There are two important numbers that we need to know when buying an HDB flat: the downpayment required and the maximum loan that we qualify for. Between the two, the downpayment could be argued as being more important as it affects the amount of loan needed and has to be fully financed using our savings.
With the average 4-room build-to-order (BTO) flats in the February 2024 BTO Exercise starting at $362,500, this would mean a downpayment of at least $72,500. This sizeable amount could be daunting for some homebuyers, especially young couples looking to start their families.
To help this group of buyers purchase their BTO HDB flats early, HDB allows the downpayment to be paid in installments under the Staggered Downpayment Scheme (SDS) as an extension of the HDB downpayment requirements.
What Is An HDB Downpayment?
Typically, we would need to place an initial amount as downpayment when buying an HDB flat. It is dependent on the purchase price of the property and whether we are taking an HDB housing loan, a bank loan, or financing it fully without a loan.
We could choose to pay for the downpayment with either cash, CPF Ordinary Account (OA) savings (including CPF housing grant if eligible), or a mix of both.
Regardless of our financing option, the downpayment is split in two stages. The first half of the amount is due within 9 months after booking a new flat when signing the Agreement for Lease (AFL). The remaining second half is paid during the collection of the keys.
Read Also: Is It More Advantageous To Apply For Your HDB BTO Flat Later In The BTO Application Period?
How Much To Pay In Downpayment?
The downpayment amount at the two stages depends on the financing option that we choose.
If we were to take up an HDB housing loan, the downpayment payable would be at least 20% of the purchase price. This is based on the latest cooling measure announced in September 2022, which restricts the loan-to-value (LTV) limit to 80%. The amount is split equally, with 10% of the purchase price paid at each stage.
On the other hand, if we were to take up a bank loan, the downpayment payable would be at least 25% of the purchase price based on the LTV limit of 75%. Buyers would be expected to pay the first 20% of the purchase price in the first stage, during the signing of the AFL, and the remaining 5% in the second stage, during the key collection.
| Downpayment Amount and Mode of Payment | Housing Loan from HDB/ Not taking any loan | Housing loan from Financial Institution (FI) | |
| Loan-To-Value (LTV) Limit of 75% | Loan-To-Value (LTV) Limit of 55% | ||
| During signing of Agreement for Lease | 10% of purchase price | 20% of purchase price: – Minimum 5% cash payment – Remaining 15% using cash and/ or CPF OA savings (including CPF housing grants if eligible) |
20% of purchase price: – Minimum 10% cash payment – Remaining 10% using cash and/ or CPF OA savings (including CPF housing grants if eligible) |
| During collection of keys | 10% of purchase price | 5% of purchase price | 25% of purchase price |
With 4-room BTO prices in non-mature towns ranging between $300,000 and $432,000, buyers taking up HDB housing loans would be expected to pay between $30,000 and $43,000 in downpayment within 9 months of booking the flat.
For certain buyer profiles, like those who are current or recent full-time students and/or National Servicemen (NSFs), this financial requirement might be overbearing and may delay their homeownership plans.
That’s where the HDB Staggered Downpayment Scheme is meant to benefit this group of flat buyers.
Read Also: 4 Reasons To Make Voluntary Housing Refund For CPF Monies Used For Your Home Downpayment And Monthly Mortgage
What Is HDB Staggered Downpayment Scheme
Under the Staggered Downpayment Scheme (SDS), the initial downpayment requirement for BTO flat buyers when they sign the AFL is halved (to 5% or 10% of the flat price). The balance amount is paid when the key to the flat is collected.
Depending on the financing option that we choose, we may only need to pay an initial downpayment of between 5% and 10% of the purchase price instead of the usual 10% to 20% within 9 months of booking the flat.
| Downpayment Amount and Mode of Payment | Housing loan from HDB/ Not taking any loan | Housing Loan from Financial Institution (FI) | |
| Loan-To-Value (LTV) Limit of 75% | Loan-To-Value (LTV) Limit of 55% | ||
| During signing of Agreement for Lease | 5% of purchase price | 10% of purchase price: – Minimum 5% cash payment – Remaining 5% using cash and/ or CPF OA savings (including CPF housing grants if eligible) |
10% of purchase price
· Cash payment only |
| During collection of keys | 15% of purchase price | 15% of purchase price | 35% of purchase price |
To further assist young couples in progressing with their homeownership plans, HDB announced in March 2024 that it will enhance the SDS by halving the initial downpayment requirement for those taking an HDB housing loan from 5% to 2.5%.
This change would take effect from the June 2024 BTO Exercise and would be applicable to couples who are eligible to defer their income assessment for the enhanced housing grant (EHG) and an HDB housing loan.
Source: HDB – Staggered Downpayment Scheme for Couples Eligible for Deferred Income Assessment
With the revised SDS, young couples may face fewer financial hurdles in meeting the initial downpayment requirements to purchase a flat. Moreover, given the median waiting time of around 3.5 years for BTO flats, they could by then save up more money and earn a higher income to reassess their income before key collection.
Read Also: How Much Down Payment You Have To Pay To Buy An Executive Condominium
Who Is Eligible For This Scheme
The SDS is available to two groups of new HDB flat buyers:
First-timer couples:
- Both are first-timer applicants, or a couple comprising a first-timer applicant and a second-timer applicant;
- Obtained a valid HFE letter on or before the younger applicant’s 30th birthday; and
- Booked an uncompleted 5-room or smaller flat in any of HDB’s sales exercises.
Flat owners who right-size to a 3-room or smaller flat in non-mature estates:
- Have not sold or completed the sale of their existing flat at the time of their HFE letter application;
- Booked an uncompleted 3-room or smaller flat in a non-mature estate in any HDB sales exercises.
How To Apply For HDB’s SDS
Assuming we fulfil the eligibility conditions for the SDS, we will be informed during the flat booking appointment of our eligibility.
Even if we could meet the usual initial downpayment requirements of between 5% and 10%, we could consider taking up the SDS, if we are eligible. It could be a useful way to retain liquidity and earn a higher rate of return on our money until the key collection stage, which could take between 3 and 4 years.
Read Also: What A 1% Increase In Interest Rates Could Mean For Your Home Loan Repayment
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