HDB Loan vs Bank Loan in Singapore: Which Is Better, Worked Out on a Median 4-Room Flat
The rate, the cash you need on day one, what a $5,000 salary can borrow and the switch you can't undo, side by side under HDB's and MAS's rules as at September 2026.
An HDB loan charges 2.6% a year (0.1% above the CPF Ordinary Account rate), lends up to 75% for up to 25 years, and lets you pay the other 25% from CPF, apart from the option fees (up to $5,000, in cash). A bank loan also lends up to 75%, but needs at least 5% in cash, and its rate is the bank's: fixed, or a benchmark such as SORA plus a spread. On a $472,500 loan over 25 years, HDB's rate costs $2,144 a month; a bank loan averaging 2.0% costs $2,003, and one averaging 3.5% costs $2,365. You can refinance from HDB to a bank, but never back.
Buying an HDB flat with a loan means choosing a lender: HDB itself, or a bank. The two lend the same share of the price, but they differ on the rate, on how much cash you must put in, on how much they will lend on your salary, and on one rule people discover too late: you can leave HDB for a bank, but never come back.
This guide sets the two side by side, works out the cost on the median $630,000 4-room resale flat (2026 H1), and uses MAS's own figures to show when the benchmark many SORA-pegged bank packages use sat above HDB's 2.6% since 2020. Rules are from HDB, MAS and CPF, read on 19 September 2026.
Which is better, an HDB loan or a bank loan?
For buyers who qualify for it, the HDB loan is the safer default: 2.6% a year, a downpayment CPF can pay apart from the option fees, and the option to move to a bank later. A bank loan costs less only while its rate stays below 2.6%: possible today if its spread over 3-month compounded SORA (1.21% on 18 September 2026) is small, but it needs at least 5% of the price in cash and can never be refinanced to HDB.
The choice is a trade between a rate that barely moves and a rate that might be lower.
- HDB's rate is pegged 0.1% above the CPF Ordinary Account rate and reviewed each quarter (HDB). CPF's OA rate has a legislated minimum of 2.5% (CPF), so HDB's rate is 2.6% today and cannot fall below it while that minimum stands; it would rise only if CPF's rate did.
- A bank's rate "Varies among FIs and may change with market conditions" (HDB). A SORA-pegged package is the benchmark plus the bank's spread; MAS's own example is "3-Month SORA + 1.5% spread" (MAS). MAS's 3-month compounded SORA was 1.21% on 18 September 2026. It was also above 2.6% on 585 published days between 14 November 2022 and 14 March 2025, peaking at 3.76%, before any bank added its spread (MAS).
On the median $630,000 4-room resale flat (2026 H1), a 75% loan is $472,500. At HDB's 2.6% over 25 years that is $2,144 a month. A bank package averaging 2.0% over the same 25 years would cost $2,003; one averaging 3.5% would cost $2,365.
Three things usually settle it:
- Cash on day one. A bank loan needs at least 5% of the price in cash ($31,500 on that flat). With an HDB loan, CPF can pay the 25% (HDB) except the option fees, which "cannot be paid using your CPF" and come to at most $5,000 (CPF).
- Whether you qualify. HDB lends only to households that meet its conditions; everyone else borrows from a bank (HDB).
- The one-way switch. You can refinance an HDB loan with a bank, but "you cannot refinance to an HDB housing loan" (HDB).
Start with HDB and you can always leave; start with a bank and you can never come in.
What is the difference between an HDB loan and a bank loan?
HDB lends at 2.6% (0.1% above the CPF OA rate) to eligible households, lets CPF pay the 25% apart from the option fees, and runs up to 25 years. A bank lends at its own rate to anyone it approves, needs at least 5% in cash and runs up to 30 years, but its 75% limit applies only up to 25 years on an HDB flat. Both cap the instalment at 30% of income.
Side by side, as the rules stood on 19 September 2026:
| HDB housing loan | Bank loan (MAS-regulated lender) | |
|---|---|---|
| Interest rate | 2.6% a year, 0.1% above the CPF OA rate, reviewed quarterly | Set by the bank: fixed or floating (often pegged to SORA), and it changes after any lock-in |
| Who can get it | At least one Singapore Citizen; income within HDB's ceiling ($16,000 for families); no private home owned or sold in the last 30 months; fewer than two HDB loans taken | Anyone the bank approves, including PR households and buyers above HDB's ceiling |
| Loan-to-value | Up to 75% (pro-rated if the lease does not reach the youngest buyer's age 95) | Up to 75% for up to 25 years; 55% beyond 25 years or past age 65 |
| Cash at the start | Only the option fees (up to $5,000 in all, which CPF can't pay); CPF OA and grants can cover the rest of the 25% | At least 5% of the price in cash (10% at 55% LTV) |
| Your CPF | OA savings above $20,000 must go into the flat first | Use as much OA as you choose, within CPF limits |
| Longest term | 25 years, 65 minus your average age, or the lease minus 20 years, whichever is shortest | 30 years on an HDB flat |
| How much it lends | Instalment up to 30% of income, assessed at 3.0% | Instalment up to 30% of income (MSR), assessed at no less than 4% |
| Legal work | HDB can act for you, on its own fee scale | A private lawyer: $2,500–$3,000 on average (CPF) |
| Paying early | Partial or full early repayment allowed | Depends on the package (lock-in, penalties) |
| Switching | Can refinance to a bank later | Cannot refinance to an HDB loan, ever |
Sources: HDB's HDB loan, interest rate, bank loan, refinancing and resale approval pages; MAS's loan-to-value, MSR and TDSR and medium-term rate rules; CPF's housing expenses guide.
Two rows catch people out. First, a bank loan on an HDB flat keeps the 75% limit only if it runs 25 years or less and ends by age 65: "Apply the lower LTV limit if the loan tenure exceeds 30 years (or 25 years for HDB flats), or the loan period extends beyond the borrower's age of 65 years" (MAS). Second, the rate each lender uses to decide how much it will lend is not the rate you pay: HDB sizes the loan at 3.0% and a bank at no less than 4%.
Same 75%, same 30% cap: the differences are the rate, the cash and the exit.
How much does an HDB loan cost compared with a bank loan on a $630,000 flat?
On the median $630,000 4-room flat, a 75% loan of $472,500 costs $2,144 a month at HDB's 2.6% over 25 years, $170,577 in interest in all. A bank loan averaging 2.0% would cost $128,314 in interest and one averaging 3.5% $237,134. The bank loan also needs at least $31,500 in cash upfront and a private lawyer.
Take the median 4-room resale flat: $630,000 in 2026 H1, across 5,379 resales. Assume the price equals HDB's valuation, so a 75% loan is $472,500 and the other 25% ($157,500) is paid upfront.
The monthly cost. Level instalments over 25 years:
| Average rate over the loan | Monthly instalment | Total interest over 25 years | Monthly vs HDB's 2.6% | 25-year interest vs HDB's 2.6% |
|---|---|---|---|---|
| 1.5% | $1,890 | $94,410 | −$254 | −$76,167 |
| 2.0% | $2,003 | $128,314 | −$141 | −$42,263 |
| 2.6% | $2,144 | $170,577 | same as HDB | same as HDB |
| 3.0% | $2,241 | $199,695 | +$97 | +$29,118 |
| 3.5% | $2,365 | $237,134 | +$221 | +$66,557 |
| 4.0% | $2,494 | $275,709 | +$350 | +$105,132 |
A bank's rate here means what your package averages over all 25 years, lock-in and after. PropKaki does not track bank packages; the grid shows what each average rate would cost, so you can place your own quote in it. For other loan sizes, see monthly home loan repayments.
The cash on day one.
| HDB loan, 25 years | Bank loan, 25 years (75%) | Bank loan, 30 years (55%) | |
|---|---|---|---|
| The loan | $472,500 | $472,500 | $346,500 |
| Paid upfront (the rest of the price) | $157,500 (25%) | $157,500 (25%) | $283,500 (45%) |
| Of which must be cash | Only the option fees, at most $5,000 | At least $31,500 (5%) | At least $63,000 (10%) |
| Legal work | HDB can act: $789.84 for the transfer and fixed items, plus mortgage fees on the loan | Private lawyer: $2,500–$3,000 on average | Private lawyer: $2,500–$3,000 on average |
The upfront split is HDB's (resale approval page); the option-fee rule and the private-lawyer range are CPF's (CPF). Buyer's stamp duty is the same whichever loan you take, and CPF can pay it. HDB's legal fee is its own scale on the median price; a loan from HDB adds a mortgage fee on the same scale. More on legal costs: conveyancing lawyers and fees.
Read the grid from HDB's 2.6% row. A package averaging 3.0% costs you $2,241 a month, more than HDB's $2,144; one averaging 2.0% costs $2,003, less. The cheaper loan is the one with the lower rate over all 25 years, not in the first two. To work out the instalment on your own price, loan and rate, use PropKaki's Property Financial Planner.
When does a bank loan beat the HDB loan's 2.6%?
A bank loan beats HDB's 2.6% only while its own rate stays below it. 3-month compounded SORA, the benchmark many SORA-pegged packages add their spread to, was 1.21% on 18 September 2026. But it was above 2.6% on every one of the 585 days MAS published from 14 November 2022 to 14 March 2025, peaking at 3.76%, before any spread.
A bank loan wins for exactly as long as its all-in rate, the benchmark plus the bank's spread or a fixed rate, stays under HDB's 2.6%. Here is the benchmark many SORA-pegged packages are built on, at the end of each year since 2020:
| Published | 3-month compounded SORA | vs HDB's 2.6% |
|---|---|---|
| 31 Dec 2020 | 0.13% | below |
| 31 Dec 2021 | 0.19% | below |
| 30 Dec 2022 | 3.10% | above |
| 29 Dec 2023 | 3.71% | above |
| 31 Dec 2024 | 3.07% | above |
| 31 Dec 2025 | 1.19% | below |
| 18 Sep 2026 | 1.21% | below |
Source: MAS Domestic Interest Rates, 1,686 daily values read on 19 September 2026 (MAS).
What the record shows:
- Rates turned fast. 3-month compounded SORA went from 0.19% at the end of 2021 to 3.10% a year later. Through 2023, a SORA-pegged loan cost more than HDB's rate whatever its spread, because the benchmark alone was higher, and a borrower who had left HDB could not go back.
- The high was 3.76% (6 November 2023), before any spread. The low was 0.07%.
- Today the benchmark is well under 2.6%. At 1.21%, a SORA package can undercut HDB's rate if the bank's spread is small, but only until the benchmark moves.
This is also why MAS makes banks work out what you can afford at the higher of 4% and the package's "thereafter" rate, "the highest interest rate offered by an FI at any time during the tenure of a property loan" (MAS). The rate after the lock-in is the one to judge a package on.
A floating rate is cheaper until it isn't; HDB's rate is dull on purpose.
How much can you borrow on a $5,000 salary with an HDB loan or a bank loan?
Up to $316,315 from HDB, and $284,179 from a bank over 25 years. Both cap the instalment at 30% of income ($1,500 a month), but HDB sizes the loan at 3.0% and a bank at no less than 4%. A 30-year bank loan stretches to $314,192, but its limit falls to 55%, so you pay 45% of the price upfront.
Both lenders cap the monthly instalment on an HDB flat at 30% of gross income: HDB's "Monthly instalments: Up to 30% of the applicants' monthly income" (HDB), and MAS's mortgage servicing ratio for banks (MAS). On $5,000 a month, that is $1,500. What differs is the rate each uses to turn $1,500 into a loan:
- HDB uses "the higher of ... Interest rate floor (currently at 3.0% per annum); and Prevailing HDB housing loan interest rate" (HDB).
- A bank uses "the higher of a 4% per annum (p.a.) floor ... or the thereafter interest rate", for both the TDSR and the MSR (MAS, 29 September 2022).
| On $5,000 a month | HDB loan, 25 years | Bank loan, 25 years | Bank loan, 30 years |
|---|---|---|---|
| Monthly instalment cap (30%) | $1,500 | $1,500 | $1,500 |
| Rate used to size the loan | 3.0% | 4% | 4% |
| Most it will lend | $316,315 | $284,179 | $314,192 |
| Loan-to-value limit | 75% | 75% | 55% |
| Flat price that loan covers at 75% | $421,753 | $378,905 | not applicable |
PropKaki's arithmetic on the published assessment rates: a first housing loan, no other debts, buyers young enough for the full term (HDB's term is capped at 65 minus your average age), and a lease that reaches the youngest buyer's age 95.
So on $5,000, HDB lends more over 25 years because its assessment rate is lower. Neither loan reaches the $472,500 that a 75% loan on the median $630,000 flat needs. Your actual figure comes from HDB's HFE letter or a bank's in-principle approval, which also weigh your age, job, commitments and repayment record (HDB); see the HFE letter guide and TDSR vs MSR.
The loan you are offered is sized at 3% or 4%, not at the rate you pay.
Is the HDB loan 75% or 80% of the price?
75%. HDB lowered its limit from 80% to 75% for resale applications received from 20 August 2024 and new flats from the October 2024 sales exercise: 75% of the price for a new flat, or of the lower of the price or HDB's value for a resale flat. A bank also lends up to 75% on an HDB flat, if the loan runs 25 years or less and ends by age 65; otherwise its limit is 55%.
HDB's page: "Resale flat: Up to 75% of the lower of the resale price or value of the flat", for "complete resale applications received by HDB on or after 20 August 2024 and flat applications for the October 2024 sales exercise onwards" (HDB). Before that date the limit was 80% (HDB).
Three details decide what you actually get:
- Price or value, whichever is lower (resale flats). The 75% is worked out on the lower of the two, so any amount you agree above HDB's valuation is not covered by the loan.
- A short lease cuts it. "If the remaining lease of the flat does not cover the youngest applicant to the age of 95 and above at the point of flat application, the LTV limit will be pro-rated from 75%" (HDB).
- A bank's 75% has conditions too. For a first loan the limit is "75% or 55%", with a minimum cash downpayment of 5% or 10% (MAS); the lower one applies beyond 25 years on an HDB flat or past age 65.
It is 75% from both lenders now; what changes is what you must pay in cash to get there.
Can you switch from a bank loan to an HDB loan later?
No. HDB lets you refinance its loan with a bank, which takes about 6 to 8 weeks, but once you have, you cannot bring that loan back to HDB. A bank loan can only move to another bank or package. A PR household that took a bank loan cannot switch to HDB even after becoming citizens.
HDB is explicit in both directions:
- From HDB to a bank: "You can refinance your HDB housing loan with one from a financial institution (FI) ... However, once you have refinanced your HDB housing loan with an FI, you cannot refinance that loan with us subsequently" (HDB). The switch takes "about 6 to 8 weeks to complete".
- From a bank: "You may refinance the FI housing loan with one from another FI or a different interest rate package ... You cannot refinance to an HDB housing loan" (HDB).
- For PR households: they "will not be allowed to refinance the loan with an HDB housing loan even if you subsequently obtain Singapore Citizenship" (HDB).
So an HDB loan keeps an option open: if bank rates fall far enough, you can leave. A bank loan closes it. Moving between banks, or to another package with the same bank, is covered in repricing vs refinancing and home loan lock-in periods.
The HDB loan is the only one you can leave but never rejoin.
Who can take an HDB loan, and who has to use a bank?
You need at least one Singapore Citizen buyer, household income within HDB's ceiling ($16,000 a month for families, $24,000 for extended families, $8,000 for singles), no private home owned or sold in the last 30 months, and fewer than two HDB loans taken before. If you don't qualify, the loan must come from a bank.
HDB's conditions for its loan (HDB):
- Citizenship: "At least 1 applicant is a Singapore Citizen".
- Income: average gross monthly household income within "$16,000 for families · $24,000 for extended families ... $8,000 for singles buying under the Single Singapore Citizen (SSC) Scheme". HDB raised the family ceiling from $14,000 and the singles ceiling from $7,000 for households that apply for an HFE letter from 24 August 2026 (HDB, 23 August 2026).
- Private property: you "Must not own or have an interest in any local or overseas private residential property" and "Must not have disposed of any private residential property in the last 30 months".
- Earlier HDB loans: the core family has "not taken 2 or more housing loans from HDB".
- Work and credit: "The applicant must be working at the point of HFE letter application and when HDB disburses the housing loan", and HDB looks at your income, job stability, commitments and repayment record.
- Paperwork: "you have to first apply for an HFE letter" (HDB); see the HFE letter guide.
Who borrows from a bank instead: households above the ceiling, owners of private property (or recent sellers), and PR households, which HDB says must take any housing loan from a financial institution (HDB). An executive condominium bought from a developer is also bank-only: "HDB does not provide housing loans for the purchase of Executive Condominium units from property developers" (HDB). HDB's own line for everyone who misses a condition: "You have to take a housing loan from an FI if you need mortgage financing" (HDB).
Check whether you qualify for HDB's loan before you compare it with anything.
Which suits you: an HDB loan or a bank loan?
An HDB loan suits first-timers with most of their savings in CPF, buyers who want a rate that barely moves, and anyone who wants to keep the option to switch. A bank loan suits buyers HDB won't lend to, people with 5% of the price in cash who want a lower rate while it lasts, and those who want to keep more CPF in their account.
| Your situation | Better fit | Why |
|---|---|---|
| First home, most savings in CPF, little cash | HDB loan | The 25% can all come from CPF; a bank needs 5% of the price in cash ($31,500 on the median 4-room flat) |
| You want an instalment that stays steady | HDB loan | Its rate follows CPF's OA rate, which has a 2.5% legislated minimum, so it cannot fall below 2.6% while that minimum stands |
| You want to keep the option of staying at HDB or leaving for a bank | HDB loan | You can move it to a bank; a bank loan can never move to HDB |
| Income above HDB's ceiling, own or recently sold private property, or a PR household | Bank loan | HDB won't lend |
| You have the cash, and a package priced well under 2.6% after its lock-in, with room in your budget if rates rise | Bank loan | At an average of 2.0% over 25 years the interest is $128,314, against $170,577 at HDB's rate |
| You want to keep more than $20,000 in your CPF OA | Bank loan | HDB requires OA savings above $20,000 to go into the flat first |
| You want the longest possible term | Neither, really | A bank goes to 30 years, but beyond 25 years the limit on an HDB flat drops to 55% |
| You are selling your current home to buy this one | Check HDB's second-loan rule first | A second HDB loan comes only after the CPF refund and part of the sale cash go into the new flat; you generally keep the higher of $25,000 or 50% of the cash proceeds |
Rules from HDB, MAS and CPF (sources in the table above); the dollar figures are PropKaki's arithmetic on the median $630,000 4-room flat.
Pick the loan for the life you expect in five years, not for this month's rate.
Does an HDB loan make you use your CPF savings first?
Yes. With an HDB loan, your CPF Ordinary Account savings above $20,000 must go into the flat before HDB grants the loan. A bank loan lets you decide how much OA to use, within CPF's limits. Either way, if you pay instalments from CPF, the Home Protection Scheme is compulsory.
HDB: applicants may "Retain up to $20,000 of the available savings in each of their CPF Ordinary Account (OA)", and "The remaining balance in your CPF OA must be used to pay for the flat purchase or take over ownership of an existing flat, before the HDB housing loan can be granted" (HDB). With a bank loan, "You may use any amount in your CPF OA for flat purchase, up to the applicable limits" (HDB).
If this is your second HDB loan, HDB also wants your last home's proceeds in the new flat first: the loan comes "only after you have paid for the flat purchase using the full CPF refund and part of the cash proceeds", and "Generally, flat applicants can keep the higher of $25,000 or 50% of the cash proceeds" (HDB).
Using more CPF means a smaller loan, so less interest, but less OA left for the monthly instalments later. For both loans, "HPS is compulsory if you use CPF savings to pay for your housing loan instalments" (HDB); an HDB loan also requires HDB's fire insurance (HDB).
What is the biggest mistake people make when choosing between an HDB loan and a bank loan?
Choosing on today's rate alone. A bank package is cheaper only while its rate stays under 2.6%, and 3-month compounded SORA went from 0.19% at the end of 2021 to 3.10% a year later. Once you leave HDB for a bank, you cannot go back.
The trap has two halves:
- Judging the first two years. MAS notes that a loan's highest rate "is typically charged after the introductory or lock-in period", and that later rate (or 4%, if higher) is the one MAS makes banks use to assess you (MAS).
- Forgetting the exit is closed. An HDB borrower who refinanced in the low-rate years of 2020 and 2021 could not return when the benchmark passed 2.6% on 14 November 2022; it stayed above until 14 March 2025 (MAS; HDB).
Before you leave HDB's loan, price the bank package at its thereafter rate, check that you could carry the instalment if the benchmark returned to its 2023 level, and keep cash in reserve. If any answer is no, the HDB loan's stability is worth paying for.
Which bank is best for an HDB loan?
PropKaki doesn't rank banks or track their packages. HDB's Flat Portal lets you ask five lenders for in-principle approval: DBS, Hong Leong Finance, Maybank, OCBC and UOB, and any MAS-regulated lender can offer a loan. Compare packages on the rate after the lock-in, the lock-in itself and the penalties, not the first-year rate.
HDB lists the lenders on its integrated loan service "in alphabetical order": "DBS Bank Limited · Hong Leong Finance Limited · Maybank Singapore Limited · Oversea-Chinese Banking Corporation Limited · United Overseas Bank Limited" (HDB). You "may also approach other FIs, regulated by the MAS". You need an accepted Letter of Offer before you exercise the option to purchase on a resale flat.
When you compare quotes:
- The thereafter rate. For a floating package it is the benchmark plus the spread, e.g. "3-Month SORA + 1.5% spread" in MAS's example (MAS).
- The lock-in and penalties. HDB: "Do check with the FI on the terms and conditions (e.g., lock-in period)" (HDB).
- Fixed or floating. See fixed vs floating home loans.
Official sources
Check the lenders' and regulators' own pages for the current rates and rules.
Methodology and sources
Where every figure comes from, and what we deliberately did not claim.
Official rules. HDB's loan conditions, rate, bank-loan rules, refinancing rules and initial-payment split are from HDB's pages (updated between 15 January and 23 August 2026); the loan-to-value, MSR, TDSR and medium-term interest rate rules are MAS's, including its 29 September 2022 release on the 4% and 3% floors; the CPF interest rate and the private-lawyer range are CPF's. All were read on 19 September 2026.
Proprietary figures. The median 4-room price ($630,000, 2026 H1, 5,379 resales) is from PropKaki's HDB resale records. Instalments, total interest and the maximum loans are PropKaki's arithmetic: level monthly instalments on a monthly-rest loan, and each lender's published assessment rate for the maximum loan. HDB's legal fee is its own conveyancing scale applied to the median price. The SORA figures are MAS's 3-month compounded SORA, 1,686 daily values from January 2020 to 18 September 2026. How we work: PropKaki methodology.
What we have not claimed: today's rate from any bank (PropKaki tracks no bank packages), which bank or package to choose, the loan you will be offered (your HFE letter or a bank's in-principle approval decides that), or where rates go next. This is a practical explainer, not financial advice. Rates and rules change: check with HDB, MAS, CPF or your bank before you commit.
Got a question this raised? Ask PropKaki.
Take any point from this analysis and apply it to your own project, budget or decision.
PropKakiFor most buyers this year, staying well within budget beats trying to time the market.