Types of Home Loans in Singapore: FAQ Comparison Guide by Homejourney

Choosing between the different types of home loans in Singapore can easily change your monthly instalment by hundreds of dollars, and affect how safely you manage debt over 20–30 years. This guide gives a Types of Home Loans in Singapore Complete Comparison: Frequently Asked Questions breakdown, so you can decide confidently and safely with Homejourney as your trusted mortgage partner.

This article is a focused FAQ companion to our main pillar guide: Types of Home Loans in Singapore: Complete Comparison Guide by Homejourney Types of Home Loans in Singapore: Complete Comparison Guide by Homejourney . Here, we zoom into the most common questions Singapore buyers ask about mortgage types, fixed rate vs floating, SORA loans, and home loan comparison strategies.

Key Types of Home Loans in Singapore (Quick Overview)

In Singapore, most owner-occupiers and investors deal with four main mortgage types:

HDB Concessionary Loan – For eligible buyers of HDB flats only, from HDB directly, at a rate currently pegged at 2.6% per annum (0.1% above CPF Ordinary Account rate). [Fact based on HDB policy; check HDB for latest.]
Bank Home Loans (Completed Properties) – For HDB and private properties, offered by banks like DBS, OCBC, UOB, HSBC, Standard Chartered, Maybank and others, with fixed or floating interest rate packages.
SORA-pegged Floating Loans – Bank loans where the interest is calculated as SORA benchmark + bank spread, now the standard floating benchmark under MAS’ transition from SIBOR/SOR.[1][9]
BUC (Building-Under-Construction) Loans – Progressive payment bank loans for new launches (condo/EC or HDB BTO) where instalments increase as construction stages are completed.[3][8]

For day-to-day decision-making, most Singaporeans compare HDB loan vs bank loan, and then within bank loans, fixed rate vs floating rate (especially SORA loans). Homejourney’s bank rates page lets you see live rates across all major banks in one place: Bank Rates .

HDB Loan vs Bank Loan: Which is Safer for First-Timers?

Many first-time buyers in estates like Punggol, Sengkang or Tengah start with the HDB loan because it feels “safer”. There is some truth to that, but trade-offs matter.

Key Differences: HDB Loan vs Bank Loan

Interest rate
HDB loan: 2.6% p.a. (stable, unchanged for many years).
Bank loans: Typically lower headline rates when you sign, but market-based and can go up or down over time.[1][2][3][7][9]
Loan-to-Value (LTV)
HDB loan: Up to 80% of purchase price or value (lower of the two), subject to eligibility.[1]
Bank loan: Up to 75% LTV due to MAS rules for residential loans.[1]
Minimum cash downpayment
HDB loan: As low as 0% cash; downpayment can be fully from CPF OA (subject to CPF rules).[1]
Bank loan: Minimum 5% of property price must be paid in cash; the next 20% can be CPF or cash.
Penalty & flexibility
HDB loan: No lock-in period or penalty for partial or full prepayment (very forgiving if you want to repay early).
Bank loans: Usually 2–3 years lock-in with penalties (often 1.5% of outstanding loan) if you redeem early or sell during lock-in.[2][3]

Local example: In my experience helping a young couple buying a 4-room resale flat in Tampines, they took an HDB loan first because their savings were tight – avoiding the 5% cash requirement made a huge difference. Five years later, when their income was more stable and interest rates had fallen, they refinanced to a bank SORA loan via a multi-bank comparison, saving about $300 per month in instalments. This “HDB first, bank later” path is common among conservative first-timers.

Practical rule of thumb:

If you value maximum safety and flexibility, expect to stay in your flat long term, and cannot easily set aside 5% cash, the HDB loan often makes sense.
If you have stronger cashflow and are comfortable with some interest rate risk, a bank loan can lower total interest paid – especially if you actively review and refinance through tools like Homejourney’s comparison engine.

Fixed Rate vs Floating Rate Home Loans (Including SORA)

Once you choose a bank loan, the next big decision is fixed rate vs floating. This is where many Singaporeans feel stuck, especially when SORA is moving.

How Fixed Rate Home Loans Work

A fixed rate home loan keeps your interest rate unchanged for a lock-in period, typically 2–3 years in Singapore.[2][3] After this period, the loan usually converts to a floating rate based on the bank’s board rate, FHR (fixed deposit rate) or a SORA-pegged formula.

Pros: Payment certainty; easier budgeting; protects you if rates rise sharply.
Cons: Initial rate may be slightly higher than floating; penalty if you refinance or fully redeem during lock-in.

As of late 2025, 2-year fixed rates for owner-occupied homes can be found in the 1.35–1.75% range for larger loans (exact rates vary by bank and loan size).[2][3] For up-to-date numbers, always check live bank offers on Homejourney’s bank rates page: Bank Rates .

How SORA Floating Loans Work

SORA (Singapore Overnight Rate Average) is the interest rate at which banks borrow from each other overnight in the Singapore money market, and it is now the main industry benchmark replacing SIBOR and SOR under MAS’ roadmap.[1][7][9] A SORA-based loan typically looks like 3M SORA + bank spread, where SORA refreshes every 1 or 3 months and the spread is contractually fixed.

Pros: Historically lower initial rate than fixed; transparent benchmark published by MAS; you may benefit if SORA trends down.
Cons: Instalments can rise when market interest rates climb; harder for risk-averse owners to sleep well.

The chart below shows recent interest rate trends in Singapore:

Looking at the past few years, SORA has moved in line with global interest rate cycles driven by US Federal Reserve policy, which explains why home loan rates in Singapore fell from the 2023–2024 highs into 2025 as expectations turned towards easing.[7] That is why many banks’ floating packages, such as 3M SORA + 0.40–0.60%, have become more attractive again.[3][9]

Who Should Choose Fixed vs Floating?

Based on what I see on the ground in places like Jurong West and Pasir Ris, many young families prefer fixed rates when they first upgrade (say from a 4-room HDB to an EC), because they are juggling childcare, car loans and elderly parents – certainty matters more than squeezing out every last dollar of savings.

Consider fixed rate if:
You are risk-averse, have tight monthly cashflow, or expect to stay in the property for at least the lock-in period.
Consider SORA floating if:
You have strong savings buffers, can handle fluctuations, and believe rates may fall or stay subdued over the next 2–3 years.

For deeper comparison tables and scenario analysis, see our specialist guides:
Fixed Rate vs Floating Rate Mortgage: Which to Choose via Homejourney
Fixed vs Floating Home Loans: Bank Rate Comparison Guide | Homejourney
Fixed vs Floating Rate Mortgage: Which to Choose in Singapore | Homejourney