How Much Mortgage Insurance Coverage Do You Need: Your Complete FAQ Guide
Your mortgage insurance coverage should equal 100% of your outstanding loan balance at the time of purchase, decreasing proportionally as you repay the loan.[1] For joint owners, coverage splits according to each person's share of the loan—typically matching the proportion of monthly installments they pay.[2] In Singapore, this protection ensures your family won't lose the home if death, terminal illness, or total permanent disability (TPD) occurs.[1]
Whether you're buying an HDB flat using CPF or a private property, understanding your coverage needs is critical. The Home Protection Scheme (HPS) mandates minimum coverage for HDB buyers using CPF-OA, while private property owners can choose between Mortgage Reducing Term Assurance (MRTA) or level term insurance.[1][3] Homejourney helps you navigate these options by verifying details from official sources like CPF Board and MAS, ensuring you make confident decisions backed by trustworthy guidance.
Understanding Your Coverage Needs: The Foundation
The primary principle is straightforward: your mortgage protection amount matches your share of the outstanding loan.[1] If you're the sole owner of an HDB flat with an S$800,000 loan, you need S$800,000 in initial coverage. As you pay down the loan over 25 years, your coverage decreases correspondingly.
For joint owners, the calculation becomes proportional. If you and your spouse jointly own a property and you're paying 80% of the monthly installments while your spouse pays 20%, you must be covered for at least 80% of the loan amount under HPS.[2] This ensures both parties maintain adequate protection based on their financial contribution.
The critical insight: coverage should never fall below your actual loan balance at any point. This is why decreasing term insurance aligns perfectly with mortgage repayment—your protection decreases as your debt decreases, keeping you appropriately covered without overpaying for unnecessary coverage.
Key Factors That Determine Your Coverage Amount
1. Loan Size and LTV Ratio
Your maximum loan amount depends on the Loan-to-Value (LTV) ratio set by MAS. As of 2025, first-time homebuyers can borrow up to 75% of the property value for bank loans, while HDB concessionary loans allow up to 80% LTV.[1][4] This directly determines your coverage amount. For example, purchasing a S$1 million condo means a maximum loan of S$750,000, requiring S$750,000 in initial coverage.[1]
2. Ownership Structure and CPF Contribution
If you're buying jointly, your CPF contribution percentage dictates your minimum HPS coverage. If you contribute 70% of the CPF-OA funds toward a S$500,000 loan, your minimum coverage is S$350,000.[1] This proportional approach protects both owners fairly while ensuring HPS compliance.
3. Age and Health Status
HPS covers you until age 65 or when the loan is fully paid, whichever comes first.[1][5] Private mortgage insurance options like MRTA or level term typically cover until age 65-70.[3] Your age at purchase affects premium costs—a 40-year-old pays significantly less than a 55-year-old for the same coverage.[3] Health conditions may require medical underwriting for private policies, potentially affecting eligibility or premiums.
4. Loan Tenure and Outstanding Balance
A 25-year mortgage means your coverage decreases gradually over 25 years. The outstanding balance at any point determines your actual coverage need. Banks and insurers use amortization schedules to calculate this automatically, adjusting your premiums annually as the balance shrinks.[3]
Step-by-Step: Calculating Your Insurance Coverage
Step 1: Determine Your Loan Amount
Start by calculating your maximum borrowing capacity using Homejourney's mortgage eligibility calculator. This tool factors in your income, existing debts, and the Total Debt Service Ratio (TDSR) limits set by MAS. TDSR caps your total monthly debt obligations at 60% of gross monthly income.[1] Once you know your loan amount, that's your starting coverage figure.
Step 2: Identify Your Ownership Share
If buying jointly, determine what percentage of the loan you're responsible for. This typically matches your CPF contribution percentage. If you're contributing S$350,000 CPF toward a S$500,000 loan, your share is 70%—meaning you need coverage for at least S$350,000.[1]
Step 3: Project Your Outstanding Balance
Use an amortization calculator to see how your loan balance decreases over time. After 10 years of a 25-year mortgage, your outstanding balance might be S$600,000 instead of S$800,000. Your coverage should mirror this decrease, which is why decreasing term insurance is standard.[1]
Step 4: Consider Adding a Buffer
For joint policies where one income primarily supports the family, consider adding 10-20% extra coverage beyond the minimum.[1] This provides additional security if the primary earner passes away, giving the family breathing room beyond just loan repayment.
Step 5: Compare Premium Costs
Premium costs vary by age, loan amount, and tenure. At age 40 with a S$500,000 loan, expect approximately S$18-90 monthly for private mortgage insurance, depending on the insurer and coverage structure.[3] Use Homejourney's bank rates page to compare offerings from DBS, OCBC, UOB, HSBC, Standard Chartered, and other major lenders.
HDB vs Private Property: Coverage Requirements Differ
HDB Flats with HPS (Mandatory if Using CPF)
If you're purchasing an HDB flat and using CPF-OA to service the mortgage, HPS is mandatory.[1][2] Your minimum coverage equals the proportion of monthly installments you pay. HPS premiums are deducted directly from your CPF-OA, making it automatic and affordable. Coverage continues until age 65 or loan maturity.[1] The scheme is designed to protect public housing stability and ensure families don't lose their homes to debt.
Private Properties (Optional but Recommended)
Private property buyers aren't eligible for HPS but can purchase MRTA or level term insurance from banks.[3] MRTA is the most common choice—it's a decreasing term policy where coverage matches your outstanding loan balance, with premiums decreasing annually.[1] Level term insurance keeps coverage constant throughout the policy term, offering different protection for different needs.[1]
For private property investors buying multiple units, you can stack policies across properties. An investor with three condos might carry three separate MRTA policies, each covering that property's loan.[1]
Common Coverage Scenarios: Real Examples
Scenario 1: First-Time HDB Buyer, Sole Owner
You purchase an HDB flat for S$400,000, taking an HDB loan of S$320,000 (80% LTV) using 100% CPF-OA. Your HPS coverage must be S$320,000 minimum. Premiums start around S$15-25 monthly at age 35 and increase gradually with age. As you repay, coverage decreases proportionally—after 10 years, your outstanding balance might be S$240,000, and your coverage adjusts accordingly.[1]
Scenario 2: Joint HDB Purchase with Unequal CPF Contributions
You and your spouse buy an HDB flat for S$500,000, taking a loan of S$400,000. You contribute 60% CPF (S$240,000) and your spouse contributes 40% (S$160,000). Your HPS coverage must be at least S$240,000, and your spouse's must be at least S$160,000. Each person's premium is calculated separately based on their coverage amount and age.[1][2]
Scenario 3: Private Condo, Joint Ownership
You and your partner purchase a S$1 million condo, obtaining a bank loan of S$750,000 (75% LTV). You're jointly covered by MRTA. Initial coverage is S$750,000, split proportionally if payments differ. Monthly premiums at age 40 for S$750,000 coverage are approximately S$45-135, depending on the bank and tenure.[3] After 15 years, with S$450,000 outstanding, your coverage and premiums adjust downward.
