CPF feels like free money for a downpayment. It is not, every dollar you use today is a dollar plus compounding interest you owe your own retirement account back on sale.
The 5% cash floor
On a first residential property financed with a bank loan, the minimum downpayment is 25% of the purchase price, of which at least 5% must be cash, no CPF and no cash gifts substituting for it. The remaining 20% can come from CPF Ordinary Account savings or additional cash. For an HDB concessionary loan, the entire downpayment can come from CPF or cash, with no mandatory cash portion.
What CPF can and can't cover
Beyond the downpayment, CPF OA can also be used for monthly mortgage instalments, Buyer's Stamp Duty, and legal and conveyancing fees. It cannot be used for the mandatory 5% cash component on a bank loan for a first property, and cannot be used at all for property tax, which is always a cash annual cost.
The accrued interest cost
Every dollar of CPF OA withdrawn for a property purchase accrues interest at 2.5% per annum from the withdrawal date, compounding for as long as you hold the property. On sale, the full withdrawal plus all accumulated interest must be returned to your CPF OA before you see a single dollar of net cash proceeds. This is the real cost most buyers underweight when deciding how much CPF to deploy.
When a CPF heavy strategy makes sense
Using more CPF and preserving cash tends to make sense if your cash is otherwise sitting idle at well below the 2.5% OA rate, if you are cash constrained after stamp duties, or if you are near retirement age with a Special Account already at the Full Retirement Sum. Preserving CPF and using more cash tends to make sense if you have a longer accumulation horizon or a disciplined investment plan targeting returns above 2.5%.
Frequently asked questions
Can I use CPF for the entire downpayment on a resale condo?
No, not with a bank loan. At least 5% of the purchase price must be cash; only the remaining 20% of the standard 25% downpayment can come from CPF Ordinary Account savings or additional cash.
Does using CPF for the downpayment cost me anything later?
Yes. CPF used for a property purchase must be refunded with accrued interest, currently 2.5% per annum, when the property is eventually sold, which reduces your net cash proceeds at that point.
Is it different for an HDB flat versus a private condo?
Yes. An HDB concessionary loan allows the entire downpayment to come from CPF or cash with no mandatory cash floor, while a bank loan, whether for an HDB flat or private condo, requires at least 5% in cash for a first property.
Weighing CPF against cash for your downpayment?
Winfred models the accrued interest cost against your CPF balance and cash reserves, so you know the real long term price of each option.
Book a free 30 minute callWinfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd (CEA Licence No. L31010886H). CEA R073319H. This page is for general information only and does not constitute financial, investment, or legal advice. Rates and rules reflect the position as at 5 Aug 2026; verify current figures with IRAS, HDB, or MAS before making any decision.