How to Find the Best Home Loan in Singapore: Mortgage Interest Rates Compared

Buying a home is a monumental step, but securing the best home loan can mean the difference between financial ease and years of unnecessary stress. With mortgage interest rates fluctuating and banks offering an array of packages, finding the right loan isn’t just about affordability—it’s about making your money work smarter. 

Whether you're financing an HDB flat or a private property, understanding the nuances of home loans could save you thousands in interest and fees. Let’s dive straight into what matters most: getting the lowest rates and the best terms for your dream home.

Type of home loans in Singapore

HDB loans for HDB properties

HDB loans are tailored for buyers of HDB properties, such as resale flats, Build-To-Order (BTO) flats, or Sale of Balance Flats (SBF). These loans are issued directly by the Housing & Development Board (HDB) and come with a fixed interest rate of 2.6%, which is calculated as the CPF Ordinary Account (OA) interest rate plus 0.1%. Only Singapore citizens are eligible for HDB loans, and applicants must meet specific criteria. This includes an income ceiling of SGD 14,000 for families or SGD 21,000 for extended families. Additionally, applicants must not own private property.

The Loan-to-Value (LTV) ratio for HDB loans is up to 75%, meaning buyers need to provide a 25% down payment, which can be fully paid using CPF OA savings. HDB loans are known for their leniency in repayment terms, offering a maximum tenure of 25 years or until the borrower reaches 65 years of age. To apply, buyers must first secure an HDB Flat Eligibility (HFE) letter. This document confirms the applicant’s qualification for the loan and provides details such as the maximum loan amount and monthly repayment schedule.

Bank loans for HDB properties

For HDB flat buyers who do not qualify for an HDB loan or prefer lower interest rates, bank loans are a viable alternative. These loans are offered by banks and financial institutions, with a variety of packages, including fixed, floating, or hybrid interest rates. Bank loans typically offer lower interest rates than HDB loans, with floating rates pegged to benchmarks like Singapore Overnight Rate Average (SORA) or fixed-rate options for greater stability.

The LTV ratio for bank loans is capped at 75%, requiring a 25% down payment, of which at least 5% must be paid in cash. The maximum repayment tenure for bank loans is 30 years, and many come with lock-in periods of 2–3 years. During this period, early repayment or refinancing may incur penalties. Bank loans are ideal for financially disciplined borrowers who can manage the risks of fluctuating interest rates and maintain a good credit score.

Bank loans for private properties

Private properties, including condominiums, Executive Condominiums (ECs), and landed homes, can only be financed through bank loans or other financial institutions. Buyers have the flexibility to choose from fixed, floating, or hybrid interest rate packages based on their risk tolerance and financial goals. Floating rates are often pegged to SORA, while fixed-rate packages provide stability for a specific period.

For the first property loan, the LTV ratio is up to 75%, requiring a 25% down payment, with at least 5% paid in cash, and the remaining 20% covered using CPF OA savings or additional cash. The maximum repayment tenure is 35 years, subject to the Total Debt Servicing Ratio (TDSR) of 55% of the borrower’s gross monthly income. 

Buyers of Building-Under-Construction (BUC) are advised to select loans without lock-in periods, allowing them to refinance later at potentially lower rates. For completed or resale properties, competitive fixed or floating rate loans are available. Applicants must provide supporting documents, such as income statements and the Option to Purchase (OTP), during the loan application process.

Differences between HDB loans and private home loans:

Best home loans for HDB flats 

When financing an HDB home in Singapore, choosing the right home loan is crucial to ensuring that your financial goals are met while minimizing potential risks. The decision on which loan to take depends on various factors, such as your long-term financial stability, the level of risk you're willing to accept, and your current income and expenses. As of January 17, 2025, here are some of the best home loan packages available for HDB flats offered in Singapore: 

Please note that interest rates and loan packages are subject to change based on market conditions and individual bank policies. It's advisable to contact the respective banks or visit their official websites for the most accurate and current information. Additionally, consider consulting with mortgage specialists to find a loan package that best suits your financial needs and circumstances.

Best home loans for private property

Before choosing a fixed-rate or floating-rate home loan for private properties in Singapore, it's essential to compare the latest offerings from various banks to find a package that aligns with your financial goals.

Some banks bundle HDB and private property loans under the same scheme, offering similar interest rates and terms. Others provide separate home loan options with differences in tenure, interest structures, or financing flexibility.

Here are some of the best home loan packages available for private property offered in Singapore: 

The interest rates and loan details provided in the tables are based on the most recent information available as of December 2024. However, please note that these rates are subject to change and may vary depending on individual circumstances and bank policies. For the most accurate and up-to-date information, it is advisable to consult directly with the respective banks or financial institutions.

Best home loans for Building-Under-Construction

Purchasing a property under construction, commonly known as a BUC property, offers several advantages, including the potential for capital appreciation and the ability to customize your home. However, financing a BUC property requires careful consideration of loan options tailored to the unique payment structure of such properties.

Home loan eligibility

Understanding the eligibility requirements for home loans in Singapore is essential to determine which type of loan suits your financial situation. To help understand home loan eligibility, we have prepared an in-depth read on the eligibility criteria for both HDB loans and bank loans.

HDB loans eligibility

HDB loans are tailored for Singaporeans purchasing public housing. The criteria ensure that these loans are accessible to those who genuinely need financial assistance for housing.

To qualify for an HDB loan, at least one applicant must be a Singapore citizen. The household income ceiling is set at SGD 14,000 for families and SGD 21,000 for extended families. Singles buying a 5-room or smaller resale flat must meet an income ceiling of SGD 7,000. Applicants must not own any private residential property locally or overseas or have sold one within the past 30 months. The flat must be owner-occupied and serve as the applicants' primary residence. Additionally, the loan tenure cannot exceed 25 years or extend beyond the age of 65. Borrowers can finance up to 80% of the flat’s valuation or purchase price, whichever is lower.

Bank loans eligibility

Bank loans are more flexible and cater to both public and private property buyers. However, they come with stricter financial assessments.

To qualify, borrowers must adhere to the Total Debt Servicing Ratio (TDSR), which limits total monthly debt obligations, including the home loan, to 55% of gross monthly income. The Loan-to-Value (LTV) ratio varies depending on the number of housing loans taken: up to 75% financing for the first loan, 45% for the second, and 35% for subsequent loans. A minimum down payment of 25%, with at least 5% in cash, is required for private properties. A good credit score and proof of stable income, such as payslips, CPF contribution history, and income tax statements, are also necessary. The property must meet the bank’s valuation standards, and the loan tenure is capped at 30 years for HDB flats and 35 years for private properties. Borrowers must not exceed the maximum age of 65 to 75 at the end of the loan tenure, depending on the bank.

By meeting these eligibility criteria, potential homeowners can increase their chances of securing a loan that aligns with their financial capabilities and housing needs.

HDB loans vs bank loans

Understanding the differences between HDB loans and bank loans is critical when choosing the right financing option for your home purchase. Here, we delve into how each loan type works, focusing on interest rates, loan-to-value (LTV) ratios, down payment structures, maximum age limits, and other key features.

HDB loans

HDB loans are provided directly by the Housing & Development Board (HDB) and are exclusively available for HDB flats. These loans come with a fixed interest rate of 2.6%, pegged at 0.1% above the CPF Ordinary Account interest rate. Borrowers can finance up to 75% of the flat’s valuation or purchase price, whichever is lower, with a minimum down payment of 25%, which can be fully covered using CPF savings.

The loan tenure is capped at 25 years, and the loan must not extend beyond the borrower’s age of 65. HDB loans do not have a lock-in period, providing flexibility for refinancing. However, they are only available to Singapore citizens meeting specific eligibility criteria, including income ceilings and property ownership restrictions.

Bank loans

Bank loans are offered by financial institutions and cater to both HDB flats and private properties. They provide a variety of interest rate packages, including fixed, floating, and hybrid rates. Floating rates are often tied to benchmarks like the Singapore Overnight Rate Average (SORA) or the Singapore Interbank Offered Rate (SIBOR), which fluctuate based on market conditions. Fixed rates typically range from 1.5% to 3% annually, depending on the bank and loan package.

The maximum LTV ratio for bank loans is 75% for the first housing loan, with subsequent loans having lower limits. A minimum down payment of 25% is required, with at least 5% paid in cash. Loan tenures are capped at 30 years for HDB flats and 35 years for private properties, and the loan must not extend beyond the borrower’s age of 65 to 75, depending on the bank’s policy. Bank loans often come with a lock-in period of 2 to 3 years, during which penalties may apply for early repayment or refinancing.

Key differences between HDB loans and bank loans

How to apply for a HDB loan?

Applying for an HDB loan involves several steps, ensuring that applicants meet eligibility requirements and provide the necessary documentation. The process differs slightly for Build-To-Order (BTO) flats and resale flats, with an additional step for BTO applicants. Here’s a comprehensive guide to applying for an HDB loan.

Step 1: Check eligibility for an HDB loan

Before applying for an HDB loan, it is essential to ensure that you meet the eligibility criteria. At least one applicant must be a Singapore citizen. The household income ceiling must not exceed SGD 14,000 for families or SGD 21,000 for extended families. For singles purchasing a resale flat, the income ceiling is capped at SGD 7,000. Additionally, applicants must not own or have disposed of any private residential property within the last 30 months. The flat being purchased must also be used as the primary residence.

Step 2: Obtain the HDB Flat Eligibility (HFE) letter

The HDB Flat Eligibility (HFE) letter is a mandatory document that confirms your eligibility for an HDB loan. This letter must be obtained before booking a flat for BTO applications or before signing the Option to Purchase (OTP) for resale flats. The HFE letter is valid for nine months from the date of issue.

List of documents required for HFE application

To apply for the HFE letter, prepare the following documents:

• Proof of Identity: NRIC for all applicants.
• Income Documents:
  • For employed individuals: Payslips for the last three months, CPF contribution history for the past 12 months, and the latest income tax notice of assessment.
  • For self-employed individuals: Income tax notices of assessment for the last two years and an accountant's certification of income.
  • For commission-based earners: Payslips for the last six months and CPF contribution history for the past 12 months.
  • For part-time workers: Payslips for the last 12 months and CPF contribution history.
• Other Supporting Documents: Divorce or separation documents (if applicable) and proof of other income sources like rental or investment returns.

How to apply for the HFE letter

To apply for an HFE letter, start by logging in to the HDB Flat Portal using your Singpass. Once logged in, navigate to the HFE application page and complete the online form with the required details. Next, upload all the necessary documents as specified by HDB. After ensuring that all information is accurate, submit your application. Approval typically takes around a month’s time, and you can track the status of your application conveniently on the HDB Flat Portal.

Step 3: Additional steps for HDB BTO flats

For BTO flats, once you have obtained the HFE letter, the next steps involve participating in the HDB BTO sales launch to select your desired flat. After choosing your flat, proceed to book it and pay the option fee, which can be done using CPF or cash. Following this, you will need to sign the Agreement for Lease and make the down payment.

Step 4: Steps for HDB resale flats

For resale flats, the process begins with obtaining the HFE letter before negotiating with the seller. Once this is done, secure the Option to Purchase (OTP) from the seller. Submit the resale application to HDB and pay the necessary fees. Finally, complete the resale transaction and take possession of the flat.

Step 5: Finalize the loan application

After securing your flat, finalize your HDB loan application by confirming the loan amount and repayment terms. You will then need to sign the necessary loan agreements with HDB and set up a GIRO arrangement for your monthly loan repayments.

Other vital aspects you need to consider

Ensure your HFE letter remains valid throughout the application process. Renew it if necessary. Be prepared to meet any additional requirements or provide supplementary documents if requested by HDB. For BTO applicants, monitor the timeline closely to ensure all steps are completed within the stipulated deadlines.

By following these steps, you can navigate the HDB loan application process smoothly, whether you’re purchasing a BTO or resale flat.

How to choose the best home loan in Singapore

Selecting the best home loan is a crucial step for anyone looking to purchase property in Singapore. With various options available, understanding the nuances of each loan type is essential to making an informed decision. Below are the key factors to consider:

1. Home Loan Interest Rates

The interest rate on your home loan significantly impacts your monthly repayments and the overall cost of borrowing. In Singapore, banks typically offer two main types of interest rates:

• Fixed Rates: These rates remain unchanged for a specified period, usually between 1 to 5 years. Fixed-rate loans are ideal for individuals who value repayment stability and want to avoid market fluctuations. However, they often start at a slightly higher rate compared to floating-rate loans.
• Floating Rates: These rates are pegged to benchmarks like the Singapore Overnight Rate Average (SORA) or previously the Singapore Interbank Offered Rate (SIBOR). Floating rates generally start lower than fixed rates but are subject to market changes, which can lead to fluctuating monthly repayments. This option suits those comfortable with potential rate increases and who prioritize lower initial payments.

2. Lock-In Period

The lock-in period is the duration during which you are required to maintain your loan with the bank, usually ranging from 2 to 5 years. Exiting the loan early, whether through refinancing or full repayment, may result in penalties during this period. When choosing a loan, consider your long-term plans and whether you may need financial flexibility in the near future.

When considering a home loan, several key factors should be carefully evaluated to ensure you make an informed decision. Start by assessing your financial situation. Take a close look at your income, savings, and any existing debts to determine a loan amount you can comfortably manage. This step is crucial to avoid overextending your finances. Next, compare loan offers from various banks and financial institutions. 

Utilize comparison tools and seek advice from financial advisors to explore different loan packages, focusing on their interest rates, terms, and features. Additionally, consider your future plans. If you anticipate selling the property or refinancing the loan within a few years, a package with a shorter lock-in period or no lock-in may be more suitable.

How to get a bank home loan

Securing a bank home loan in Singapore requires a systematic approach to ensure you meet eligibility criteria and understand the application process. Here’s a step-by-step guide:

1. Determine the Maximum Loan Amount

The Loan-to-Value (LTV) ratio sets the maximum amount you can borrow for a property. For bank loans in Singapore, the LTV is capped at 75% of the property’s value or purchase price, whichever is lower. The remaining 25% must be funded through your own resources, which can include cash and Central Provident Fund (CPF) savings.

2. Obtain In-Principle Approval (IPA)

An In-Principle Approval (IPA) is a preliminary assessment by the bank to determine your eligibility for a loan and provide an estimate of the amount you can borrow. 

When preparing to apply for a loan, assess your financial health to ensure your Total Debt Servicing Ratio (TDSR) does not exceed 55%. The TDSR is the percentage of your gross monthly income allocated to servicing all debt obligations, including the new home loan. Meeting this requirement is essential for approval. 

Gather the necessary documents, such as your NRIC, proof of income (e.g., payslips or Notice of Assessment), and details of existing debts. Once you have these documents ready, submit your application online or in person through your chosen bank. Upon approval, the bank will issue an In-Principle Approval (IPA), providing a clearer picture of your borrowing capacity.

3. Apply for the Home Loan

After receiving the IPA, you can proceed with the formal loan application process. Start by selecting a loan package that aligns with your financial needs and preferences. Consider factors such as fixed or floating interest rates, loan tenure, and lock-in periods. 

Then, provide the bank with the signed Sale and Purchase Agreement (SPA) along with any additional required documents. Upon final approval, the bank will issue a formal letter of offer. Once you accept the offer and meet any stipulated conditions, the loan will be disbursed in stages, depending on the construction progress of the property. 

Selecting the ideal home loan in Singapore

Selecting the right home loan is crucial for securing your dream property in Singapore. Whether you're considering an HDB flat, private property, or a BUC, it's essential to compare various loan packages to find one that aligns with your financial goals and risk tolerance. Fixed-rate loans offer stability with consistent payments, while floating-rate loans may provide lower initial rates but can fluctuate with market conditions.

Both HDB and private property loans come in fixed and floating-rate options, each with its own advantages. HDB bank loans may appeal to those looking for market-driven rates, while the HDB concessionary loan offers a stable 2.6% fixed rate. Private property loans, on the other hand, offer varied packages, allowing borrowers to choose between rate stability or potential savings through floating rates.

When it comes to BUC properties, specialized loans are designed to accommodate the unique needs of such purchases. These loans often feature progressive disbursements aligned with construction milestones and may offer competitive interest rates. It's important to understand the specific terms and conditions of these loans, as they can vary significantly between financial institutions.

Given the dynamic nature of interest rates and loan offerings, it's advisable to consult directly with banks or financial advisors to obtain the most current information. By thoroughly researching and comparing available options, you can make an informed decision that best suits your financial situation and homeownership aspirations.

Building Financial Stability Beyond Your Home Loan

Finding the best home loan is just one part of securing your financial future—growing your wealth over time is just as important. While your mortgage is a long-term commitment, platforms like StashAway allow you to invest your savings intelligently, ensuring your money is working for you even while you're repaying your loan. 

Whether it’s through General Investing or Supplementary Retirement Scheme (SRS) portfolios, StashAway offers low-cost, globally diversified investment options to help you build long-term financial security. By balancing homeownership with smart investing, you can achieve both property ownership and wealth accumulation for the future.