New property cooling measure to tighten HDB loan limits; larger grants for lower-income flat buyers

SINGAPORE – In an effort to cool the Housing and Development Board (HDB) resale market, the maximum loan that home buyers can take from HDB will be reduced from August 20. At the same time, more financial support will be provided to first-time flat buyers in the lower-to-middle income brackets through an increase in the Enhanced CPF Housing Grant (EHG).

Starting from August 20, the loan-to-value (LTV) limit for HDB housing loans will be lowered from 80% to 75%. This means buyers will now be able to borrow up to 75% of their flat’s value, instead of the previous 80%. This adjustment brings the HDB loan limit in line with mortgages granted by financial institutions, which remain at 75%.

HDB and the Ministry of National Development (MND) announced these changes on the night of August 19, marking the fourth round of property cooling measures since December 2021. The adjustments are aimed at moderating the sustained demand for HDB resale flats, encouraging prudent borrowing, and making housing more affordable for lower-to-middle income first-time buyers.

In his National Day Rally speech on August 18, Prime Minister Lawrence Wong highlighted the government’s efforts to address housing affordability, including increasing the supply of flats to help control prices. He also announced that the EHG would be raised to better support first-time home buyers, especially those from lower-income groups.

Under the revised EHG, eligible families can receive up to $120,000 in grants, an increase from the previous maximum of $80,000. Singles will also benefit, with the maximum grant amount increasing from $40,000 to $60,000. These changes are designed to cushion the impact of the tighter loan limits on first-time buyers, particularly those from lower-income households.

For instance, eligible first-time families buying a resale flat could potentially receive up to $230,000 in housing grants, including the revised EHG, a CPF Housing Grant of up to $80,000, and a Proximity Housing Grant (PHG) of up to $30,000. Similarly, eligible singles could receive up to $115,000 in grants.

The increased EHG will vary depending on monthly household income, with the grant amount ranging from $5,000 to $40,000 for families and $2,500 to $20,000 for singles. For example, families with an average monthly household income of $1,500 or less will qualify for the maximum grant of $120,000.

HDB and MND assured that home buyers who have already received an HDB Flat Eligibility (HFE) letter will have their eligibility updated automatically to reflect the new EHG amounts. Additionally, first-time buyers currently in the process of purchasing a resale HDB flat will also receive the additional grant automatically.

The government emphasized that resale flats remain affordable for most buyers. In 2023, eight in 10 first-time families who purchased resale flats used 25% or less of their monthly household income to service their HDB loans, often covering their payments entirely through their Central Provident Fund (CPF) contributions with little or no cash outlay.

While high-priced resale flats make headlines, HDB and MND noted that such transactions are rare and do not represent the broader market. The government reiterated its commitment to keeping public housing affordable and accessible to Singaporeans, promising to monitor the property market closely and adjust policies as necessary to maintain stability and sustainability.