Understanding LTV and ABSD for Investment Properties in Singapore
When you buy a second or third residential property in Singapore, two critical regulations determine how much you can borrow and how much you'll pay upfront: Loan-to-Value (LTV) limits and Additional Buyer's Stamp Duty (ABSD). Unlike your first property purchase, investment property financing is deliberately more conservative—banks lend less, you must contribute more cash, and stamp duties escalate significantly with each property you own.
At Homejourney, we believe every investor deserves transparent, verified information to make confident decisions. This guide explains exactly how LTV and ABSD work for investment properties, walks you through real calculations, and shows you how to plan sustainable portfolio financing without overextending financially.
What Is LTV for Investment Properties?
Loan-to-Value (LTV) is the maximum percentage of a property's purchase price that a bank will lend you. The Monetary Authority of Singapore (MAS) sets these limits as macroprudential rules to keep household leverage safe and prevent speculative bubbles. For investment properties, LTV limits are significantly lower than for owner-occupied homes because banks view rental income as less stable than owner-occupier income.
The key principle: the more properties you already own with outstanding loans, the less a bank will lend you on the next purchase. This forces investors to build portfolios gradually and maintain healthy cash reserves.
Current 2026 LTV Limits for Investment Properties
MAS macroprudential rules set strict LTV caps based on your number of existing housing loans:
- First property (no outstanding housing loans): Up to 75% LTV for private residential property (subject to age and tenure conditions)
- Second property (one outstanding housing loan): Around 45% LTV under standard conditions
- Third and subsequent properties (two or more outstanding loans): Around 35% LTV
This means on a S$1.5 million investment property purchase:
- First property: Maximum loan of S$1,125,000 (75% of S$1.5m) → You need S$375,000 down payment (25%)
- Second property: Maximum loan of S$675,000 (45% of S$1.5m) → You need S$825,000 down payment (55%)
- Third property: Maximum loan of S$525,000 (35% of S$1.5m) → You need S$975,000 down payment (65%)
These LTV limits also vary based on loan tenure. If your mortgage extends beyond age 65, banks apply even stricter limits—typically 55% LTV for the first property, 25% for the second, and 15% for the third and beyond.
What Is ABSD and How Much Will You Pay?
Additional Buyer's Stamp Duty (ABSD) is a tax you pay on top of standard Buyer's Stamp Duty (BSD) when purchasing residential property. The Inland Revenue Authority of Singapore (IRAS) administers ABSD, and rates depend on two factors: your buyer profile (Singapore Citizen, Permanent Resident, foreigner, or entity) and your total count of residential properties already owned.
ABSD is calculated on the higher of the property's purchase price or market valuation, whichever is greater. Critically, you must pay ABSD within 14 days of exercising the Option to Purchase—well before your property completion date. This creates a significant cash flow requirement beyond your down payment.
ABSD Rates by Buyer Profile (2026)
Singapore Citizens:
- First residential property: 0% ABSD
- Second residential property: 20% ABSD
- Third and subsequent properties: 30% ABSD
Singapore Permanent Residents (SPR):
- First residential property: 5% ABSD
- Second residential property: 30% ABSD
- Third and subsequent properties: 30% ABSD
Foreigners:
- All residential properties: 60% ABSD (flat rate regardless of property count)
Entities (companies and certain trusts):
- All residential properties: 65% ABSD
Real ABSD Calculation Example
A Singapore Citizen purchasing a S$1.5 million investment property as their second residential property:
- Purchase price: S$1,500,000
- ABSD rate (second property): 20%
- ABSD payable: S$300,000
This S$300,000 must be paid within 14 days of exercising the Option to Purchase—typically before you've even secured full financing. For a third property at S$1.5 million, ABSD jumps to S$450,000 (30%).
Complete Cost Breakdown: What You Actually Need
Understanding LTV and ABSD separately isn't enough—you need to see the complete cash requirement for an investment property purchase. Here's a realistic breakdown for a S$1.5 million property purchased as a second investment by a Singapore Citizen:
- Initial deposit (Option to Purchase): S$15,000 (1% of purchase price)
- Exercise deposit (upon exercising option): S$60,000 (4% of purchase price)
- ABSD (due within 14 days of exercising option): S$300,000 (20% of S$1.5m)
- Final down payment at completion: S$300,000 (25% down payment minus deposits already paid)
- Buyer's Stamp Duty (BSD): Approximately S$13,500
- Legal fees and disbursements: Approximately S$2,000–S$3,000
- Total cash required before completion: Approximately S$690,500
- Mortgage amount: S$809,500 (at 45% LTV for second property)
Notice the significant difference: as a second property with 45% LTV, you're funding 55% of the purchase price yourself—more than double the 25% required for your first property. This is why many investors space their purchases strategically to manage cash flow.
How LTV and ABSD Interact: The Portfolio Impact
LTV and ABSD work together to shape your investment strategy. Lower LTV limits mean you need larger down payments; escalating ABSD rates mean each property becomes progressively more expensive to acquire. Together, they create natural brakes on aggressive portfolio expansion.
Consider a scenario: an investor with S$2 million in liquid capital wants to build a three-property portfolio:
- Property 1 (S$1.5m): 75% LTV = S$375,000 down + S$0 ABSD = S$375,000 total cash
- Property 2 (S$1.5m): 45% LTV = S$825,000 down + S$300,000 ABSD = S$1,125,000 total cash
- Property 3 (S$1.5m): 35% LTV = S$975,000 down + S$450,000 ABSD = S$1,425,000 total cash
- Total cash required: S$2,925,000
With only S$2 million available, this investor cannot execute this strategy without additional capital, refinancing, or selling an existing property. This is why understanding LTV and ABSD upfront—before you commit to purchases—is essential.
Special Considerations: Joint Purchases and Decoupling
When two people with different buyer profiles jointly purchase an investment property, ABSD is applied based on the buyer with the highest applicable rate. For example, if a Singapore Citizen (who owns one property) and a Singapore PR (who owns no properties) jointly purchase one investment property, the Citizen's second-property ABSD rate (20%) applies to the entire purchase.
This has important implications for married couples or business partners: structuring ownership carefully can sometimes optimize ABSD outcomes, though such decisions should involve professional tax and legal advice.
Planning Your Investment Property Financing: A Step-by-Step Framework
At Homejourney, we recommend this structured approach to investment property financing:
Step 1: Determine Your Current Property Count
Count all residential properties you currently own, including HDB flats, private apartments, landed houses, and any properties held jointly. This count determines both your LTV limit and your ABSD rate.
Step 2: Apply the Correct LTV Limit
Based on your property count, identify your applicable LTV band (75%, 45%, or 35%). Remember that extended-tenure loans have lower LTV limits, so confirm with your bank whether your loan tenure affects your limit.
Step 3: Calculate Maximum Borrowing Capacity
Use this formula: Maximum Loan = LTV % × Purchase Price
Then calculate: Required Down Payment = Purchase Price − Maximum Loan
Remember that at least 5% of your down payment must be in cash (not CPF); banks typically require 10–15% cash for investment properties.
Step 4: Calculate ABSD and Other Stamp Duties
Using IRAS rates for your buyer profile, calculate: ABSD = ABSD Rate % × (Higher of Purchase Price or Market Valuation)
Add BSD (approximately 0.9% of purchase price) and legal fees (typically S$2,000–S$3,500) to get your total upfront costs.
Step 5: Verify Your Total Debt Servicing Ratio (TDSR)
Banks apply a TDSR ceiling of 55% of your gross monthly income for all housing and non-housing debt combined. Calculate your total monthly mortgage payments (including the new property) plus existing debt obligations to ensure you stay within this limit. This is often the limiting factor for investors with multiple properties.
Step 6: Compare Bank Offers
Different banks offer different LTV limits, interest rates, and terms for investment properties. Use Bank Rates ">Homejourney's bank rates comparison tool to view current offerings from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other major lenders. You can calculate your eligibility instantly and submit applications to multiple banks with one click.
Common Misconceptions About Investment Property LTV and ABSD
Misconception 1: "ABSD only applies to foreigners." Reality: Singapore Citizens pay ABSD from their second property onward; SPRs pay from their first property. Only owner-occupiers of their first property escape ABSD.
Misconception 2: "I can borrow 75% for every investment property." Reality: 75% LTV applies only to your first property with no outstanding loans. Your second property drops to 45% LTV, and your third to 35%.
Misconception 3: "ABSD is optional or negotiable." Reality: ABSD is a mandatory tax administered by IRAS. All residential property buyers (except first-time citizen owner-occupiers) must pay it within 14 days of exercising their option.
Misconception 4: "I can use 100% CPF for my down payment." Reality: Banks require a minimum cash component (typically 5–15%) for investment properties. CPF can cover the remainder of your down payment, but not all of it.
Frequently Asked Questions About Investment Property LTV and ABSD
Q1: Can I refinance my first property to extract equity and use it for a second property down payment?
Yes, but with limits. If you refinance your first property and extract equity, banks will still apply LTV limits based on your property count. For a second property purchase, you'd still face 45% LTV. However, refinancing your first property to a lower interest rate can free up monthly cash flow to support the mortgage on a second property, helping you meet TDSR requirements.
Q2: Does ABSD apply if I buy through a company or trust?
Yes. Entities (companies and certain trusts) face a 65% ABSD rate on all residential property purchases—higher than any individual buyer profile. This makes corporate property ownership significantly more expensive from a stamp duty perspective, though there may be other strategic reasons to use entities.
