Understanding Singapore's Home Loan Types: Your Complete Comparison
Singapore offers three primary home loan structures—fixed-rate, floating-rate, and SORA-linked loans—each with distinct advantages depending on your financial situation and risk tolerance. Choosing the right loan type is one of the most important decisions you'll make as a property buyer, yet many Singaporeans rush through this decision without fully understanding how each option affects their monthly budget and long-term costs.
At Homejourney, we believe informed buyers make better decisions. That's why we've created this comprehensive guide to help you understand each loan type, compare rates across Singapore's major banks, and discover actionable strategies to improve your home loan approval chances. Whether you're a first-time buyer, upgrading from an HDB flat, or refinancing an existing mortgage, this guide will equip you with the knowledge to secure the best possible loan for your situation.
Fixed-Rate Home Loans: Predictability and Peace of Mind
A fixed-rate home loan locks your interest rate for a predetermined period, typically between one and three years.[1] During this lock-in period, your monthly repayments remain exactly the same, regardless of how market interest rates change. This predictability makes fixed-rate loans ideal for buyers who value budgeting certainty and prefer to know their exact housing costs for years in advance.
Fixed-rate loans typically come with lock-in periods and early-repayment charges, meaning if you want to refinance or pay off the loan early before the fixed period ends, you'll face penalties.[1] However, many banks offer flexibility options—such as the ability to convert to a floating rate after the fixed period expires or to make partial prepayments without penalty.
Current fixed-rate offerings in Singapore (January 2026): Promotional rates start as low as 1.25% for two-year fixed packages, with Maybank and Standard Chartered currently offering competitive rates around 1.65% for standard two-year fixed loans.[3] For HDB loans specifically, the rate is fixed at 2.6%, making it one of the most stable borrowing options available.[2]
Who should choose fixed-rate loans? First-time buyers who want certainty, borrowers with tight budgets who can't afford payment fluctuations, and those who plan to stay in their property for at least 5-7 years typically benefit most from fixed-rate structures.
Floating-Rate and SORA-Linked Loans: Flexibility and Potential Savings
Floating-rate home loans move with a benchmark interest rate set by the market, most commonly SORA (Singapore Overnight Rate Average).[1] When the benchmark falls, your monthly repayments decrease. When it rises, your instalments increase. These loans appeal to borrowers who monitor rates closely, can absorb payment changes, and believe interest rates will fall or remain stable.
SORA replaced the older SIBOR and SOR benchmarks starting in 2021, following regulatory changes by the Monetary Authority of Singapore (MAS).[2] Most major banks—including DBS, OCBC, UOB, HSBC, and Standard Chartered—now offer SORA-linked packages with spreads (the bank's margin above SORA) typically ranging from +0.25% to +0.65% depending on the bank and loan size.
The chart below shows recent SORA trends to help you understand how rates have moved:
As shown above, SORA rates have fluctuated significantly, making the timing of your loan decision important. Floating-rate loans often offer greater flexibility than fixed-rate options, with shorter lock-in periods (typically 1-2 years) and the ability to refinance more easily when rates shift.[1]
Current floating-rate offerings (January 2026): Promotional floating rates start as low as 1.14% (3M SORA + spread), with Standard Chartered and Maybank offering some of the most competitive spreads at +0.40% to +0.50% above 3M SORA.[3][4] For comparison, OCBC's 1M SORA package carries a +0.65% spread, while DBS offers 3M SORA at +0.50%.
Who should choose floating-rate loans? Borrowers who expect interest rates to decline, those planning to refinance within 3-5 years, investors seeking to maximize cash flow, and those comfortable with payment variability typically benefit from floating-rate structures.
Fixed vs. Floating: Making the Right Choice for Your Situation
The decision between fixed and floating rates depends on three key factors: your risk tolerance, your financial flexibility, and your market outlook.
Choose fixed-rate if: You have a tight monthly budget and cannot absorb payment increases; you're a first-time buyer who values certainty; you plan to stay in your property for 7+ years; or you believe interest rates will rise significantly.
Choose floating-rate if: You have financial flexibility to handle payment changes; you plan to refinance within 3-5 years; you believe rates will fall or remain stable; or you want to maximize early-year savings and don't mind higher payments later.
Many savvy borrowers use a hybrid approach: starting with a fixed-rate loan for the first 2-3 years to lock in low rates and build equity, then refinancing to a floating rate if market conditions improve. Homejourney's bank rates comparison tool lets you see both fixed and floating options from DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other major banks side-by-side, making this comparison instant and transparent.
Bank Loans vs. HDB Loans: Understanding Your Financing Options
Singapore buyers have two distinct financing pathways: bank loans for private properties and HDB loans for public housing. Understanding the differences is crucial for making the right choice.
HDB Loans: Available only for HDB flats (both new and resale), HDB loans offer a fixed interest rate of 2.6%, a lower 10% down payment (split into two payments), and lenient repayment terms.[2] The loan-to-value (LTV) ratio reaches 80%, meaning you can borrow up to 80% of the property's value. HDB loans are known for being flexible on repayment, making them ideal for buyers prioritizing affordability and stability.
Bank Loans: Available for private properties (condos, landed homes, EC units) and HDB flats (as an alternative to HDB loans), bank loans typically offer interest rates ranging from 3.7% to 5.5%, with current promotional rates much lower.[2] The standard LTV ratio is 75%, though some banks offer up to 80% for qualified borrowers. Bank loans provide greater flexibility in terms and repayment options compared to HDB loans.
| Feature | Bank Loan | HDB Loan |
|---|---|---|
| Interest Rate | 3.7% - 5.5% (promotional rates from 1.25%) | 2.6% (fixed) |
| Loan-to-Value (LTV) | 75% (up to 80% for qualified borrowers) | 80% |
| Down Payment | 20-25% | 10% (split into 2 payments) |
| Flexibility | High (various repayment options, refinancing) | Moderate (lenient but less flexible) |
| Property Type | Private properties, condos, landed homes, EC | HDB flats only |
How to Improve Your Home Loan Approval Chances: A Strategic Approach
Getting approved for a home loan isn't guaranteed, and the approval process can feel uncertain. However, understanding what banks assess and taking strategic steps before applying significantly improves your chances. Here's how:
1. Strengthen Your Credit Profile
Banks assess your creditworthiness before approving any loan. Start by checking your credit report with the Credit Bureau Singapore (CBS) to identify any issues. Pay all bills on time for at least 6-12 months before applying, as recent payment history carries significant weight. Clear any outstanding debts or credit card balances if possible—banks prefer to see borrowers with low existing debt levels, as this improves your debt-to-income ratio.
2. Understand and Optimize Your TDSR (Total Debt Service Ratio)
The TDSR is the percentage of your monthly income that goes toward all debt repayments, including the new home loan. Singapore's MAS caps TDSR at 60%, meaning your total monthly debt payments (including the new mortgage) cannot exceed 60% of your gross monthly income. To improve approval chances, aim to keep your TDSR below 55% if possible, as this provides a safety buffer and makes your application more attractive to banks.
Calculate your TDSR before applying: Add all your monthly debt obligations (car loans, credit cards, personal loans, existing mortgages) plus the estimated new home loan payment, then divide by your gross monthly income. If your TDSR exceeds 60%, you'll need to either increase your income, reduce other debts, or look at lower-priced properties.
3. Increase Your Down Payment
While the minimum down payment is typically 20-25% for private properties and 10% for HDB flats, putting down more than the minimum significantly strengthens your application. A larger down payment reduces the bank's risk, demonstrates your financial commitment, and may qualify you for better interest rates. If possible, aim for a 25-30% down payment to stand out as a strong applicant.
4. Maintain Stable Employment and Income
Banks prefer borrowers with stable, verifiable income. If you're self-employed or have recently changed jobs, expect additional scrutiny. Ideally, stay in your current position for at least 6-12 months before applying. If you've recently received a promotion or salary increase, document this with your employment letter and latest payslips—banks may use your new income level for calculations.
5. Gather Strong Documentation Early
Having all required documents ready before applying accelerates the process and demonstrates professionalism. Essential documents include: recent payslips (last 3 months), employment letter with salary confirmation, income tax returns or Notice of Assessment (NOA) for the last 2 years, bank statements (last 3-6 months), CPF statements, proof of down payment funds, and identification documents. For self-employed borrowers, prepare audited financial statements and business registration documents.
6. Use Homejourney's Eligibility Calculator Before Applying
Before submitting applications to banks, use Homejourney's mortgage eligibility calculator to understand your borrowing power instantly. This tool factors in your income, existing debts, and property price to show you exactly how much you can borrow and what your estimated monthly payments will be. Knowing your eligibility beforehand prevents wasted applications and helps you target properties within your realistic budget.
7. Apply Through Multiple Banks Simultaneously
Don't apply to just one bank—different banks have different lending criteria and rate offerings. Homejourney's multi-bank application system lets you submit one application that reaches DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank, and other major banks simultaneously. This approach increases your approval chances and lets you compare offers side-by-side. Multiple applications within a short timeframe (typically 2 weeks) count as a single inquiry on your credit report, so there's no penalty to your credit score.
8. Consider Using Homejourney's Mortgage Brokers
Homejourney's mortgage brokers provide personalized guidance throughout the application process. When you apply via Homejourney's bank rates page, you can connect with brokers who understand Singapore's lending landscape and can advise on which banks are most likely to approve your application based on your profile. They also help optimize your documentation and can sometimes negotiate better rates on your behalf.
