HDB Loan Limit Reduced to 75%; Increased Grants for Low-Income Flat Buyers

If you’re looking to get a new home soon, there’s some news from the Ministry of National Development (MND) and Housing & Development Board (HDB) that you might want to know about.

It involves the HDB Loan-to-Value (LTV) limit, as well as the Enhanced CPF Housing Grant.

Cooling the HDB Resale Market: HDB LTV Limit Lowered From 80% to 75%

On Monday (19 August), MND and HDB announced two sets of measures related to housing — one set to cool the HDB resale market, and the other, to provide more support to lower- and middle-income first-time home buyers.

We’ll first take a look at the set of measures meant to cool the HDB resale market.

Unless you were living under a rock, you probably knew that HDB resale prices were insane the last couple of years. Most notably, HDB resale prices grew by 10.4% in 2022.

Fortunately, with the cooling measures that the government has already undertaken recently such as the ramping up of BTO flat supply, the rate at which HDB resale prices are rising has been slowing, with 2023 seeing HDB resale prices growing at 4.9%.

However, aside from ramping up BTO flat supply, the government will also be introducing another measure to further cool the market — lowering the LTV limit for HDB housing loans.

The LTV limit for HDB housing loans will be lowered from 80% to 75%, and this lowered LTV limit will start kicking in almost immediately.

If you’re looking to purchase a resale flat, the lower LTV limit will apply to complete resale applications received by HDB on or after 20 August 2024. And, if you’re looking to BTO soon, the lower LTV limit will apply to BTO applications from the October 2024 BTO exercise onwards.

While the lowered LTV limit might seem like a bummer for those of you seeking to maximise your HDB loan, the new change is meant for the greater good lah — to encourage flat buyers to borrow prudently, while also cooling the market.

More Support for Lower- and Middle-Income Households: Increase in Enhanced CPF Housing Grant for First-Time Home Owners

At this juncture, you might be thinking: “Wah, if the LTV limit is lowered, how will lower- and middle-income buyers finance the purchase of a home?”

Not to worry — it seems that the government has also factored that into consideration with the second set of measures just announced.

To support lower- and middle-income home buyers, the Enhanced CPF Housing Grant will be increased to provide additional support for lower- to middle-income households buying new or resale flats as their first home.

Give and take lor. While the LTV limit will be lowered, there will be increased grants for those who need it. 

Currently, under the Enhanced CPF Housing Grant, eligible first-timer families can receive up to $80,000 worth of grants, while eligible first-timer singles can receive up to $40,000 worth of grants. The amount received is tiered based on household income, and there are no restrictions as to flat type and location.

But that’s about to change for the better — HDB has now announced that the maximum grant amount will be revised upwards to better support lower- and middle-income first-time home buyers.

Specifically, the maximum grant amount for eligible first-timer families will be increased from $80,000 to $120,000, while that for eligible first-timer singles will be increased from $40,000 to $60,000.

Depending on monthly household income, the increment will range between $5,000 to $40,000 for families and between $2,500 to $20,000 for singles. And of course, higher increments will be given to lower-income households requiring more support.

To find out exactly how much more you’ll receive from the revised Enhanced CPF Housing Grant, you can see the table compiled by HDB here.

Heng, ong, huat ah! 

The next question is then when the increments in the Enhanced CPF Housing Grant amounts will kick in.

Well, it will kick in as quickly as the lowered LTV limit.

Those who apply for a new BTO flat from the October 2024 BTO exercise onwards will be able to reap the benefits of the Enhanced CPF Housing Grant increments.

You don’t even have to make any additional applications to receive the increased grant — HDB will automatically update your HDB Flat Eligibility (HFE) letter to reflect the revised Enhanced CPF Housing Grant amount and will notify you individually via email.

That being said, it also means you won’t have to re-submit your HFE applications to receive the increased grant.

However, we have bad news for those who have already applied for BTO flats launched earlier, such as in the June 2024 exercise — you will not be able to get the increased grants.

What about those looking at resale flats?

Well, if you’re an eligible first-time home buyer with only your HFE letter, but haven’t submitted your resale flat application, you’ll also receive the additional grant amount if you submit a resale flat application on or after 20 August 2024. HDB will automatically update your HFE letter to reflect the revised grant amount, and will also notify you individually by email.

If your resale transaction is pending completion, the grant amount will be automatically credited to your CPF accounts within two months from the date of resale completion. So, you also won’t have to approach HDB to request the increased grant.

Then now, we have those who have submitted an HFE letter application but have yet to receive the HFE letter. There’s good news for you — you will also be entitled to the additional grant amounts.

HDB will extend the revised grant amount to eligible first-timers who have already submitted their HFE letter applications before 20 August 2024. The revised grant amount will be reflected in the HFE letter to be issued by HDB, and you won’t have to apply for a fresh HFE letter.

And of course, if you apply for an HFE letter on or after 20 August 2024, you’ll also enjoy the increased grant amounts.

So, go forth and chase your BTO dreams lah.