How Does a Home Loan Work in Singapore: Homejourney Complete Guide
This definitive guide explains how a home loan works in Singapore, covering mortgage basics from eligibility to repayment. Whether you're a first-time buyer or investor, Homejourney provides verified insights for confident decisions in a trusted environment.
Singapore's property market demands understanding housing loans amid TDSR rules and SORA rates. Homejourney prioritizes your safety with transparent tools like our bank rates page for comparing DBS, OCBC, UOB, and more.
Table of Contents
- Executive Summary
- 1. Home Loan Explained: Mortgage Basics
- 2. Home Loan Eligibility in Singapore
- 3. HDB Loan vs Bank Loan: Key Differences
- 4. How Interest Rates Work in Home Loans
- 5. LTV, TDSR, and MSR: Borrowing Limits
- 6. Using CPF for Your Downpayment
- 7. Step-by-Step Home Loan Application Process
- 8. Hidden Costs and Fees in Housing Loans
- 9. Refinancing Your Home Loan
- 10. Common Mistakes and Insider Tips
- FAQ: Home Loan Singapore Questions
- Next Steps with Homejourney
Executive Summary
A home loan in Singapore finances up to 75-90% of your property value, with repayments spread over 20-35 years. Key factors include LTV limits, TDSR at 55% of income using 3.5% stress rate, and benchmarks like SORA.
HDB flats qualify for concessional HDB loans (2.6% fixed p.a.), while private properties require bank loans from partners like DBS or HSBC. Homejourney's bank rates comparison simplifies choosing, with Singpass integration for instant eligibility checks.
This 2026 guide draws from MAS, HDB regulations, offering real examples like a $500,000 HDB flat purchase. Expect actionable advice, tables, and why Homejourney ensures trust through verified data.
1. Home Loan Explained: Mortgage Basics
A home loan, or housing loan Singapore, is borrowed funds repaid monthly with interest. Principal reduces the loan balance; interest is the bank's cost for lending.
In Singapore, loans cover HDB flats, Executive Condominiums (ECs) post-MOP, and private properties. Banks like UOB and Standard Chartered dominate private financing; HDB offers flats only[1][6].
Key Mortgage Terms Defined
- Principal: Amount borrowed, e.g., $400,000 for a $500,000 flat.
- Interest Rate: Annual percentage; fixed (unchanging) or floating (SORA-based).
- Tenure: Repayment period, max 30 years HDB, 35 private[1].
- Monthly Repayment: Fixed via amortization, blending principal and interest.
Example: $400,000 loan at 3% over 25 years yields ~$1,886/month. Use Homejourney's mortgage calculator for precise figures.
How Repayments Work
Early payments are mostly interest; later, principal. Amortization tables show progression. Singapore mandates direct debit from your account.
2. Home Loan Eligibility in Singapore
Eligibility requires age 21-65, stable income, and good credit (BB+ score)[1]. Self-employed need IRAS NOA; foreigners face stricter KYC[2].
Income and Credit Requirements
| Criteria | HDB Loan | Bank Loan |
|---|---|---|
| Min Income | None (household <$14k) | Varies, often $3k+ |
| Credit Score | BB+ | BB+ preferred |
| Age Max | 65 at maturity | 65-75 |
HDB caps household income at $14,000 ($7,000 single)[6]. Banks assess via 6 months' payslips or CPF[1].
Insider tip: Recent CPF top-ups boost Ordinary Account for downpayments, improving eligibility.
3. HDB Loan vs Bank Loan: Key Differences
HDB loans suit flats (2.6% fixed, 90% LTV); banks for private/ECs (competitive SORA rates, up to 75% LTV)[1].
- HDB: Stable rate, but slower processing; requires HFE letter[4].
- Bank: Lower rates possible, faster IPA; must meet TDSR[1].
For a $600,000 BTO in Punggol, HDB loan offers peace; banks better for resale in prime areas like Orchard.
4. How Interest Rates Work in Home Loans
Most loans peg to SORA (Singapore Overnight Rate Average), replacing past SOR/FIXED[5]. 3M SORA ~2.8% in 2026.
Fixed rates (1-3 years) offer stability; floating adjust monthly. Banks like DBS add 0.5-1% spread.
The chart below shows recent interest rate trends in Singapore:
As seen, SORA stabilized post-2025 peaks. Track live on Homejourney bank rates.
Fixed vs Floating Comparison
| Type | Pros | Cons |
|---|---|---|
| Fixed | Predictable payments | Higher initial rate |
| Floating (SORA) | Potentially lower long-term | Rate volatility |
5. LTV, TDSR, and MSR: Borrowing Limits
Loan-to-Value (LTV) caps loan at property value percentage. First-time: 75% private, 90% HDB[1].
TDSR limits total debt (incl. loans) to 55% income at 3.5% stress rate. MSR for HDB: 30% income[1].
Example: $10,000 income family; MSR allows $3,000 housing repayment. Learn more in our LTV Ratio Singapore: Limits, Downpayment & Homejourney Benefits ">LTV guide.
6. Using CPF for Your Downpayment
CPF Ordinary Account (OA) funds downpayment (up to 100% bank loans post-5% cash)[1]. Accrued interest goes to you.
For $500,000 flat: 5% cash ($25k), rest CPF. Minimum sum applies at 55.
7. Step-by-Step Home Loan Application Process
1. Check eligibility on Homejourney calculator.
2. Get IPA (2-3 days)[2].
3. Property search via Homejourney search.
4. Formal application, valuation ($50-700)[1].
5. Sign documents, disburse[2].
- Submit docs: Payslips, NOA, Singpass via Homejourney[1].
- IPA from banks like OCBC.
- Valuation and legal fees.
- Final approval (weeks)[2].
- Completion, first repayment.
8. Hidden Costs and Fees in Housing Loans
- Valuation: $50-700[1].
- Legal: $2,000-3,000.
- Stamp Duty: ABSD 60% foreigners[3].
- Processing: 0.5-1% loan amount.
Total extras: 2-5% purchase price. Homejourney verifies to avoid surprises.
9. Refinancing Your Home Loan
Refinance 2-3 months pre-lock-in expiry (2-month notice)[7]. Compare via Homejourney; multi-bank apps save time.
Benefits: Lower SORA rates in 2026 could save $200/month on $500k loan.
10. Common Mistakes and Insider Tips
- Mistake: Ignoring TDSR stress test[1]. Tip: Use Homejourney calculator first.
- Mistake: Not comparing banks. Tip: Homejourney shows DBS vs Maybank instantly.
- Insider: Time IPA before BTO ballot; port loans when upgrading.
For LTV details, see LTV Ratio Singapore: Limits, Calculations & Downpayment Guide | Homejourney ">our LTV article.
FAQ: Common Home Loan Questions in Singapore
What is the current HDB loan rate?
2.6% p.a. fixed, subject to eligibility[6].
How much can I borrow? (TDSR/MSR)
Housing ≤30% income (MSR); total debt ≤55% at 3.5%[1].
HDB or bank loan better?
HDB for stability; bank for rates. Compare on Homejourney.
Can foreigners get home loans?
Yes, but 60% ABSD, stricter LTV[2][3].
What documents for IPA?
Payslips, NRIC, income proof[1]. Singpass speeds via Homejourney.
How to refinance?
3 months pre-expiry; use our multi-bank tool[7].
Is fixed or SORA better in 2026?
SORA if rates fall; fixed for caution. Check chart above.
Next Steps with Homejourney
Start safely: Visit bank-rates for rates, calculator, and Singpass applications. Homejourney verifies data, listens to feedback, ensuring trusted transactions. Search properties at property search within your budget.
Disclaimer: Not financial advice; consult professionals. Rates as of 2026; subject to change.
References
- Singapore Property Market Analysis 1 (2026)
- Singapore Property Market Analysis 6 (2026)
- Singapore Property Market Analysis 2 (2026)
- Singapore Property Market Analysis 4 (2026)
- Singapore Property Market Analysis 5 (2026)
- Singapore Property Market Analysis 3 (2026)
- Singapore Property Market Analysis 7 (2026)
