How To Check Your HDB Loan Eligibility


Choosing the right financing for your home is an important part of the homebuying process. You must decide whether you want to get a housing loan from a bank or HDB.

If you choose to get financing from HDB, then it’s important to know how to check your HDB loan eligibility.

In this post, we’ll discuss how to check your HDB loan eligibility and what determines the HDB loan amount that you can access. It’s vital to know the restrictions on applicants and the eligibility process.

Do your research beforehand so that you are aware of how to check your eligibility for a HDB loan and the documents you will need for a successful application.

Let’s take a look at some of these requirements now.

HDB Loan Eligibility Conditions And Terms

HDB offers housing loans to Singaporeans to enable them to purchase HDB properties at a concessionary rate. It offers housing loans at a rate of 2.6% per annum to those who meet the criteria for HDB loan eligibility.

The eligibility criteria are as follows:

  • You should be a Singaporean. In the case of joint ownership, one of the buyers should be a Singapore citizen.
  • You should not have taken two or more housing loans from HDB. The last owned property should not be private residential property. Housing and development company flats inherited or given as a gift are considered private property.
  • The income of singles who are looking to buy a five-room house or smaller flat or a new two-room flat in a non-mature estate should not earn more than $7,000 monthly. Families should not have a monthly income of more than $14,000. The monthly income of extended families  is capped at $21,000.
  • You should not have disposed of any private residential property within 30 months of applying for the housing loan. You should also not own more than one market or commercial property. If you own a stall or commercial property, you must be running your business from there and have no other source of income.
  • You qualify for a HDB loan if the property you want to buy has a lease that covers the youngest buyer in the family up to 95 years of age.
  • You must have a stable source of income and be able to pay for the monthly mortgage repayments. If your income is fixed, you must be receiving continuous income for the last three months. On the other hand, if your income varies, you must be in continuous employment for the last six months.

Alternatively, you must be in continuous employment or trade for at least six months.

HLE Letter Validity Period

HDB flat buyers must apply for a HDB loan eligibility (HLE) letter. The letter will advise whether you have met the HDB loan eligibility and credit assessment criteria.

It shows you the loan amount you qualify for, the interest rate, the loan tenure, and other terms and conditions.

You should apply for the letter if you:

  • Book a new flat with HDB
  • Want to take over the ownership of a flat by way of transfer
  • Wish to purchase the flat from a reseller and have submitted a resale application

Couples who are buying their first property or still in National Service can qualify for an income assessment deferment. All borrowers must have a HLE letter when they apply for a flat.

During the application process, you must have the following:

  • A valid Singpass
  • Income proof and supporting documents
  • Documents that you submitted to the HDB website

After the submission and authentication of the documents, the HLE letter will be assessed.

A loan offer will be offered if the letter is approved. It will be valid for six months. If there are no changes in your income and financial position during the six months, there will be no reassessment.

However, a reassessment may be required if any the following occurs:

  • The information given is untrue and incorrect
  • There are changes in your income and financial position and your family
  • You fail to meet any of the conditions and terms for purchasing the flat
  • Changes in the HDB policy have affected your eligibility

If you purchase an incomplete HDB flat, there will be an assessment when it is complete. This is to confirm there are no changes in your financial position that may hinder you from paying the loan.

Credit Assessment Criteria

Before you apply for a HLE letter, you need to have all the income documents.

During the HLE process, the lender will carry out a credit assessment. The documents needed depend on your current work situation, and they are as follows:

  • Those who are employed and contribute towards their CPF savings will need to submit a payslip or recent letter from the employee with the employment details. You will need to include your CPF contribution history
  • If you are not contributing towards CPF, you will need to submit six months of payslips preceding the month of application, a credit bureau report, and six months of bank statements
  • Self-employed borrowers should submit a Notice of Assessment from IRAS or a certified annual statement of accounts from the audit firm
  • Part-time and odd job workers should submit a six-month statement, the most recent 15-month CPF contribution history, a credit bureau report, and the most recent six-month bank statements
  • If you are unemployed, submit your proof of income for the preceding months from the previous employer and your CPF contribution history. Students can submit their student pass or a letter from the institution of study.

During the assessment, the following income is not considered:

  • Alimony or maintenance fees
  • Bonuses and directors’ fees
  • Claims or reimbursement of expenses
  • Dividend income or interest from deposit accounts.
  • Income from ad hoc overtime work
  • National Service Allowance
  • Occupier’s income or overseas cost of living allowance
  • Pension
  • Rental income
  • Scholarship travel allowance

If you are applying for your second HDB loan, you will need to submit additional documents such as:

  • A completion statement, which shows how the proceeds received were administered
  • Divorce documents showing the division of the HDB flat, if applicable

How, Where, And When To Apply For A HDB Housing Loan

Here is the procedure to follow when buying a flat through HDB.

  • Register your intent to buy. This triggers the assessment of your eligibility.
  • Apply for a HLE letter from the HDB website. You will need to have your Singpass. The letter indicates the amount you are eligible for, interest, and loan tenure.
  • After receiving the HLE letter, you can visit the HDB page and apply for the loan.

Factors That Determine How Much Housing Loan You Can Get

The loan amount you can get from HDB depends on several variables. Here are the main factors that determine the maximum HDB loan you can get.

Income And Employment

The housing loan amount you can access depends on your income. It’s important to be able to make monthly repayments.

Age And Loan Tenure

The loan-to-value (LTV) ratio is capped at 55% if the loan tenure exceeds 25 years or if the loan tenure extends beyond 65 years.

This means if you take a loan, you must be able to pay it back by the time you turn 65. To enjoy a higher LTV, you must be able to pay the loan before you turn 65.

Number Of Outstanding Home Loans

If you have an outstanding loan, the LTV of the second loan falls to 45%. The balance of 55% is the downpayment you will need to pay. Out of which, half must be paid in cash. You can use your CPF funds for the rest.

Those with two outstanding loans get an LTV ratio of 35% for a loan with a tenure of fewer than 30 years.

Remaining Lease On The Property

Properties with a lease term of 36 to 40 years left on the lease have a maximum LTV of 60%. You are allowed to pay up to 15% of the property price using your CPF funds.

If you opt for a property with a lease of less than 30 years, then you will not qualify for a loan.

Credit Rating

Your credit rating will determine how much the lender is willing to give for the property. If it considers it a risk to lend you the money, the LTV will fall.

Property Location And Condition

The LTV you can access can decrease based on the location and state of the property. Run-down properties and those with defects will cause a lender to offer a lower LTV.

In addition, if a property is located in an undesirable location, you may receive a lower LTV.

Can You Use Your CPF?

You can use your CPF funds to purchase a HDB flat. First-time Build-To-Order (BTO) buyers can use all of their CPF funds, with the exception of $20,000, to purchase the property. The $20,000 is set aside for future needs.

CPF savings can be used to pay for your HDB flat, repay the housing loan, pay for the stamp duty, legal fees, and other related costs. You can also use your CPF savings to cover the cost of upgrading your HDB flat under the HDB main upgrading programme.

You can’t use your CPF savings for the following:

  • To pay booking fees or deposits to HDB sellers
  • Paying the resale levy
  • To cover the cost of construction, improvement, or repairs to your HDB flat
  • Monthly service and conservancy fees
  • To repay non-housing loans

Be Clear About What HDB Loan Eligibility Entails

Now that you know how to check your eligibility for an HDB loan, it’s time to get started on the process. Fortunately, the process is straightforward and can be done entirely online.

With a few clicks, you’ll be able to find out whether you qualify for a HDB loan and how much you will be able to borrow. Get started on the process now and you will be on your way to owning a home.

Those looking to buy a home and need the finances to pay for expenses not covered in their CPF savings and HDB loans can turn to Katong Credit.

We offer loans at lower interest rates and instant approval. Contact us today or apply for a loan now to kickstart your journey to owning a home.

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