Down Payment

Rates and thresholds change. The current figures are kept in one place: the Singapore property rules reference.

What it is

The down payment is the slice of a property's purchase price you have to pay yourself, in cash or CPF, before a bank loan covers the rest. It exists because banks will only lend up to a set percentage of the property's price or valuation, known as LTV, or Loan to Value, and the buyer has to fund the gap between that loan and the full price.

How it works

For a first residential property financed with a bank loan and no other mortgage outstanding, the maximum LTV is 75 percent, which means the down payment is 25 percent of the price. Within that 25 percent, at least 5 percent of the price must be paid in cash, no CPF and no gifted cash count toward this cash portion, and the remaining 20 percent can come from CPF Ordinary Account savings or additional cash if you prefer to preserve your CPF. If you already have an outstanding housing loan and are financing a second property, LTV drops materially and the required cash portion rises as well, so the down payment burden is meaningfully heavier for a second purchase.

Buyers using an HDB concessionary loan instead of a bank loan follow a different LTV and down payment structure specific to HDB loans, so the 75 percent figure above applies to bank loans, not HDB loans.

A simple worked illustration

On an illustrative first property price of 1,000,000 dollars financed with a bank loan, the down payment would be 250,000 dollars, made up of at least 50,000 dollars in cash and up to 200,000 dollars from CPF Ordinary Account savings or more cash. This is a rounded example based on the 75 percent LTV rule, not a quote for any specific buyer's situation.

What first time buyers get wrong

• Assuming CPF alone can cover the whole down payment, when a minimum cash portion is always required on a bank loan.
• Forgetting that a second property carries a much lower LTV and a higher required cash portion than a first purchase.
• Not accounting for the separate stamp duty, legal, and other closing costs that sit on top of the down payment itself.
• Confusing the down payment with the deposit paid when exercising the Option to Purchase, which is only an early portion of the eventual down payment.

What to check

Work out your available cash and CPF Ordinary Account balance early, and confirm the current LTV tier that applies to your situation with your bank, since LTV rules have changed before and can change again as a cooling measure. This page explains the general mechanism only and is not personalised advice on how to fund your own down payment.

Winfred 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. Verify current figures with IRAS, HDB, CPF Board, or MAS before making any decision.