Planning your finances before applying for a HDB BTO flat
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Planning your finances before applying for a HDB BTO flat

Apr 2023
Sep 2022
Havelock Hillside, a new project under the prime location public housing (PLH) model in the August 2022 BTO launch
  • Getting a new HDB BTO flat is not simply an “apply first, think later” act
  • Refer to our BTO payment timeline to know when and how much you’ll need to fork out
  • Your income will affect how much you can borrow for the home loan
  • Be realistic with your finances, keep track of your spending, and start investing early through Endowus.

Mapping your finances before applying for a HDB BTO flat

Since the pandemic hit, waiting times for new Build-To-Order (BTO) projects have been getting longer

What’s more, there’s a chance some couples might not even get a queue number

In anticipation of such hurdles, more young Singaporeans in their 20s are starting to adopt the “apply first, think later” mindset for BTO flats. This is despite the fact that many have not begun drawing a salary, or have only recently joined the workforce.

Have you assessed your financial situation to know what you can afford? Here’s a quick guide to help you plan your finances before applying for a BTO flat.

Budget to know what you can afford

With the Singapore government now building more public housing in prime locations, the price range of new BTO flats has widened — homes in non-mature estates may start from around $300,000, while those in mature estates could command upwards of $700,000.

In the recent August 2022 launch, a four-room flat costs up to $363,000 in Choa Chu Kang (Keat Hong Grange), and up to $730,000 in Bukit Merah (Havelock Hillside, pictured above). That’s a difference of almost $400,000. (Note: The Straits Times reported that those who have applied for a flat in the Aug sales exercise will only be informed of their ballot result around mid-October, instead of September. The delay is due to a large number of applicants in the August launch, HDB told ST.)

Evaluating your finances can help you decide whether you should apply for a BTO flat now, and how to select one that’s most suitable for you. This way, you won’t get stuck in the rat race with a hefty housing loan that empties your savings.

Firstly, knowing when and how much you need to pay throughout the long BTO purchase journey is vital to your financial planning. To illustrate the key sums you’ll have to fork out, Endowus has created a BTO payment timeline to show when you’d have to pay for expenses such as the application fee, stamp duties, and fire insurance. (The total estimated cost excludes mortgage payments.) 

Based on the timeline, if you are one of the lucky few to get a queue number, choosing a unit would mean forking out $45,000 for a four-room BTO flat worth $600,000, within the first six months from the date of application. 

Read more: Facing up to rising mortgage rates

Besides making sure you have enough cash on hand for these payments, consider also the other aspects of your financial situation, such as your income, expenses, savings, and any financial commitments.

Let’s put things into perspective with Jack and his fiancée, Jill, as an example. At age 23, they are applying for a BTO flat this year. They expect the home to be ready in five years, around 2027.

Young couple looking to buy a HDB BTO flat

Jack Jill
Current age 23 years old 23 years old
Current cash savings $30,000 $30,000
Occupation Student
(graduating in 2025)
(graduating in 2024)
Expected age when they move in 28 years old 28 years old
Expected monthly salary* at age 28 $4,500 $4,500
Expected cash savings at age 28 $50,000 $50,000
Expected CPF OA balance at age 28 $50,000 $60,000
Expenses in the next 1-2 years
(besides BTO purchase)
Overseas exchange programme and wedding Graduation trip, parents' allowance, and wedding

Note: To accumulate $30,000 in cash savings before graduation, many young adults have to rely partly on financial support from their parents, and/or save aggressively — the lion’s share of their monthly income — as they work part-time for a few years while juggling their studies.
*The median gross monthly income from work (excluding employer CPF) of full-time professionals aged 25-29 was close to $4,500, based on the Ministry of Manpower’s 2021 labour force report.

Source: Endowus

When Jack and Jill sign the agreement of lease, which may be when they are around the age of 24 years old, they will have to pay $45,000 (or $22,500 per person) if they choose a four-room BTO flat priced at $600,000. Based on their current cash savings of $30,000 each, that leaves each person with less than $10,000 for other short-term expenses such as their wedding and overseas travel.

On the other hand, if they choose a cheaper four-room BTO flat priced at $400,000, the couple will have to pay only $29,000 (or $14,500 per person), leaving them with about $15,000 each after paying for the application fee, a 5% downpayment, stamp duty, and legal fees.

Of course, the flip side of going for a cheaper BTO flat is that Jack and Jill will probably have to forgo some benefits that come with the pricier one. These may include closer proximity to an MRT station or schools, a higher-floor unit, or more convenience from better amenities in the neighbourhood.

Ultimately, this decision will depend on your financial commitments and goals. Weigh your options and priorities, and have an honest conversation about money matters with your partner if you plan to buy the flat as a couple.

Another factor to consider is the waiting time. Each BTO project will have an estimated date of completion. You also need to account for the time taken for key collection and renovation — these will add at least six months from the date of completion before you can actually move in.

In the August 2022 launch, the Keat Hong Grange project is expected to be completed in the fourth quarter of 2026, while Havelock Hillside is estimated to be completed about two years later, by the fourth quarter of 2028. 

A two-year difference can affect your income, which in turn determines how much you can borrow when it comes to the mortgage.

Getting a home loan: how much can you borrow?

Young couples may be able to defer the income assessment for a HDB home loan and housing grants. If you’re eligible, your income will only be assessed about three months before the completion date, instead of right now. By then, you would have worked for a few years and have accumulated more savings. 

Income is one of the key factors affecting how much of a loan you can take. This mortgage amount is an important indication of what you can afford over the long term, as you will need to repay it in monthly instalments, including interest — likely over the next couple of decades.

Here are a few considerations:

Loan-to-value (LTV) limit 

The LTV limit caps the maximum amount you can borrow. The current LTV limit is 85% for a HDB loan, and 75% for a bank loan. This means that if you take up a home loan from HDB, you can only borrow up to 85% of your home value, and the remaining 15% — the downpayment — has to be paid in cash or CPF.

With the staggered downpayment scheme, first-timer applicants below 30 years old can pay the downpayment in two instalments. For example, with a HDB housing loan, the couple only needs to fork out 5% when they sign the lease agreement and the remaining 10% during key collection. This will ease your financial burden in the earlier stages of financing your house. 

Mortgage servicing ratio (MSR)

The MSR refers to the portion of your salary that goes into repaying property loans. It’s capped at 30% of your gross monthly income. So in Jack’s example, if he earns $4,500 a month, he can only use up to $1,350 for the monthly loan repayment. 

Total debt servicing ratio (TDSR)

Similarly, TDSR limits how much you can borrow. It considers the portion of your pay that goes towards repaying all your monthly debt obligations, including non-property loans such as student loans, credit card loans, and car loans.

TDSR is set at a maximum of 55% of your gross monthly income. 

Considering both MSR and TDSR, if you buy a BTO flat that’s more expensive than what your salary can cover, then the rest of the monthly loan repayments will have to come out of your savings.

Going back to the example of Jack and Jill, they may be able to afford a new four-room flat that costs up to $800,000 — including a HDB loan of about $595,000 — based on estimations using this budget calculator by HDB

But that’s assuming their income assessment for the loan is deferred till they’re 28, they each have a $4,500 monthly salary and $50,000 in cash savings by then, and if they have no other financial commitments besides the mortgage.

HDB or bank loan?

Choosing between a HDB loan and a bank loan will depend on your financial situation and the interest rate environment.

HDB loans have a fixed interest rate at 2.6%. Bank loans come in a variety of packages with floating rates, fixed rates, and hybrid options. Floating rates for home loans are typically pegged to the Singapore Overnight Rate Average (Sora) benchmark, which can change and is often influenced by US interest rates.

Whether you take out a mortgage from HDB or a bank can affect your financial planning, as the loan amount, the monthly instalments, and the mode of payment will be different. Here’s a quick summary: 

HDB loan Bank loan
Interest rate 2.6% 2.6% onwards
(fluctuates over time)
LTV limit 85% 75%
Downpayment 15% (cash or CPF) 5% (cash only) and
20% (cash or CPF)

With a 75% LTV limit for a bank loan, you will have to fork out a larger downpayment — 25% of the property value — which may not be feasible for some couples.

Hence, when deciding between a HDB loan and a bank loan, it is also important to consider how much available cash and CPF you have on hand for the downpayment. Note also that you can service your monthly housing loan repayments with CPF.

Read more: Spotlighting HDB loans amid rising interest rates

Estimated completion date and expected salary

The longer the BTO flat takes to complete, the more time you will have in the workforce before your income is assessed for loan eligibility. You could have more savings and a higher salary by then.

For example, if Jack applied for Keat Hong Grange during the August 2022 launch, he would have worked for only a year before the income assessment. On the other hand, if he applied for Havelock Hills, he would have three years to aim for a pay raise and build up his cash and CPF funds.

The expected salaries and savings they key into the HDB budget calculator would thus be different, depending on the BTO project they have in mind.

Grant eligibility

The income assessment also determines how much you can get from the Enhanced CPF Housing Grant. The higher your average household income bracket, the lower the amount of grant you can get.

Note that having a higher grant will also mean you’re bringing in a lower income, which affects your loan eligibility.

New property cooling measures

Meanwhile, Singapore regulators introduced on 30 Sept 2022 new property cooling measures, which included tighter maximum loan quantum limits for housing loans to ensure prudent borrowing and avoid future difficulties in servicing home loans.

Singapore regulators tightened the rules around HDB housing loans, lowering the loan-to-value (LTV) limit for HDB housing loans from 85% to 80%. In other words, the amount that HDB will lend to flat buyers will be no more than 80% of the price of the property.

Since both first-time buyers and buyers from lower-income families can access significant housing grants, the impact of the tightened LTV ratio should be limited for them. The tightened LTV limit will apply to new flat applications for sales exercises launched and complete resale applications that are received by HDB on or after 30 Sept 2022.

HDB’s concessionary interest rate of 2.6% p.a. is unchanged.

But for new applications for an HDB Loan Eligibility starting 30 Sept 2022, it will introduce an interest rate floor of 3% p.a. to calculate the eligible loan amount.

The Monetary Authority of Singapore (MAS) has also raised by 0.5%-point the medium-term interest rate floor used by private financial institutions to compute a borrower’s TDSR and MSR. The regulator said the move reflects higher interest rates expected over the medium term, compared to the period of exceptionally low rates from 2013 to 2021.

Source: MAS, MND

Be realistic with personal finances as a fresh grad

After securing a home with your partner, the next big expenses might include your wedding, honeymoon, and renovation costs. Don’t forget to also factor these costs into your financial planning. Make sure that you’re both on the same page when it comes to how you spend, save, and invest your money.

As a fresh graduate, it can be stressful as you step into adulthood. Many financial commitments that you may not have to worry about before — such as utility bills, taxes, and transportation — will start to surface and put pressure on your finances. 

Therefore, it is important to spend within your means and begin building an emergency fund

Here’s a simple illustration of how you can estimate your expenses and income with your first job, to kickstart your financial planning. Budgeting and tracking your money will also help you determine how much you can invest each month, even if you’re starting with only a small sum.

How much do you spend each month?

Gross monthly income* $3,800
Take-home salary
(after deducting 20% employee CPF contribution)
Cash savings
(20% of gross monthly income)
Amount available for spending and investing $2,280
Expenses and investments
Transportation $100
Utilities: water, electricity, broadband $120
Other bills: mobile phone, Spotify, Netflix, etc $80
Food $200
Insurance premiums $200
Parents’ allowance $300
Entertainment: nightlife, shopping, movie tickets, etc $400
Total monthly expenses
(excluding housing loan repayment)
Amount available for investments $880

*The median gross monthly salary among Singapore fresh graduates in full-time permanent jobs was $3,800 in 2021, according to a survey of university grads from NUS, NTU, SMU, and SUSS.

This breakdown includes some of the common financial commitments for a young adult in Singapore. To pay the monthly mortgage instalments, some individuals choose to use CPF OA savings instead of cash. 

After deducting your expenses and savings, the remaining amount of your monthly income can go into building an emergency fund as well as for investments.

Along the way, there may also be unforeseen circumstances such as job loss, illnesses, accidents, or a delay in the completion of the BTO project. These will disrupt your financial plans and goals. This is where your emergency fund would come in handy. 

Thinking ahead about the interim options available will also help relieve some of the financial impact and anxiety. For instance, you may discuss the possibility of staying with your parents or renting an apartment with your partner if the BTO project completion is held back.

Purchasing a BTO flat is a major decision, and you should not subscribe to the “apply first, think later” mindset.

As Endowus, we're here to help you plan ahead. Knowing what you can afford will give you peace of mind in managing your money and as you prepare for retirement.


Here are more articles and tools to help with your financial planning journey:

With digital wealth platform Endowus, you can plan and manage your money — whether held in cash, CPF, or SRS — by investing in globally diversified, intelligent, low-cost portfolios seamlessly. To get started, click here.


This article is for information purposes only and should not be considered as an offer, solicitation or advice for the purchase or sale of any investment products. It is recommended that you seek financial advice as to the suitability of any investment. Whilst Pte. Ltd. (“Endowus”) has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or typographical errors.

Any opinion or estimate above is made on a general basis and none of Endowus, nor any of its affiliates, representatives or agents have given any consideration to nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Opinions expressed herein are subject to change without notice.  

Investment involves risk. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Past performance is not an indicator nor a guarantee of future performance.

Please note that the above information does not purport to be all-inclusive or to contain all the information that you may need in order to make an informed decision. The information contained herein is not intended, and should not be construed, as legal, tax, regulatory, accounting or financial advice.

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Havelock Hillside, a new project under the prime location public housing (PLH) model in the August 2022 BTO launch

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