buyers Must Avoid | Homejourney .
How Homejourney helps you compare HDB loan vs bank loan safely
Homejourney is built to make the first property mortgage as transparent and safe as possible. Instead of running from branch to branch in Raffles Place or Tampines, you can manage the process from home.
1. Compare all major banks instantly
On Homejourney’s bank rates page Bank Rates , you can:
- Compare rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong Bank, Citibank and more in one place.
- See fixed vs SORA floating packages side-by-side, updated in near real time using verified bank data.[6]
- Understand lock-in periods, partial prepayment rules, and legal subsidy conditions clearly before you commit.
2. Calculate your borrowing power safely
Use our mortgage calculator on the same page Mortgage Rates to:
- Estimate your maximum loan amount under MAS TDSR rules.[2][3]
- Test different scenarios: longer vs shorter tenure, different rates, adding co-borrowers.
- Check whether you should adjust your property budget (and then search within your range using Property Search ).
