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  • Writer's pictureAaron Lin

Ask Aaron Now: Should I Use Bank Loan Or HDB Loan for My First HDB Flat?


You need to be able to pay the minimum cash down payment when using a bank loan.

The second HDB loan is less attractive than the first HDB loan.

You might want to save your HDB loan for a bigger purchase in the future.


The HDB loan allows you to borrow up to 90% of the flat value while the bank loan only allows you to borrow up to 75%. Furthermore, there is a cash down payment of 5% incurred when you take on a bank loan, with the remaining 20% paid in CPF. When using a bank loan, you will need to make sure that you are able to fork out the minimum cash down payment.

HDB loans do not require you to make this cash down payment. However, you can only make use of this HDB loan once. Subsequent HDB loans will come with additional requirements with regards to cash proceeds. In fact, you will have to use up to 50% of the cash proceeds from your existing HDB flat. Hence, the first HDB loan is more attractive.

If you are looking to purchase a big HDB flat, I recommend using the HDB loan. If you are looking for a smaller HDB flat, you might want to take a bank loan and save the HDB loan for a bigger purchase in the future. This will facilitate your upgrading process. This principle also applies to BTO flats

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