Understanding LTV and ABSD for Investment Properties
When purchasing an investment property in Singapore, two critical financial factors determine your borrowing capacity and total acquisition costs: Loan-to-Value (LTV) limits and Additional Buyer's Stamp Duty (ABSD).[1][5] These regulations directly impact how much you can borrow, what down payment you'll need, and the total cash required at purchase—making them essential knowledge for any property investor planning to build a portfolio.
Unlike owner-occupied properties, investment properties face stricter lending rules designed to cool speculative demand and protect financial stability.[1] Understanding these constraints upfront helps you structure deals correctly, avoid costly mistakes, and make informed decisions about which properties fit your investment strategy.
LTV Limits for Investment Properties Explained
Loan-to-Value (LTV) represents the percentage of a property's value that banks will lend you.[1] For investment properties in Singapore, LTV limits are significantly lower than for your primary residence, reflecting the higher risk banks associate with non-owner-occupied properties.
Here's how LTV works for investment property loans:
- First investment property: Maximum 75% LTV if the loan tenure does not exceed 30 years or run past age 65, whichever comes first[1]
- Second and subsequent investment properties: Maximum 55% LTV[6]
- Properties with multiple outstanding residential loans: LTV drops to 15-25% depending on your loan profile[6]
This means on a S$2 million investment property at 75% LTV, you can borrow up to S$1.5 million, requiring S$500,000 in cash equity plus additional funds for stamp duties and fees.[1] The difference between your first and subsequent properties is substantial—your second investment property requires 20 percentage points more down payment.
Calculating Your Down Payment for Investment Properties
Down payment requirements for investment properties are significantly higher than for owner-occupied homes. Here's a practical calculation framework:
Step 1: Calculate your maximum loan amount
Property price × LTV percentage = Maximum loan amount
Example: S$2,000,000 × 75% = S$1,500,000
Step 2: Determine your equity requirement
Property price - Maximum loan amount = Equity needed
Example: S$2,000,000 - S$1,500,000 = S$500,000
Step 3: Add stamp duties and fees
Buyer's Stamp Duty (BSD) on a S$2 million property runs approximately S$60,000-S$80,000, plus legal fees of S$2,000-S$3,000. For investment properties, you'll also pay ABSD (discussed below).
For a S$2 million first investment property purchase, total liquid funds needed would be approximately S$1.77 million when including the S$500,000 equity, S$60,000 BSD, S$200,000 ABSD (if you're a Singapore Citizen buying your second residential property), and professional fees.[1]
ABSD Rates for Investment Property Buyers in 2026
Additional Buyer's Stamp Duty (ABSD) is a tax levied on top of standard Buyer's Stamp Duty when you purchase a residential property beyond your first home.[4][5] ABSD rates vary dramatically based on your residency status and how many properties you already own.
Current ABSD rates for residential investment properties in 2026:
- Singapore Citizens buying a 2nd residential property: 20% ABSD[5]
- Singapore Citizens buying a 3rd+ residential property: 30% ABSD[4]
- Permanent Residents (PRs) buying a 1st residential property: 5% ABSD[5]
- Permanent Residents buying a 2nd residential property: 30% ABSD[5]
- Permanent Residents buying a 3rd+ residential property: 35% ABSD[4]
- Foreign nationals buying any residential property: 60% ABSD[1][5]
To illustrate the impact: a Singapore Citizen purchasing a S$1 million second investment property pays S$200,000 in ABSD alone.[5] A foreign investor buying the same property pays S$600,000 in ABSD—three times more.[1] This punitive rate for foreign buyers, introduced in April 2023, was designed to prioritize housing for citizens and permanent residents while cooling speculative foreign demand.[1]
When ABSD is Triggered and Payment Deadlines
Understanding when ABSD becomes due is critical for cash flow planning. ABSD is triggered when you exercise your Option to Purchase (OTP), and payment is due within 14 days of signing the Sales and Purchase Agreement or exercising your OTP.[1]
Here's the typical timeline:
- You sign the OTP and pay 5% of the purchase price as deposit
- ABSD and Buyer's Stamp Duty are triggered at this point
- You have 14 days from OTP exercise to pay both duties to IRAS (Inland Revenue Authority of Singapore)[1]
- Late payment incurs penalties, so coordinate closely with your lawyer who typically handles e-stamping
For newly developed properties, you can use CPF funds to pay ABSD. However, for resale properties, the initial ABSD payment must be in cash through your lawyer.[2] Once you become the legal owner, you can apply to use CPF for ABSD reimbursement on resale properties.
Strategic Considerations for Investment Property Financing
When structuring your investment property loan, several strategic factors influence your borrowing costs and overall returns:
Loan tenure and age limits: To access the higher 75% LTV on your first investment property, your loan tenure cannot exceed 30 years and must end before age 65.[1] Longer tenures (35 years or beyond age 65) drop your LTV to 55%, requiring significantly more cash down payment.
Multiple property ownership impact: Each additional investment property you own reduces your LTV on subsequent purchases.[6] This compounds the difficulty of building a large portfolio—your third property might only qualify for 15-25% LTV, requiring 75-85% down payment.
Co-ownership and joint purchases: If you purchase investment properties jointly with buyers of different profiles (e.g., a Singapore Citizen and a PR), the ABSD rate applied is the highest rate applicable to any buyer.[4] This means a PR's lower ABSD rate doesn't benefit a Citizen co-buyer—the Citizen's higher rate applies to all properties in the joint purchase.
Investors should compare current mortgage rates across Singapore's major banks using Homejourney's bank rates page, which displays real-time rates from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other lenders. You can also use the built-in mortgage calculator to instantly determine your borrowing capacity based on your income and existing obligations.
Common Misconceptions About LTV and ABSD
Misconception 1: "ABSD can be avoided by using a company to purchase the property." While entities do have different ABSD rates (65% for most companies), this is not lower than individual rates and provides no tax advantage for most investors.[4]
Misconception 2: "CPF can cover all ABSD payments immediately." For resale properties, your initial ABSD payment must be cash. CPF can only be used for ABSD reimbursement after you become the legal owner.[2]
Misconception 3: "LTV limits are the same for all investment properties." Your first investment property qualifies for 75% LTV, but subsequent properties drop to 55% or lower, fundamentally changing your financing strategy.[6]
Misconception 4: "ABSD rates are the same for all residential properties." ABSD varies dramatically based on property type, buyer profile, and ownership history. Commercial properties are exempt from ABSD entirely.[2]
Investment Property Financing with Homejourney
Navigating LTV limits and ABSD calculations requires accurate financial planning. Homejourney's platform simplifies this process through several integrated tools:
- Real-time bank rate comparison: View current mortgage rates from all major Singapore banks in one dashboard, updated daily to reflect market conditions
- Mortgage eligibility calculator: Input your income, CPF balance, and existing loans to instantly see your maximum borrowing capacity and required down payment
- Multi-bank loan application: Submit one application and receive offers from multiple banks simultaneously, saving time and allowing you to compare terms
- Singpass/MyInfo integration: Auto-fill your application in seconds with verified income, employment, and CPF data for faster approval processing
When you're ready to apply for an investment property loan, visit Homejourney's bank rates page to compare current offers and connect with our mortgage brokers who provide personalized guidance on structuring your investment property financing.
FAQ: LTV and ABSD for Investment Properties
Q: Can I use my CPF to pay the down payment on an investment property?
A: CPF can be used for down payments on investment properties, subject to the same rules as primary residence purchases. However, your CPF withdrawal is limited to your available balance, and you must still meet the LTV requirements. For example, if you need a 25% down payment (75% LTV), you can use CPF for this amount if available.
Q: What happens to my LTV if I already own an HDB flat and want to buy a private investment property?
A: If you own an HDB flat and purchase a private investment property, that private property is typically counted as your first private residential property for ABSD purposes (0% ABSD if you're a Citizen), but your LTV may be affected by your total outstanding residential loans. Banks assess your overall loan portfolio when determining LTV on new purchases.
Q: Is there any way to reduce ABSD on an investment property purchase?
A: ABSD reduction is extremely limited for investment properties. The main legal avenue is purchasing commercial properties instead of residential properties, which are exempt from ABSD entirely.[2] However, commercial properties have different financing rules and lower rental yields. Another option is to sell an existing property within specific timeframes if you qualify for ABSD remission schemes, though these are rare.
Q: How does TDSR affect my investment property loan?
A: Total Debt Service Ratio (TDSR) limits your monthly loan payments to 60% of your gross monthly income. Investment property loans count toward this limit, reducing your borrowing capacity. If you already have a mortgage on your primary residence, your investment property loan must fit within the remaining TDSR headroom.
Q: Can I refinance my investment property to access better rates?
A: Yes, investment property refinancing is common when rates drop. However, refinancing doesn't change your LTV limit or ABSD obligations (ABSD was already paid at purchase). You can refinance to a lower rate with the same bank or switch to a competitor offering better terms. Use Homejourney's refinancing comparison tools to evaluate options across multiple lenders.
Next Steps: Planning Your Investment Property Purchase
Understanding LTV and ABSD is foundational, but successful investment property financing requires integrated planning across multiple factors. For comprehensive guidance on structuring your entire investment strategy, refer to our detailed guides on LTV for Investment Property Singapore: Limits, Rules & Tips and Best Bank Loans for Property Investors in Singapore.
For investors managing multiple properties, our guide on Financing Multiple Investment Properties Safely in Singapore addresses portfolio-level strategies and cumulative LTV impacts.
Before committing to any investment property purchase, calculate your exact borrowing capacity and total acquisition costs using Homejourney's mortgage calculator. This ensures you understand the full financial picture—down payment, ABSD, stamp duties, and monthly mortgage payments—before making an offer.
Ready to explore investment properties within your budget? Use Homejourney's property search to filter by price range, location, and investment criteria. When you find properties that fit your strategy, our integrated loan application system lets you submit to multiple banks simultaneously, ensuring you get competitive rates and transparent terms.
At Homejourney, we prioritize your safety and success by providing verified information, transparent comparisons, and access to Singapore's most competitive mortgage offers—all designed to help you build your property investment portfolio with confidence.
