Q1 2026 Property Financing FAQs: Your Homejourney Mortgage Guide
As we enter Q1 2026, Singapore's property market presents a unique financing opportunity that many buyers are asking about. With mortgage rates at 3-year lows and significant gaps between HDB and bank loan rates, understanding your financing options has never been more critical. This guide addresses the most pressing questions from Singapore property buyers and investors considering their moves in the first quarter of 2026.
Homejourney is committed to helping you make confident, informed decisions about property financing. Our platform prioritizes your safety and trustworthiness by verifying information, comparing rates transparently, and connecting you with verified financing partners. Let's explore the key questions shaping property financing decisions right now.
Understanding Current Interest Rate Environment
What are the current mortgage rates in Singapore for Q1 2026?
As of January 2026, Singapore's mortgage landscape shows compelling rates across both fixed and floating options. Fixed-rate mortgages start from as low as 1.30%, while floating SORA-based packages begin at approximately 1.15% (3M SORA + 0%).[1][3] These represent some of the lowest rates available in recent years, creating a favorable borrowing environment for both first-time buyers and upgraders.
The HDB loan rate remains fixed at 2.6%, creating a significant 1.0-1.45% gap between HDB and bank financing options.[1][2] This arbitrage opportunity has driven unprecedented refinancing activity, with major banks reporting 7-13x increases in HDB owners switching to bank loans.[1][2]
The chart below shows recent SORA trends to help you understand how rates have moved:
To compare current rates from all major Singapore banks and calculate your eligibility instantly, visit Homejourney's bank rates page where you can view offerings from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other leading lenders in one place.
Will interest rates go lower in Q1 2026?
Market expectations suggest limited further downside for interest rates in Q1 2026. The US Federal Reserve has signaled a measured approach to rate cuts, with projections indicating only marginal easing through 2026.[2] Singapore's SORA rates may have already "found a floor" at current levels, according to banking analysts.[2]
However, banks are expected to continue offering competitive packages, including legal subsidies and cash rebates, particularly in Q1 when competition for market share intensifies.[2] Rather than waiting for rates to drop further, many experts recommend locking in current rates while they remain historically low, especially if you're ready to purchase.
Should I choose a fixed or floating rate mortgage?
This decision depends on your risk appetite, long-term financial plans, and budgeting preferences. In 2025, four out of five customers chose fixed-rate packages, with most homeowners preferring stability in their monthly repayments.[2] Fixed rates offer budgeting certainty and protection against future rate increases.
Floating SORA-based mortgages can offer lower initial rates but expose you to interest rate volatility. With rates likely to remain low but stable, both options have merit. Consider your financial flexibility: if you prefer predictable monthly payments, fixed rates provide peace of mind; if you can absorb potential rate increases and want to maximize savings, floating rates may suit you better.
Banks typically don't charge penalties for early repayment or sale during lock-in periods on fixed packages, reducing the risk of switching if circumstances change.[2]
HDB Loan vs Bank Loan: Making the Right Choice
Should I refinance my HDB loan to a bank loan in Q1 2026?
The 1.0-1.45% rate differential between HDB loans (2.6%) and bank financing (1.30-1.88% fixed) creates genuine savings opportunity. A homeowner with an outstanding HDB loan of S$300,000 could save approximately S$3,000-4,350 annually by refinancing to a bank loan.[1]
Critical consideration: Once you refinance from an HDB loan to a bank loan, you cannot return to HDB financing in the future. This is a permanent decision. You should also be aware that bank loans introduce interest rate volatility, unlike the fixed HDB rate.
Homejourney recommends stress-testing your finances at 4% interest rates, not current rates, to ensure you can comfortably manage payments if rates rise.[1] If you're refinancing, use our multi-bank application system to compare offers from DBS, OCBC, UOB, and other major lenders simultaneously, ensuring you secure the best available rate.
What's the difference between HDB and bank loan terms?
HDB loans offer a fixed 2.6% rate pegged to the CPF Ordinary Account rate, with no penalties for early repayment or property sale. Bank loans provide lower rates (currently 1.30-1.88%) but include lock-in periods typically ranging from 3-5 years, with potential early repayment penalties.[1][2]
Bank loans also require TDSR (Total Debt Servicing Ratio) compliance at 55% of gross income, stress-tested at 4%, while HDB loans have different assessment criteria. The choice depends on whether you prioritize rate savings (bank) or flexibility and simplicity (HDB).
Financing Eligibility and Calculations
How much can I borrow based on TDSR requirements?
TDSR (Total Debt Servicing Ratio) is the maximum percentage of your gross monthly income that can go toward all debt repayments. Banks typically cap this at 55% of gross income, stress-tested at 4% interest rates.[1]
Example calculation: If your combined household gross income is S$12,000 monthly, your maximum total debt servicing is S$6,600 (55% × S$12,000). If you have existing debts of S$1,000, you can allocate S$5,600 to mortgage payments. At a 1.8% rate over 25 years, this supports approximately S$1.3 million in borrowing.[1]
Homejourney's mortgage calculator automatically performs TDSR calculations and stress-testing, showing you exactly how much you can borrow based on your income and existing debts. Access it on our bank rates page to get instant, personalized results.
What's the maximum LTV (Loan-to-Value) for my property purchase?
LTV determines the maximum loan amount as a percentage of property value. For first properties, the maximum LTV is 75%, meaning you need at least 25% downpayment.[1] For second properties, LTV drops to 45%, requiring 55% downpayment.
Your downpayment can include CPF savings (up to your available balance) plus cash. The minimum cash component is typically 5% of property value, with the remainder coming from CPF or additional cash.[1]
Can I use CPF for my downpayment and ongoing mortgage payments?
Yes, CPF can be used for both downpayment and monthly mortgage repayments, provided you have sufficient CPF ordinary account balance. For HDB purchases, you can use CPF for the full downpayment and loan repayment. For private properties, CPF usage is more restricted but still permitted for eligible buyers.
First-time buyers should also explore CPF Housing Grants: Enhanced Housing Grant (up to S$80,000), Proximity Housing Grant (S$30,000 if staying near parents), and other schemes totaling up to S$110,000 in potential assistance.[1] These grants reduce the amount you need to finance.
Refinancing and Loan Optimization
When should I refinance my current mortgage?
If you're currently paying 2.0-2.5% on your mortgage, Q1 2026 presents an excellent refinancing window. Current rates of 1.30-1.88% offer meaningful savings that justify refinancing costs.[1] If you're paying above 2.5%, refinancing becomes even more attractive. However, if your current rate is below 2.0%, the savings may not justify refinancing fees.
Consider refinancing costs (legal fees, valuation, processing) typically ranging from S$1,000-2,000. Calculate your break-even point: if monthly savings exceed refinancing costs within 12-18 months, refinancing makes financial sense.
Homejourney simplifies refinancing by allowing you to submit one application and receive offers from multiple banks simultaneously, ensuring you secure the best available rate without shopping around individually.
What documents do I need for a mortgage application?
Standard mortgage applications require proof of income (payslips, tax returns), employment letter, bank statements (typically 3-6 months), CPF statements, property valuation report, and identification documents. For self-employed applicants, additional documentation like business financial statements may be required.
Homejourney accelerates this process through Singpass/MyInfo integration, which auto-fills your application with verified income, employment, and CPF data in seconds, significantly reducing approval timelines.
Property Purchase Considerations
Should I buy a new launch or resale property in Q1 2026?
New launches offer deferred payment schemes, show unit quality, and latest facilities, making them attractive for buyers with limited upfront capital.[1] Resale properties provide immediate occupancy, established neighborhoods, and negotiation flexibility on price.[1]
In Q1 2026's favorable interest rate environment, both options are viable. New launches benefit from lower financing costs on deferred payments, while resale properties allow you to lock in current low rates immediately. Consider your timeline: if you need housing urgently, resale works better; if you can wait 3-4 years, new launches may offer better value.
What additional costs should I budget beyond the mortgage?
Beyond monthly mortgage payments, budget for: stamp duties (typically 3-4% of property value), legal fees (S$1,500-3,000), valuation fees (S$300-500), insurance, property tax, maintenance, and utilities. For second properties, add 20% ABSD (Additional Buyer's Stamp Duty) on property value.[1]
Critical timing note: If you're upgrading from HDB to a private property, sell your HDB within 6 months to avoid ABSD charges. This timing consideration is crucial in Q1 2026 planning.
What's bridge financing and when do I need it?
Bridge financing solves the timing gap when your HDB sale completes after your new property purchase. Banks typically offer bridge loans for 6-12 months at 3-4% per annum on the bridged amount.[1] This allows you to complete your new purchase before selling your existing property, avoiding pressure to accept lower offers.
Alternatively, family loans or personal savings can bridge the gap. Evaluate the cost-benefit: bridge financing costs money but provides flexibility and negotiating power.
Strategic Timing for Q1 2026
Why is Q1 2026 considered favorable for property financing?
Q1 2026 presents a rare convergence of favorable financing conditions: mortgage rates at 3-year lows (1.30-1.88% fixed), significant HDB-to-bank loan arbitrage opportunities (1.0-1.45% savings), and intensified bank competition for market share leading to better packages and incentives.[1][2]
Additionally, interest rate expectations suggest limited further downside, making current rates attractive for locking in long-term certainty. The combination of low rates, competitive packages, and favorable market conditions creates an optimal window for both first-time buyers and upgraders.
Should I wait for rates to drop further or buy now?
While rates could marginally decrease, the risk-reward calculus favors acting sooner rather than later. Waiting for perfect rates may result in higher property prices offsetting any rate savings.[1] Property prices have shown resilience, and delaying your purchase risks paying more for the property itself while chasing minimal rate improvements.
Homejourney recommends a practical approach: if you're ready to buy and can afford current rates stress-tested at 4%, lock in financing now. The certainty of owning your property outweighs the speculative benefit of waiting for marginally lower rates.
Frequently Asked Questions
Q: Can I get a mortgage if I'm self-employed?
A: Yes, but self-employed applicants face stricter documentation requirements. Banks typically require 2-3 years of audited financial statements, business registration documents, and tax returns. Your income assessment may be more conservative, potentially reducing borrowing capacity. Homejourney connects you with mortgage brokers experienced in self-employed applications who can navigate these requirements and identify banks most receptive to your profile.
Q: What happens if interest rates spike after I lock in a fixed rate?
A: Fixed-rate mortgages protect you completely—your rate and monthly payment remain unchanged regardless of market conditions. This is the primary advantage of fixed rates. You're protected against rate spikes, providing long-term financial certainty. The trade-off is that if rates fall significantly, you're locked in at a higher rate (though most fixed packages allow penalty-free partial repayment).
