How Home Loans Work in Singapore: A Complete Guide
A home loan in Singapore is a secured loan from a bank or financial institution that allows you to purchase residential property by borrowing a percentage of the purchase price, which you repay over a fixed period (typically 25-35 years) with interest.[1] The bank holds a mortgage over your property as security until you've fully repaid the loan.
Understanding how home loans work is essential before you apply, as Singapore's mortgage system involves specific regulations, eligibility criteria, and a multi-step application process that can take 8-12 weeks from offer to completion.[1] This guide walks you through every stage, explains key concepts like Loan-to-Value (LTV) and Total Debt Service Ratio (TDSR), and shows you how Homejourney simplifies the entire process.
The Core Mechanics: LTV, TDSR, and Loan Tenure
Three fundamental concepts govern how much you can borrow and what you'll repay monthly.
Loan-to-Value (LTV) Ratio
LTV determines the maximum percentage of the property's value that a bank will lend you.[1] For your first residential property, the maximum LTV is 75% if your loan tenure does not exceed 30 years and you're under age 65.[1] This means if you're buying a S$2 million condo at 75% LTV, you can borrow up to S$1.5 million, requiring S$500,000 in cash and CPF equity plus stamp duties—totaling roughly S$1.77 million in liquid funds upfront.[1]
If your loan extends to 35 years or beyond age 65, LTV drops to 55%, meaning you'll need a larger down payment.[1] Foreigners face the same LTV limits as Singapore citizens for private property purchases, though they must pay an Additional Buyer's Stamp Duty (ABSD) of 60% on the purchase price unless exempt under Free Trade Agreements.[2]
Total Debt Service Ratio (TDSR)
TDSR is a critical affordability measure that caps your total monthly debt repayments (mortgage, car loans, credit cards, personal loans) at 55% of your gross monthly income.[1] Banks use stress-test rates—typically around 4%—to calculate whether you can afford the loan if rates rise.
For example, a S$1.5 million loan over 25 years at a 4% stress-test rate translates to roughly S$7,900 monthly installment, meaning you'd need stable gross income of at least S$14,400 per month to clear TDSR comfortably assuming no other debt.[1] Banks will scrutinize your payslips, tax assessments, and employment contracts to verify income stability.[1]
Loan Tenure and Age Limits
The maximum loan tenure is 30 years for HDB properties and 35 years for private properties.[3] However, to qualify for the full 75% LTV on private properties, your loan tenure must not exceed 30 years, or you must be under age 65.[1] The minimum age to qualify for a home loan is 21 years, and banks use 65 as the standard age cap for loan repayment.[2][3]
Older applicants will need to negotiate a shorter LTV and larger deposit to be eligible.[2] If you were previously bankrupt, you'll typically need to wait 5-7 years after receiving your official discharge letter before applying.[3]
Understanding Interest Rates and SORA
Most Singapore home loans are priced off SORA (Singapore Overnight Rate Average), the benchmark rate set by the Monetary Authority of Singapore.[1] Banks add their own margin (typically 1.5%-2.5%) to SORA to determine your interest rate.
You'll choose between floating-rate loans (where your rate moves with SORA) or fixed-rate loans (where your rate is locked for a period, usually 1-5 years, then reverts to floating).[1] Floating rates are typically lower but expose you to rate increases; fixed rates provide certainty but may be slightly higher.
The chart below shows recent SORA trends to help you understand how rates have moved:
To compare current rates from DBS, OCBC, UOB, HSBC, Standard Chartered, and other major banks, Homejourney's Bank Rates page displays live rates updated daily, allowing you to calculate your exact monthly repayment and compare offers side-by-side before applying.
Step-by-Step: The Home Loan Application Process
The mortgage journey involves seven key stages, each with specific documentation and timelines.
Step 1: Assess Your Eligibility and Gather Documents
Before approaching any bank, calculate your borrowing power using Homejourney's mortgage eligibility calculator.Bank Rates You'll need to verify your income, employment status, and existing debts to understand your TDSR capacity.
Required documents for mortgage applications typically include:[1][3]
- Valid passport and current visa or work pass (for foreigners)
- Latest employment contract or letter of appointment
- Last 3-6 months' payslips or bank statements showing salary credits
- Latest Notice of Assessment (NOA) from IRAS for the past 2 years
- Overseas credit report if you have borrowings outside Singapore (for foreigners)
- Bank statements from your home country evidencing savings and deposit source (for foreigners)
- CPF statement showing your Ordinary Account balance
Gather these documents early—having them ready accelerates the entire process and strengthens your position when making an offer.
Step 2: Secure In-Principle Approval (IPA)
Before making any offer, apply for an IPA with one or two banks.[1] Submit your full document pack and await preliminary credit assessment. IPAs typically arrive within 3-5 business days for salaried employees with straightforward income.[1]
An IPA is non-negotiable—sellers and agents want proof you can finance before granting an Option to Purchase.[1] The IPA is valid for 30 days and gives you confidence to make an offer without worrying about financing rejection later.
With Homejourney, you can submit one application via Singpass and receive IPAs from multiple banks simultaneously, comparing their preliminary offers instantly.
Step 3: Negotiate and Obtain an Option to Purchase (OTP)
Once you've found your property, negotiate price and terms with the seller's agent. The seller will draft an OTP granting you exclusive rights to buy at the agreed price for a fixed period, usually 14 or 21 days.[1]
You'll pay an option fee, typically 1% of the purchase price, which is non-refundable if you walk away but credited against the purchase price if you proceed.[1][2] The option fee is due the day you receive the signed OTP, often via cashier's order or bank transfer.
Step 4: Complete Legal Due Diligence
While you hold the OTP, engage a lawyer to conduct legal due diligence on the property.[1] Your lawyer will review the title, check for encumbrances, verify the seller's ownership, and ensure no legal issues exist. This step protects you from purchasing a property with hidden liabilities.
Step 5: Exercise the Option to Purchase
Before the option expiry, sign the OTP acceptance and pay the balance of the deposit to bring the total to 5% of the purchase price.[1] At this point, you are contractually bound, and both BSD (Buyer's Stamp Duty) and ABSD (if applicable) are triggered.[1]
You have 14 days from exercising the OTP to pay stamp duties to IRAS.[1] Late payment incurs penalties, so coordinate closely with your lawyer, who will usually handle e-stamping on your behalf.
Step 6: Finalize Mortgage and Valuation
Notify your bank that the OTP is exercised and provide a copy of the signed Sales & Purchase Agreement.[1] The bank orders an independent valuation, typically completed within one week.[1]
If the valuation comes in below your purchase price, the bank lends against the lower number, meaning you must top up the shortfall in cash.[1] Assuming valuation meets or exceeds the purchase price, the bank issues the formal Letter of Offer.
Review all terms carefully: lock-in clauses, prepayment penalties, fee schedules, and interest rate structure.[1] The bank's solicitors will then prepare mortgage documents for execution closer to completion.
Step 7: Completion and Key Collection
Completion occurs 8-12 weeks after exercising the OTP for resale transactions, or on the contractual completion date for new launches upon TOP (Temporary Occupation Permit) issuance.[1] On completion day, your lawyer coordinates with the seller's lawyer to exchange executed transfer documents, the seller hands over keys and vacant possession, and the bank disburses the loan amount while you remit any final balance due.[1]
Title transfers are lodged electronically with the Singapore Land Authority, and you receive confirmation of registration within days.[1]
Why Homejourney Makes the Process Safer and Faster
Homejourney prioritizes user safety and trustworthiness throughout the home loan journey by simplifying complexity and providing transparent, verified information.
Multi-Bank Application in One Place
Instead of visiting each bank individually and submitting separate applications, Homejourney's Bank Rates platform allows you to submit one application via Singpass, which auto-fills your income, employment, and CPF data instantly.Bank Rates Your details are securely sent to DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Public Bank, Hong Leong Bank, and Citibank simultaneously.
This approach eliminates the hassle of multiple applications, reduces the risk of inconsistent information across banks, and accelerates approval timelines since all banks receive your data at once.
Real-Time Rate Comparison and Eligibility Calculator
Homejourney's mortgage eligibility calculator lets you instantly calculate your borrowing power based on your income and existing debts, showing your maximum LTV and monthly repayment across different loan tenures.Bank Rates You can then compare live rates from all major banks and see exactly how much you'll pay monthly with each lender.
This transparency ensures you understand your financial position before committing to any application, reducing the risk of rejection or unexpected terms.
Side-by-Side Offer Comparison
Once banks issue their Letters of Offer, Homejourney displays all offers side-by-side so you can compare interest rates, lock-in periods, prepayment penalties, and fees in one view.Bank Rates This makes it easy to identify the best deal for your situation without manually tracking multiple emails and documents.
Personalized Guidance from Mortgage Brokers
When you apply via Homejourney's Bank Rates page, you gain access to Homejourney Mortgage Brokers who provide personalized guidance throughout your application. They help you understand terms, negotiate with banks, and ensure you're getting the best rate and structure for your needs.
Verified Property Information and Market Data
Homejourney's Projects directory provides verified property information, recent transaction data, and market analysis so you can make informed decisions about which properties fit your budget and investment goals.Property Search This reduces the risk of overpaying or purchasing in areas with declining values.
Pro Tips to Improve Your Approval Chances
- Build a strong local credit history: If you're an expat, establish a Singapore bank account and maintain a good payment record on local credit cards to demonstrate creditworthiness to banks.[2]
- Minimize existing debt: Pay down car loans, credit cards, and personal loans before applying, as these reduce your TDSR capacity.[2]
- Secure permanent residency if possible: PR status strengthens your application and may qualify you for better rates.[2]
- Provide clear income documentation: Self-employed applicants should provide 2-3 years of audited accounts and tax assessments to prove income stability.[1]
- Apply early in your property search: Get your IPA before making an offer so you can move quickly when you find the right property.[1]
- Use Homejourney's eligibility calculator first: Understand your borrowing power before viewing properties, ensuring you don't waste time on properties outside your budget.Bank Rates
Common Mistakes to Avoid
- Applying to multiple banks without coordination: Each application triggers a credit inquiry, which can temporarily lower your credit score. Use Homejourney to submit one coordinated application instead.
- Changing jobs or taking on new debt during the application: Banks reassess your financial situation before disbursing the loan. Major changes can trigger additional scrutiny or rejection.
- Overestimating your borrowing power: Just because a bank will lend you S$1.5 million doesn't mean you can comfortably afford it. Use stress-test rates and TDSR calculations to determine your true affordability.
- Ignoring lock-in clauses and prepayment penalties:
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