Buying a home in Singapore isn’t just another purchase—it’s likely the single biggest financial commitment most people will ever make. And before you even start planning renovations or picking out furniture, there’s a critical first decision to make: how will you finance your flat?
For most buyers, that choice boils down to two options: an HDB loan or a bank loan. Both are popular, both come with unique advantages and trade-offs, and the right pick depends on your financial profile, appetite for risk, and long-term plans.
In this article, we’ll unpack the differences between HDB loans and bank loans across key factors like eligibility, interest rates, downpayment, loan tenure, and refinancing flexibility. By the end, you’ll have a clearer picture of which path fits your situation best.
Quick Comparison Table
Before we dive into the details, here’s a side-by-side snapshot of how HDB loans and bank loans stack up. Think of it as your cheat sheet for the rest of the article:
| Feature | HDB Loan | Bank Loan |
|---|---|---|
| Interest Rate | Fixed at 2.6% p.a. (stable, pegged to CPF OA +0.1%) | Starts lower (~2.2–2.5%), but usually floating after lock-in; can rise |
| Eligibility | Singapore Citizens only; income ceiling applies; cannot own private property | Open to Citizens, PRs, and foreigners; no income ceiling |
| Downpayment | 20%, fully payable with CPF (no cash needed) | 25%, with at least 5% in cash, remainder by CPF |
| Loan Tenure | Up to 25 years | Up to 30 years |
| Flexibility | No lock-in; no early repayment penalty | Typically 2–3 year lock-in; early repayment penalty applies during period |
| Refinancing | Can switch to a bank loan anytime (one-way only) | Can refinance to another bank after lock-in; cannot switch to HDB loan |
This overview sets the stage: HDB loans give you stability and flexibility, while bank loans offer potentially lower rates but come with stricter terms and cash requirements.
Eligibility: Who Qualifies?
Not everyone can pick freely between an HDB loan and a bank loan—eligibility rules play a big part in narrowing down your options.
HDB Loan
At least one buyer must be a Singapore Citizen.
Subject to income ceilings: S$14,000 for families, S$21,000 for extended families, and S$7,000 for singles under the Single Singapore Citizen scheme.
You cannot own private property or have taken more than two previous HDB loans.
Designed to support Singaporeans who need affordability and stability. (You can also check our HDB flat eligibility guide for a detailed breakdown of requirements.)
Bank Loan
Open to Singapore Citizens, PRs, and foreigners with valid passes.
No income ceiling—your earning capacity doesn’t disqualify you.
Approval depends mainly on your creditworthiness and the bank’s internal assessment.
Key takeaway: HDB loans are more restrictive, but they come with tailored benefits for Singaporeans who meet the criteria. Bank loans, on the other hand, are open to a wider pool of buyers, provided you have the financial standing to qualify.
Interest Rates: Stability vs Potential Savings
When it comes to home loans, the interest rate is often the biggest deciding factor—it determines how much you’ll actually pay over the years.
HDB Loan
Fixed at 2.6% p.a., pegged to the CPF Ordinary Account rate +0.1%.
Doesn’t change with market movements, so your monthly repayments stay stable.
Ideal if you value predictability and want peace of mind when budgeting.
Bank Loan
Often starts lower than HDB loans (around 2.2–2.5% in recent years).
Rates are typically fixed only for the first 1–3 years, then revert to floating rates linked to SORA (Singapore Overnight Rate Average).
Can mean significant savings in the short term, but monthly repayments may rise if market rates climb.
Key takeaway: If you prefer stability and certainty, the HDB loan wins. If you’re comfortable with some risk and want to chase lower costs, a bank loan may give you the edge.
Loan Tenure & Repayment Flexibility
How long you can stretch your loan—and how much freedom you have in paying it off—differs significantly between HDB and bank loans.
HDB Loan
Loan tenure of up to 25 years.
No lock-in period: you can refinance or fully repay anytime without penalty.
Generally more lenient if you face financial hardship, with options to restructure or defer.
Bank Loan
Loan tenure of up to 30 years, giving you smaller monthly instalments over the long run.
Comes with a lock-in period (usually 1–3 years), during which switching or repaying early triggers penalties.
Less flexible if your financial situation changes unexpectedly.
Key takeaway: HDB loans prioritise flexibility and borrower-friendly terms, while bank loans offer longer repayment horizons but tie you down with early repayment restrictions.
Downpayment & Cash Requirement
The downpayment is often where buyers feel the biggest pinch—especially if cash savings are tight.
HDB Loan
Requires a 20% downpayment, which can be fully paid using CPF Ordinary Account (OA) funds.
No mandatory cash component, making it friendlier for buyers with limited liquid cash but healthy CPF balances.
Bank Loan
Requires a 25% downpayment.
At least 5% must be paid in cash, with the rest allowed from CPF OA.
This upfront cash requirement can be a hurdle for buyers without sufficient savings.
Key takeaway: HDB loans are CPF-heavy and cash-light, while bank loans demand a higher cash outlay upfront, which could be a deciding factor for buyers balancing liquidity.
Refinancing & Switching Options
Your choice of loan doesn’t have to be permanent—refinancing can reshape your repayment journey. But the rules differ depending on where you start.
HDB Loan
You can switch to a bank loan at any time if market rates look more attractive.
Once you move, though, it’s a one-way street—you cannot return to an HDB loan.
Bank Loan
You can refinance to another bank after the lock-in period ends, often to secure a lower promotional rate.
However, you can never switch back to an HDB loan.
Key takeaway: Many homeowners adopt a hybrid strategy—start with the stability of an HDB loan, then refinance into a bank loan later to capture potential savings.
Pros and Cons Breakdown
HDB Loan
✅ Stable repayments – fixed 2.6% interest keeps things predictable.
✅ CPF-friendly – downpayment can be fully covered by CPF, no cash required.
✅ Flexible repayment – no lock-in, no penalties for paying off early.
❌ Higher interest rates (currently) compared to some bank packages.
❌ Strict eligibility rules – citizen requirement, income ceilings, no private property.
❌ Shorter tenure capped at 25 years.
Bank Loan
✅ Potentially lower rates – especially during promotional or low-interest periods.
✅ Wider eligibility – open to citizens, PRs, and foreigners, no income ceiling.
✅ Longer tenure of up to 30 years, reducing monthly instalments.
❌ Cash-heavy – at least 5% of downpayment must be cash.
❌ Variable rates – repayments can rise with market fluctuations.
❌ Penalties during lock-in if you repay or refinance too early.
Which Should You Choose? (Decision Framework)
There’s no universal winner—your ideal loan depends on your personal circumstances. Here’s a simple way to frame the decision:
Best for Stability & Peace of Mind → HDB Loan
Choose this if you prefer predictable repayments, want to minimise cash outlay, and value flexibility in repaying early without penalties.Best for Cost-Savings & Longer Tenure → Bank Loan
Go for this if you can handle the upfront cash requirement, are comfortable with fluctuating interest rates, and want a longer repayment horizon to lower monthly instalments.Hybrid Strategy: Start with HDB, Refinance Later
Many homeowners begin with an HDB loan for stability, then switch to a bank loan down the line to take advantage of lower market rates.
Guidance: Ultimately, your decision should align with your financial profile, risk appetite, and long-term housing plans. Run the numbers, weigh the trade-offs, and choose the path that supports your homeownership journey best.
At the end of the day, there’s no one-size-fits-all answer when it comes to choosing between an HDB loan and a bank loan. The “best” option hinges on your income, savings mix (CPF vs cash), risk tolerance, and long-term financial plans.
Before locking yourself in, run the numbers with a mortgage calculator to see how different scenarios play out over time. If you’re unsure, it may also be worth consulting a mortgage broker or property consultant who can tailor advice to your situation.
Before deciding, compare today’s interest rates and evaluate your CPF and cash reserves to see which option fits your homeownership journey best.
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