The short version
- Your loan is capped by the Total Debt Servicing Ratio (TDSR): all monthly debt repayments cannot exceed 55% of your gross monthly income.
- With no existing housing loan, a bank loan can cover up to 75% of the price, so you need a 25% downpayment, with at least 5% in cash.
- CPF Ordinary Account savings can fund the rest of the downpayment and your instalments, within CPF limits.
- On a new launch the loan is drawn in stages, so your repayments rise gradually.
Most buyers need a bank loan, and the loan rules decide how much home they can afford. This guide explains the rules in plain language. The numbers in the examples are illustrations, not Thomson Reserve prices or bank rates.
1. TDSR: the income test
Under the Total Debt Servicing Ratio, your total monthly debt repayments, including the new home loan, car loans, personal loans and credit card minimums, cannot exceed 55% of your gross monthly income. Banks also test the loan at a higher stress-test interest rate, not the rate you will actually pay, so the loan you qualify for is lower than a simple calculation at today's rates would suggest. Joint buyers can combine incomes.
Worked example. Suppose your household earns $15,000 a month with no other debts. Your TDSR limit is $8,250 a month. At a stress-test rate of 4% over 30 years, that supports a loan of roughly $1.7 million. If you also have a $1,000 a month car loan, the room for the home loan falls to $7,250 a month, and the loan you qualify for falls to roughly $1.5 million.
Going the other way, a $1,500,000 loan over 30 years at a 4% stress-test rate costs about $7,160 a month in the test, which needs a gross monthly income of about $13,000.
Banks apply their own criteria on top of TDSR, so treat these as estimates and get an in-principle approval.
2. Loan-to-value (LTV): how much cash you need
The loan-to-value limit caps the loan as a share of the price. For bank loans:
| Your outstanding housing loans | Maximum LTV | Minimum cash |
|---|---|---|
| None (first property loan) | 75% | 5% |
| One | 45% | 25% |
| Two or more | 35% | 25% |
If the loan tenure is longer than 30 years, or runs past age 65, the LTV for a first loan drops to 55%, and you need at least 10% in cash. Choosing a tenure within the limits keeps your cash needs lower.
Worked example. On an imaginary $2,000,000 purchase with a 75% loan, you borrow $1,500,000 and pay a $500,000 downpayment. At least $100,000 of that must be cash, which the booking fee usually covers. The remaining $400,000 can come from cash or CPF.
3. Using CPF
CPF Ordinary Account savings can be used for the downpayment beyond the minimum cash, for the progressive payments and for monthly instalments, subject to CPF limits on how much you can use for a property. Check the CPF Board's housing usage tools for your own limits. CPF cannot be used for the booking fee.
4. How a new launch loan works
Because a new launch is paid in stages, the loan is not drawn all at once.
- You pay the booking fee and downpayment from cash and CPF.
- As each building stage completes, the bank disburses its share of the loan to the developer.
- You pay interest only on the amount drawn, so repayments start small and grow with each stage.
- At the Temporary Occupation Permit and the Certificate of Statutory Completion, the final large payments are drawn, and the loan is fully disbursed.
This graduated build-up is useful, because you may still be paying rent on your current home while the condo is built. Plan your cash flow for the overlap. Our costs guide shows the stage payments.
5. Before you book: a short checklist
- Get an in-principle approval from at least two banks and compare the rates and terms.
- Check your TDSR with all your commitments included.
- Confirm your CPF balance and usage limit.
- Keep a buffer for stamp duties, legal fees and interest rate changes.
- If you still own an HDB flat, read about the Additional Buyer's Stamp Duty and check how your existing loan affects your LTV.
FAQs
What is TDSR?
TDSR is the Total Debt Servicing Ratio. It limits your total monthly debt repayments to 55% of your gross monthly income.
How much downpayment do I need for a new launch condo?
With a 75% bank loan you need a 25% downpayment, of which at least 5% must be cash. With a longer tenure, or if you already have a housing loan, the downpayment is larger.
Can I use CPF for a new launch condo?
Yes, for the downpayment beyond the minimum cash, the progressive payments and monthly instalments, subject to CPF limits. Not for the booking fee.
Do I start paying the full loan instalment straight away?
No. On a new launch the bank disburses the loan in stages, so you pay interest only on the amount drawn and your instalments rise over time.
Does an existing HDB loan affect my condo loan?
It can. An outstanding housing loan lowers the LTV limit for a new loan, and the HDB flat counts as a property for stamp duty. Get advice before you book.