A resale flat can be financed by HDB or by a bank, and the two differ in more than the rate. You can refinance from HDB to a bank later but never the other way, so the first choice is the one that matters.
An HDB loan
- Borrow up to 75% of the price or valuation, whichever is lower, over up to 25 years.
- The rate is pegged at the CPF Ordinary Account rate plus 0.1%, currently 3%. It has moved rarely, which is the real attraction.
- No cash down payment is required: CPF may cover the whole of it.
- There is an income ceiling of $14,000 a month for a family, and you may not have taken two or more HDB loans before.
A bank loan
- Borrow up to 75% over up to 30 years, with at least 5% of the price in cash.
- The rate is whatever the market offers, fixed for a couple of years or floating. It can rise.
- No income ceiling, so it is the only route above the HDB limit.
- Often cheaper than 3% when rates are low, and dearer when they are not.
Both are capped by your income
Whichever you choose, the repayment must fit the : no more than 30% of gross monthly income on this home loan. A bank must also test the wider of 55% across all your debts, and it tests at a rate floor rather than the rate you are offered, so the sum is stricter than it looks.
Try both in the affordability calculator: the difference in monthly repayment is usually smaller than the difference in how much cash you need on completion day.
Sources: HDB: housing loan from HDB, HDB: housing loan from a financial institution. Rates and limits change; confirm them before you decide.