Rental Yield vs Mortgage Payment: Safe Investment Analysis with Homejourney

For Singapore property buyers and investors, understanding how rental yield stacks up against your mortgage payment is the single most important step in deciding whether a property is a safe, positive cash flow investment. This guide from Homejourney breaks down rental yield vs mortgage payment investment analysis in practical, Singapore-specific terms, using real examples, current data, and clear frameworks you can apply immediately.

We will cover how to calculate gross and net rental yield, how to compare your rental income to your loan payment, and how to assess if a property is likely to be positive cash flow or a monthly drain on your finances. Along the way, we will show how to use Homejourney’s bank rates comparison, mortgage calculator, and property search tools to make safer, better-informed decisions.

1. Why Rental Yield vs Mortgage Payment Matters in Singapore
2. Core Concepts: Rental Yield, Mortgage Payment, and Cash Flow
3. Singapore Regulations that Shape Your Investment Math
4. How to Calculate Rental Yield and Loan Payment Step-by-Step
5. Real Singapore Case Studies: From Tiong Bahru to Punggol
6. Reading Interest Rates, SORA, and Their Impact on Cash Flow
7. Positive Cash Flow Property: How to Stress-Test Safely
8. HDB vs Condo, Bank Loan vs HDB Loan: Impact on Returns
9. Using CPF, TDSR/MSR, LTV, and ABSD in Your Investment Analysis
10. Practical Decision Frameworks for Investors and Upgraders
11. How Homejourney Helps You Invest and Borrow Safely
12. FAQ: Rental Yield, Mortgage Payments, and Safe Investing

1. Why Rental Yield vs Mortgage Payment Matters in Singapore

In Singapore, gross residential rental yields typically hover around 3%–3.5% on average, with some districts seeing slightly higher yields around 3.6% and others lower around 2.7%.^[4][3] At the same time, home loan rates have in recent years moved in a range where best floating and fixed packages can be around 1.6%–2.4% during promotional lock-in periods, while the HDB concessionary loan remains at 2.6%.^[3] This relatively narrow gap between rental yields and mortgage rates means your investment outcome can swing quickly between positive and negative cash flow depending on your entry price, loan size, and interest rate.

If you buy a S$1.2 million city-fringe condo and rent it out to an expat couple working in Raffles Place, even a S$300–S$400 monthly shortfall between rental income and mortgage payment can add up to S$3,600–S$4,800 a year. Over a 5-year holding period, that’s almost S$20,000 out of pocket, excluding maintenance and taxes. On the other hand, a well-chosen unit in Punggol or Woodlands with a solid tenant profile and slightly higher yield could cover your mortgage and still produce a modest monthly surplus that helps fund your next investment or acts as a buffer during vacancies.

For first-time buyers, upgraders, and seasoned investors alike, analysing rental income vs loan payment is therefore not an academic exercise. It is the foundation of a safe investment strategy that aligns with MAS rules, your personal risk appetite, and long-term financial goals. Homejourney’s mission is to make this analysis transparent, data-driven, and easy to execute, so you never feel like you are guessing.

2. Core Concepts: Rental Yield, Mortgage Payment, and Cash Flow

2.1 Key Definitions in Simple Terms

Before you dive into spreadsheets, it is crucial to understand a few key terms you will see repeatedly in Singapore property discussions.

Gross rental yield: Annual rent divided by property purchase price (or current market value), expressed as a percentage. It ignores costs such as maintenance and property tax.
Net rental yield: (Annual rent – all annual expenses) divided by purchase price or current value, expressed as a percentage. This gives a more realistic view of your investment return mortgage after costs.
Mortgage payment: Your monthly instalment to the bank or HDB, made up of principal plus interest. This is what your rental income must at least cover if you want positive cash flow.
Positive cash flow property: A property where the rent (after deducting expenses) is higher than the monthly loan instalment plus other costs, giving you a monthly surplus.
Negative cash flow property: A property where rent and other income are insufficient to cover loan instalments and expenses, requiring regular top-ups from your salary or savings.

From an investor’s perspective, the most important relationship is between rental income loan payment (how much rent you collect vs your monthly loan instalment) and your other recurring costs. This relationship determines whether you can hold onto the property comfortably during market cycles without being forced to sell.

2.2 How the Singapore System Shapes These Numbers

Singapore’s tightly regulated housing market, MAS loan rules, and public housing framework (HDB) mean that your loan size, loan tenure, and interest rate are not entirely up to you. MAS sets rules like the Total Debt Servicing Ratio (TDSR), while HDB imposes the Mortgage Servicing Ratio (MSR) for HDB flats. These rules cap your loan based on your income and existing debt, affecting your monthly instalments and, ultimately, how easy or hard it is for rental income to cover them.

In practice, this means that two identical units in Jurong East can produce very different outcomes for different buyers depending on how they are financed. A buyer who locks in a lower interest rate and maintains a conservative loan-to-value (LTV) might enjoy stable positive cash flow, while another who stretches to the maximum LTV and chooses a shorter loan tenure may struggle with a high monthly instalment that rent cannot cover.

3. Singapore Regulations that Shape Your Investment Math

3.1 MAS Regulations: TDSR, Stress Test, and LTV

The Monetary Authority of Singapore (MAS) sets macroprudential rules to ensure that households do not over-leverage on property. Key elements that directly affect your rental yield vs mortgage payment analysis include:

Total Debt Servicing Ratio (TDSR): Caps your total monthly debt obligations (including property loans, car loans, credit cards, and personal loans) at a fixed percentage of your gross monthly income. This limits how much you can borrow and, thus, your monthly instalment. For investment properties, this is often the critical constraint.
Loan-to-Value (LTV) limits: Depending on your number of existing housing loans and loan tenure, LTV determines the maximum percentage of the property price you can finance. Lower LTV means higher cash/CPF downpayment but smaller monthly loan payments.
Interest rate stress test: Banks must assess your ability to repay based on a higher notional interest rate (for example, 3.5% for residential property, though this can be updated over time) even if current rates are lower, to ensure you are not caught off guard when rates rise.

These rules are periodically refined, so always cross-check the latest details with official MAS and government announcements, and make use of the Homejourney mortgage calculator at Mortgage Rates or Bank Rates to see how they apply to your specific situation.

3.2 HDB, MSR, and Owner-Occupier Considerations

For HDB flats and new executive condominiums (ECs) bought from developers, the Mortgage Servicing Ratio (MSR) caps your monthly mortgage payments (for these properties) at a fixed share of your gross monthly income. This is on top of TDSR, which applies to all property loans. MSR can significantly limit how large your loan can be for an HDB or new EC, especially if your income is modest.

From a rental yield perspective, HDB flats generally have lower purchase prices than private condos but are subject to stricter rules on renting out, including minimum occupation periods and approval conditions. Investors intending to rent out HDB units must consider not only yield but also HDB regulations, which are laid out clearly on the HDB website. The stricter rules mean your flexibility to react to tenant demand can be lower than for a private condo.

3.3 Stamp Duties and Taxes

Singapore levies Buyer’s Stamp Duty (BSD) on all property purchases and Additional Buyer’s Stamp Duty (ABSD) on certain profiles, such as Singaporeans purchasing second and subsequent properties, permanent residents, and foreigners. ABSD can significantly raise your upfront cost, lowering your overall investment return if you do not hold the property long enough. Detailed ABSD and BSD tables are available on IRAS and government portals, and a full financing perspective is covered in 投资物业的LTV和ABSD完整指南｜Homejourney安全融资攻略 and LTV and ABSD for Investment Property: Homejourney’s Safe 2026 Playbook .

On the income side, rental income is taxable in Singapore. Residents pay tax on a progressive scale up to 24%, while non-residents generally pay a flat 24% on rental income.^[4] IRAS allows you to deduct allowable expenses such as property tax, interest on the loan, maintenance, and agent fees. This affects your net yield and should be included in a detailed investment analysis.

4. How to Calculate Rental Yield and Loan Payment Step-by-Step

4.1 Simple Featured-Snippet Style Summary

How do you compare rental yield vs mortgage payment in Singapore?

Step 1: Estimate annual rental income (monthly rent × 12, minus expected vacancy).
Step 2: Compute gross rental yield = annual rent ÷ purchase price × 100%.
Step 3: Deduct annual expenses (maintenance, property tax, insurance, agent fees) to get net rental income.
Step 4: Calculate net rental yield = net rental income ÷ purchase price × 100%.
Step 5: Compute your monthly mortgage instalment based on loan amount, interest rate, and tenure.
Step 6: Compare net monthly rental income vs monthly instalment and other recurring costs to see if the property is positive or negative cash flow.

4.2 Worked Example: Central Condo

Consider a 1-bedroom private condo near Tanjong Pagar MRT (District 2), an area where average gross yields have been reported around 4% in recent data.^[4] Suppose you buy at S$1,200,000 and rent it out to a professional working in the CBD.

Item	Assumption	Calculation
Purchase Price	S$1,200,000	—
Monthly Rent	S$4,100	S$4,100 × 12 = S$49,200/year
Vacancy Allowance	1 month/year	Effective rent: S$4,100 × 11 = S$45,100
Gross Rental Yield	—	45,100 ÷ 1,200,000 ≈ 3.76%

Next, estimate expenses:

Maintenance fee: S$350/month → S$4,200/year
Property tax (non-owner-occupied): approximate based on IRAS calculators
Insurance: S$300/year
Sinking fund / repairs: S$1,000/year

Assume total annual expenses (excluding loan interest) are S$8,000. Net rental income is therefore S$45,100 – S$8,000 = S$37,100. Net rental yield ≈ 37,100 ÷ 1,200,000 = 3.09%.

4.3 Comparing to Mortgage Payment

Suppose you finance 75% (S$900,000) with a bank loan at 2.1% interest over 25 years.

Loan Variable	Assumption
Loan Amount	S$900,000
Interest Rate	2.1% per annum
Tenure	25 years
Estimated Monthly Instalment	≈ S$3,850–S$3,900 (use Homejourney calculator for precise figure)

Your net monthly rental income is S$37,100 ÷ 12 ≈ S$3,092. Your estimated monthly mortgage payment is around S$3,850–S$3,900. This means you are running a negative monthly cash flow of roughly S$800–S$900, before factoring in property tax timing differences and any vacancy beyond your assumption.

This illustrates a common reality in central Singapore: even with a decent gross rental yield, high purchase prices and relatively conservative LTV limits mean many central condos are negative cash flow on a pure rent-vs-loan basis. Investors buy them primarily for long-term capital appreciation and prestige, not immediate monthly income.

To run these numbers safely for your own case, use Homejourney’s mortgage calculator at https://www.homejourney.sg/bank-rates#calculator to plug in your exact loan size, interest rate, and tenure.

5. Real Singapore Case Studies: From Tiong Bahru to Punggol

5.1 Insider Example: City-Fringe Conservation Charm (Tiong Bahru)

Tiong Bahru is a prime example of an area where lifestyle and long-term appreciation often dominate the conversation more than raw rental yield. Walking out of Tiong Bahru MRT Exit B, you’re barely five minutes from the pre-war walk-up apartments and newer condos like The Regency at Tiong Bahru. Cafés at Yong Siak Street and Seng Poh Road draw both locals and expats, keeping rental demand healthy, especially for 2-bedroom units popular with young couples.

However, purchase prices here are correspondingly high. A modern 2-bedroom condo unit might be transacting around S$1.6–S$1.8 million depending on age, size, and proximity to the MRT. Typical rents for well-renovated units can be strong but, after factoring in buyer’s stamp duty, maintenance, and loan servicing, many investors find that Tiong Bahru investments are mildly negative cash flow unless they accept a longer tenure or lower LTV to reduce monthly payments.

5.2 Insider Example: Young Family Hubs (Punggol / Sengkang)

Contrast this with Punggol, where newer 3-room and 4-room HDB flats or mass-market condos like those near Waterway Point can sometimes offer better net yields relative to their prices. If you walk from Punggol MRT through the integrated mall and down towards Punggol Waterway Park, you will notice clusters of young families and a steady flow of buses connecting the area to business parks in the northeast. This translates into consistent rental demand for reasonably priced units.

Purchase prices here are lower than in Tiong Bahru, while rents—especially for 3- and 4-room flats near Punggol MRT and good primary schools—can be surprisingly resilient, particularly during periods when new launch ECs and condos are still under construction. Investors comfortable with slightly longer commute times may achieve closer to neutral or mildly positive cash flow, especially if they secure a favourable bank loan package via Homejourney at Bank Rates .

5.3 Insider Example: Cross-Border Advantage (Woodlands)

Woodlands has transformed significantly over the years, especially with the Thomson-East Coast Line (TEL) improving connectivity and the planned Woodlands Regional Centre bringing new commercial activity. Walking from Woodlands MRT to Causeway Point and the civic centre, you will see a mix of older HDB blocks and newer ones, with the upcoming commercial developments likely to support demand from both Malaysian commuters and locals working in nearby industrial and business zones.

Because purchase prices in Woodlands are generally lower than in core central regions, yet rental demand is stable, gross yields here can be relatively healthy. For investors, this may translate into a better balance between rental yield and mortgage payment, particularly if you keep your LTV conservative and choose a competitive SORA-pegged loan from partner banks like DBS, OCBC, or UOB via Homejourney.

6. Reading Interest Rates, SORA, and Their Impact on Cash Flow

6.1 SORA, Fixed vs Floating, and Why It Matters

Most Singapore bank home loans today are either fixed-rate packages for an initial lock-in period or floating packages pegged to benchmark rates such as the Compounded Singapore Overnight Rate Average (SORA) plus a bank spread.^[3] According to market data, banks have recently offered fixed-rate mortgages in the approximate range of 1.55%–2.40% during locked periods, and floating packages (SORA plus spread) in the approximate 1.65%–2.30% range during promotional phases.^[3] HDB concessionary loans remain higher at 2.60%, prompting many borrowers to refinance to bank loans when eligible.

The choice between fixed and floating affects your cash flow stability. Fixed rates provide certainty but may be slightly higher initially. Floating SORA-based loans may start lower but can move with market rates. For an investment property where the rent partly offsets your instalment, you might be more comfortable accepting some floating-rate risk, especially if you build in sufficient cash flow buffer and use Homejourney’s real-time SORA tracking to monitor trends.

The chart below shows recent interest rate trends in Singapore:

By visually tracking how SORA and bank package rates have moved in recent months, you can better judge whether a current floating offer is at the high or low end of its recent range. Homejourney’s Bank Rates page helps you see these trends alongside current promotional packages from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Hong Leong Bank, Citibank, and others.

6.2 How Rate Changes Hit Your Monthly Cash Flow

Assume you took a S$900,000 loan at 1.8% for 25 years and then rates rise to 2.8%. A 1% hike in interest can easily increase your monthly instalment by several hundred dollars. If your rental income is already only slightly above your mortgage payment, that increase can wipe out your positive cash flow, turning a previously comfortable property into a financial strain.

This is why both MAS and experienced advisors recommend stress-testing your investment at higher assumed interest rates. Many analysts suggest running your numbers at 3%–3.5% interest for safety, even if current rates are below that, a practice echoed by financial commentaries that encourage stress-testing at 3.5%.^[2] Homejourney’s eligibility and affordability calculator allows you to test different rate scenarios quickly so you can see the impact on your monthly cash flow before committing.

7. Positive Cash Flow Property: How to Stress-Test Safely

7.1 Quick Cash Flow Checklist

To identify a positive cash flow property in Singapore, use this simple checklist:

Target gross rental yield of at least 3.5%–4% for mass-market condos or HDB units with strong demand, knowing that average yields are around 3.29% nationwide.^[4]
Aim for net rental yield comfortably above your expected mortgage rate (for example, 1–1.5 percentage points higher) to cover maintenance, vacancies, and rate hikes.
Ensure that even at a higher stressed interest rate (e.g., 3.5%), your rental income covers at least 90%–100% of the mortgage instalment plus fixed costs.
Maintain an emergency buffer of at least 6–12 months of mortgage instalments in cash or CPF OA to ride out vacancies or sudden repairs.

7.2 Practical Stress-Test Framework

You can structure your stress-test in three layers:

Base Case: Current interest rate, realistic rent, standard vacancy (1 month/year). Does the property at least break even on a net basis?
Moderate Stress: Interest rate +1%, rent –5%, vacancy 2 months/year. Are you still within a manageable top-up amount from your income?
Severe Stress: Interest rate +1.5%–2%, rent –10%, vacancy 3 months/year. In this scenario, are you still able to hold the property comfortably without risking default or fire-sale?

If your property only works under the ideal base case and collapses under moderate stress, you are effectively speculating on continued low interest rates and strong rental demand—riskier than many investors are comfortable with. Homejourney’s calculators and the in-depth analysis in Rental Yield vs Mortgage: Cash Flow Analysis for Safer Investing | Homejourney and 租金收益vs房贷：正现金流计算实战指南｜Homejourney安全投资 can guide you through more detailed “what-if” scenarios.

8. HDB vs Condo, Bank Loan vs HDB Loan: Impact on Returns

8.1 HDB vs Private Condo for Rental Yield

Historically, private condos can achieve moderately higher gross rental yields than HDB flats in certain locations, but HDB flats benefit from lower absolute prices and, for owner-occupiers, the ability to tap HDB loans and generous grants. Some data sources report slightly above-average gross yields in city-fringe and selected non-central districts, with yields around 3.5%–4% in places like Alexandra/ Commonwealth and Hougang/Punggol/Sengkang.^[3][4]

For pure investors (non-owner-occupiers):

Condos generally offer more flexibility to rent out immediately, attract expat tenants, and have facilities.
HDB units are subject to rules like the Minimum Occupation Period (MOP) before you can rent out the whole flat, though you may rent out rooms with conditions.
Condos often carry higher maintenance fees, which can erode net yield.

For owner-occupiers considering future rental income (for example, living in the unit first and renting out after 5–10 years), HDB can be a cost-effective entry, but you must factor in the rules around resale, upgrading, and eventual rental.

8.2 HDB Loan vs Bank Loan

Key differences between HDB loans and bank loans include:

Interest rate: HDB loan is pegged at 0.1% above the CPF Ordinary Account (OA) interest rate, currently 2.6% per annum. Bank loans can be lower initially, especially promotional SORA-based or fixed packages, but they fluctuate over time.
Downpayment: HDB loans require a smaller minimum cash downpayment, with the rest payable via CPF, which can help first-time buyers.
Flexibility: Bank loans may offer lower initial rates but come with lock-in periods; refinancing is possible but must consider legal and valuation costs.

For investors focused on investment return mortgage and long-term yield, bank loans obtained through multi-bank comparison on Homejourney can often provide a lower cost of funds than HDB loans, especially when you carefully manage refinance timings.

8.3 CPF Usage and Long-Term Implications

CPF OA funds can be used for downpayment and monthly instalments, but they also accrue interest at 2.5% per annum. When you use CPF for property, you must eventually refund the principal plus accrued interest if you sell, which effectively acts as a low-risk opportunity cost. Over-leveraging your CPF on a marginal-yield property may not be optimal compared to keeping more CPF for retirement.

Homejourney encourages users to consider both cash and CPF impacts, not only whether a property “pays for itself” on a monthly basis. Our calculators allow you to model CPF use vs cash for various properties you find on Property Search or Property Search .

9. Using CPF, TDSR/MSR, LTV, and ABSD in Your Investment Analysis

9.1 TDSR and MSR: How Much Can You Borrow?

Your maximum loan (and thus your monthly mortgage payment) is constrained by TDSR and MSR limits set by MAS and HDB. These rules ensure that your total monthly debt obligations do not exceed a defined share of your gross income. If your rental yield is attractive on paper but you can only borrow at a high interest rate or shorter tenure, your monthly instalment may still be too large for your cash flow comfort zone.

Instead of stretching to the maximum allowed by TDSR, consider borrowing less or extending tenure slightly to achieve a more comfortable monthly figure, then using rental income to build an emergency buffer. Homejourney’s borrowing power calculator at Bank Rates factors in these rules automatically when you input your income, age, and existing debts.

9.2 LTV, ABSD, and Multi-Property Portfolios

For investors holding or planning multiple properties, the combination of stricter LTV for subsequent properties and ABSD on additional purchases can significantly alter your return profile. A second investment property with higher ABSD and lower LTV may require substantial cash or CPF upfront, but the mortgage may be smaller and easier to cover with rent. Conversely, a high-LTV first investment property may appear more leveraged but can have attractive cash-on-cash returns if yields are solid.

Detailed strategies for multi-property financing, including managing LTV and ABSD safely, are covered in 多套房产融资策略全解析：Homejourney安全投资指南 and Financing Multiple Investment Properties Safely with Homejourney . Always consult a licensed advisor or Homejourney mortgage specialist before making high-leverage decisions.

10. Practical Decision Frameworks for Investors and Upgraders

10.1 Framework A: First Investment Property (Condo)

If you are a first-time investor buying a S$1 million mass-market condo near an MRT station, you can use this high-level decision flow:

Check current and historical rents in the development and surrounding projects via Projects or Projects Directory . Aim for a realistic rent, not the highest asking price.
Calculate gross and net rental yield as shown earlier, including vacancy and typical maintenance costs.
Use Bank Rates and Mortgage Rates to compare fixed vs SORA-based loans from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, CIMB, RHB, Hong Leong Bank, Citibank, and others.
Run cash flow under 2–3 interest rate scenarios (for example, 2.0%, 3.0%, 3.5%).
Ensure that in a moderate stress scenario, your personal income can comfortably support any monthly shortfall without compromising your lifestyle or savings goals.

10.2 Framework B: HDB Upgrader Keeping First Flat for Rent

Many Singaporeans consider keeping their first HDB as a rental property while upgrading to a condo. This can be a powerful wealth-building strategy, but only if the numbers and regulations align.

Key questions to ask:

Have you fulfilled the Minimum Occupation Period (MOP) for your HDB?
What realistic rent can your current HDB fetch based on block age, floor level, and proximity to MRT (for example, 8–10 minutes’ walk from Sengkang MRT vs 15 minutes from Buangkok)?
Does the rent from your HDB, after property tax and maintenance, substantially offset the mortgage payment on the condo you are buying?
How will ABSD and LTV rules apply when you own both properties?

Homejourney’s integrated approach—combining property search, loan comparison, and expert articles such as 新加坡房产投资融资完整指南：Homejourney安全投资全攻略 —helps you weigh these factors in one place instead of guessing piecemeal.