HDB loan vs bank loan for a resale flat: eligibility, interest rates, and the LTV difference
HDB loan vs bank loan for a resale flat: eligibility, the 2.6% rate, LTV, MSR and TDSR compared, now that both loans share the same 75% loan-to-value cap.
The LTV gap that used to decide this for you is gone. Now it actually takes some thinking.
For years, the HDB loan vs bank loan conversation had a shortcut answer: HDB loan if you wanted to borrow more with less cash, bank loan if you wanted a cheaper rate and had cash to spare. Since the loan-to-value limit for HDB loans was cut from 80% to 75% in August 2024 — putting it level with the bank loan cap — that shortcut doesn't work any more. Both now cap your loan at 75% of the flat's price or valuation, whichever is lower. The real differences live elsewhere now, and they're the kind that only show up once you're comparing actual numbers, not headline percentages.
This is for the resale buyer standing at the fork: eligible for both, and trying to work out which one actually saves money and stress over a 25-year commitment. If you're not eligible for an HDB loan — income above the ceiling, or you've already used up your two-loan lifetime allowance — this decision is already made for you, and you can skip to the LTV and TDSR sections to understand what you're working with on the bank side.
HDB Loan vs Bank Loan — the comparison
| HDB Loan | Bank Loan | |
|---|---|---|
| Loan-to-Value (LTV) cap | 75% of price/valuation (aligned with bank loans since 20 Aug 2024) | 75% of price/valuation |
| Minimum cash down payment | 0% — the full 25% down payment can be paid via CPF OA, cash, or a mix | Minimum 5% cash; remaining 20% via CPF or cash |
| Interest rate | 2.6% p.a., pegged 0.1% above the CPF OA rate — has stayed stable for over a decade because the peg itself hasn't moved since the early 1990s | Floating (SORA-pegged) or fixed-rate packages that move with the bank's board rate — check current rates, as these shift more often than the HDB rate |
| Income ceiling | $16,000/month (families), $8,000/month (singles), $24,000/month (extended families) — HDB's revised ceiling from 24 August 2026 | No income ceiling |
| MSR (Mortgage Servicing Ratio) | Applies — capped at 30% of gross monthly income | Applies — capped at 30% of gross monthly income (MSR applies to any loan used to buy an HDB flat, HDB or bank) |
| TDSR (Total Debt Servicing Ratio) | Does not apply | Applies — capped at 55% of gross monthly income across all your debt obligations |
| Citizenship requirement | At least one buyer must be a Singapore Citizen | No citizenship restriction — subject to the bank's own credit criteria |
| Lifetime loan limit | Maximum two HDB concessionary loans in a lifetime | No cap on number of bank loans, subject to eligibility each time |
| Lock-in / early repayment | No lock-in period, no penalty for prepayment or full early redemption | Typically 2–3 year lock-in with penalty for early full redemption or refinancing within that window |
Where each one actually wins
The HDB loan's real advantage was never really the LTV any more — it's the zero mandatory cash requirement. If you're CPF-rich but cash-poor, which describes a lot of first-time resale buyers in their early 30s, being able to fund the entire 25% down payment through CPF OA without finding 5% in cash upfront is a genuinely different experience at the point of sale. Add the fact that HDB loans carry no lock-in penalty, and it's a loan you can refinance out of the moment a better bank package appears, with nothing lost.
The bank loan's advantage is largely about rate — when SORA-pegged packages sit meaningfully below 2.6%, and they often do in a low-rate environment, the interest savings over 25 years can be substantial, and unlike the HDB rate, a bank package with no lock-in on refinancing lets you keep chasing the best rate every couple of years. The trade-off is you're taking on TDSR exposure across your entire debt profile — car loan, credit cards, any other property loan — not just MSR on this one purchase. If you're carrying other debt, that 55% ceiling can bind before the 30% MSR does.
The honest trade-off
Here's what I tell clients who assume "HDB loan is always safer": it's safer on cash flow, not necessarily cheaper over the life of the loan. A 2.6% rate that's stable for 25 years is genuinely valuable insurance against a rate cycle turning against you — but if you have the cash buffer for the 5% minimum and the discipline to refinance every few years, a bank loan has, in most rate environments over the past decade, worked out cheaper in total interest paid. There's no universally correct answer here; there's only the correct answer for your own cash position and risk tolerance.
My take
If you don't have 5% of the purchase price sitting in cash outside your CPF and emergency fund, the HDB loan isn't just the safer choice — it may be the only realistic one, and that's fine. If you do have that cash buffer, run both scenarios properly before deciding on rate alone; the MSR and TDSR mechanics change what you can actually borrow, not just what it costs. I built the HDB buyer calculator on the site to run exactly this side-by-side, using your actual income and the flat's price.
If you want me to run your specific numbers — income, other debts, and the flat you're eyeing — against both loan types before you commit to an HFE letter, message me on WhatsApp or book a slot and we'll work it out properly.
Run the numbers with the Monthly Mortgage Calculator or check your upfront costs with the Stamp Duty Calculator (BSD/ABSD).
Sources: Verified against HDB (hdb.gov.sg) — Interest Rate and loan eligibility pages, and MAS (mas.gov.sg) — MSR and TDSR rules explainer — 2 September 2026. LTV, income ceiling, and interest rate figures reflect the framework in place following HDB's 20 August 2024 loan-to-value revision and the 24 August 2026 income ceiling increase; confirm current bank loan rates directly with individual banks, as these are reviewed far more frequently than HDB's concessionary rate.