Buying An HDB Resale Flat: What Will It Really Cost?

What Are The Steps, And How Long Do They Take?

Buyers no longer register an Intent to Buy. You start with an HDB Flat Eligibility (HFE) letter: it is free, online only and valid for 9 months, and it shows the grants and HDB loan you could get. You need it before a seller can grant you an Option to Purchase (OTP) if you want an HDB loan. The seller must have registered an Intent to Sell for more than 7 days.

1. Option to Purchase. You pay an Option Fee of S$1 to S$1,000. The OTP lasts 21 calendar days and expires at 4pm.
2. Request for Value. Using CPF or a loan? Submit it by the next working day. The fee is S$120, and the result usually takes 10 working days.
3. Exercise the OTP. Wait for the value first. A bank loan needs a Letter of Offer by now. Option and exercise fees together are at most S$5,000.
4. Resale application. You and the seller each submit your part. HDB accepts a complete application within 28 working days.
5. Completion. Documents come about 3 weeks after acceptance, approval about 2 weeks after you pay, and completion about 8 weeks after acceptance at the earliest.

How Much Cash Do You Need Up Front?

A housing loan and your CPF are based on the lower of the price and HDB’s value of the flat. Agree a price above the value and the difference, called Cash-Over-Valuation (COV), must be paid in cash. Loans and CPF cannot cover it.

Of the lower figure, you then pay an initial payment. With an HDB loan it is 25%, from cash or CPF Ordinary Account (OA) savings. With a bank loan at 75%, it is also 25%, but at least 5% must be cash. With a bank loan at 55%, it is 45%, at least 10% in cash. The option money you pay the seller is part of the price.

What Does A S$600,000 Flat Really Cost?

Take a couple of first-timer citizens earning S$11,000 a month. They agree S$600,000 for a 4-room flat that HDB values at S$580,000, and take an HDB loan.

• Cash-Over-Valuation, cash only: S$20,000
• HDB loan, 75% of S$580,000: S$435,000
• Initial payment, 25% of S$580,000: S$145,000
• Buyer’s Stamp Duty on S$600,000: S$12,600
• Cash and CPF needed before grants: S$177,600

If they qualify for the S$80,000 CPF Housing Grant (Family), their own money falls to S$97,600, plus fees. At an assumed 2.6% a year over 25 years, the loan costs about S$1,973 a month.

HDB Loan Or Bank Loan: Why Do The Numbers Differ?

Both lend up to 75% of the lower of price and value. For an HDB loan, 75% is the limit since 20 August 2024, when HDB cut it from 80%. An HDB loan is cut below 75% if the lease will not last until the youngest buyer turns 95, and each of you may keep up to S$20,000 in your OA. A bank lends 55% if the loan runs past age 65 or over 25 years.

The tests differ too. For an HDB flat, repayments may not exceed 30% of income, the Mortgage Servicing Ratio (MSR). A bank loan must also pass the 55% Total Debt Servicing Ratio (TDSR), which counts your other loans. HDB tests at 3% a year or more, banks at 4% or more. On S$11,000 a month, the 30% limit is S$3,300 a month. Tested over 25 years at those rates (3% for an HDB loan, 4% for a bank loan), that supports about S$695,892 with an HDB loan but S$625,193 with a bank loan. Pick the same loan type in every calculator.

Which Grants Can Lower The Price?

First-timer families buying resale can get up to S$230,000 in CPF housing grants. HDB confirms the amounts in your HFE letter.

• CPF Housing Grant (Family): Up to S$80,000 for a 2- to 4-room flat, S$50,000 for 5-room or bigger, with household income up to S$16,000
• Enhanced CPF Housing Grant (EHG): Up to S$120,000, with household income up to S$9,000 and 12 months of work
• Proximity Housing Grant (PHG): S$30,000 to live with parents or a child, S$20,000 to live within 4km

You must qualify for the Family Grant before the EHG. The full EHG needs the lease to cover the youngest buyer to age 95. Grants go into your CPF and count towards the initial payment.

What Do Stamp Duty And Fees Add?

Buyer’s Stamp Duty is charged on the higher of the price and the value: 1% on the first S$180,000, 2% on the next S$180,000, then 3%, rising in bands. Citizens buying a first home pay no Additional Buyer’s Stamp Duty (ABSD); a household of Singapore Permanent Residents pays 5%. With an HDB loan, the mortgage also has stamp duty of 0.4% of the loan, up to S$500.

Add the S$80 resale application fee and legal fees. If HDB acts for you, its fee for the transfer is 13.5 cents per S$100 on the first S$30,000, falling to 9 cents, plus GST. CPF can pay stamp duty and legal fees, but agent’s fees are cash.

How Long Must You Live There?

The Minimum Occupation Period (MOP) is 5 years for most resale flats and 10 years for Plus and Prime flats. It starts from the date the purchase completes. Until it ends, you cannot sell on the open market, rent out the whole flat or buy private property. Months you do not live there do not count.

What Else Should You Budget For?

Renovation, furnishing and moving are paid in cash. CPF Board suggests a renovation budget with at least 10% set aside for surprises such as wiring and plumbing. An HDB loan needs fire insurance, renewed every 5 years, and if you take an HDB loan or use CPF, HDB asks for a health declaration for the Home Protection Scheme (HPS). Keep 3 to 6 months of expenses untouched as well.