How Does a Home Loan Work in Singapore Complete: Frequently Asked Questions

A home loan in Singapore, also known as a housing loan or mortgage, is financing from banks or HDB to buy property, repaid monthly with interest over 20-35 years.[1][2] Homejourney simplifies this with transparent tools like our bank rates page, where you compare DBS, OCBC, UOB rates securely using Singpass.[1]

This cluster article answers key questions on how does a home loan work in Singapore, building on our pillar guide How Does a Home Loan Work in Singapore: Homejourney Complete Guide. First-time buyers and refinancers get actionable steps for safe decisions in our trusted platform.

Home Loan Basics Explained for Singapore Buyers

Home loan explained: You borrow up to 75-90% of property value (Loan-to-Value or LTV limit), pay downpayment (5-25% cash/CPF), then monthly installments from income or CPF.[1][6] MAS regulates via TDSR (Total Debt Servicing Ratio, max 55% of income at 3.5% stress rate) and MSR (30% for HDB).[1][6]

For HDB flats, choose HDB loan (2.6% pegged to CPF OA +0.1%, stable) or bank loan (SORA-based, ~3-4% variable).[2] Private properties require bank loans only.[1] Homejourney's eligibility calculator at https://www.homejourney.sg/bank-rates#calculator shows your limit instantly.

HDB Loan vs Bank Loan: Key Differences

HDB loans suit first-timers: 90% LTV first property, no lock-in, but income <$14,000, Singapore citizen needed.[2] Bank loans offer lower rates short-term (e.g., 1.35% promo for $500k+), up to 75% LTV, but TDSR applies strictly.[1][3]

HDB: Fixed 2.6%, 30-year max tenure, MSR 30%.[2]
Bank: SORA + margin (e.g., 3M SORA ~3%), 35-year max, promotions from UOB/DBS.[3][5]

Compare live rates from DBS, OCBC, UOB, HSBC, Standard Chartered on Homejourney's bank rates page. For ECs/private, banks only post-MOP.[1]

Step-by-Step Home Loan Process in Singapore

Check Eligibility: Age 21-65, credit score >BB, income proof (6 months payslips, NOA for self-employed).[1]
Get IPA: In-Principle Approval (2-3 days) via Homejourney or banks.[1][5]
Exercise Option: Pay 1-5% option fee, use CPF for downpayment (HDB: up to 10%; banks: 5% cash min).[1][6]
Valuation & Formal Approval: Bank valuer assesses ($50-700 fee).[1]
Loan Disbursement: Funds to seller at completion; set CPF auto-deduction.[5]

Foreigners: 75% LTV first loan.[3] Use Homejourney's multi-bank application with Singpass for one-click submissions to 10+ banks like Maybank, CIMB.

Understanding Interest Rates and SORA

Mortgage basics include SORA (Singapore Overnight Rate Average), replacing SOR: banks quote 3M/6M SORA + 0.6-1% margin.[1] Fixed packages (1-3% first 2 years) convert to floating post-lock-in (2-3 years).

The chart below shows recent interest rate trends in Singapore:

Rates fluctuate; track via Homejourney for timing refinancing (notify 2 months early).[4] Example: $800k HDB flat, 25-year bank loan at 3.5%: ~$4,000/month.[1]

Using CPF and Managing Repayments

CPF OA funds downpayment/stamps (after OA min $5k single/$10k family) and installments (bank auto-pays excess).[1] MSR/TDSR use gross income; e.g., $10k household can't exceed $3k HDB MSR.[1]

Refinancing? Compare via Homejourney; port loans easily. Insider tip: Apply pre-lock-in expiry for best rates, as UOB offers cash gifts $450k+ loans.[3]

Frequently Asked Questions

What documents do I need for a housing loan Singapore application?

NRIC/passport, latest payslips/IR8A, 2-year NOAs (self-employed), CPF statements, option to purchase.[1][3] Homejourney auto-fills via Singpass/MyInfo.