Starting 20th August 2024, new changes are coming that could impact how much you can borrow to buy an HDB flat. The Housing Board is tightening the maximum loan amount to cool down the resale market. But there’s good news too—first-time buyers in the lower-to-middle income range will receive more financial support, with the Enhanced CPF Housing Grant (EHG) increasing to up to $120,000 for families and $60,000 for singles.
Right now, the EHG offers up to $80,000 for families and $40,000 for singles, so this is a significant boost. These changes were announced late on August 19, as part of the government’s ongoing efforts to keep housing affordable, especially for those buying their first home.
One key change is the reduction of the loan-to-value limit for HDB housing loans from 80% to 75%. This means buyers will need to borrow a bit less—up to 75% of the flat’s value, aligning with what banks offer.
The rationale behind these measures is to encourage more prudent borrowing and to help make housing more affordable, especially for first-time home buyers from lower-to-middle income households. During the recent National Day Rally, Prime Minister Lawrence Wong emphasized the government’s commitment to keeping housing prices in check by increasing the supply of flats.
HDB resale prices have been on the rise since mid-2020, with some record-breaking transactions, like a five-room flat in Margaret Drive selling for $1.726 million in July. While previous rounds of cooling measures and efforts to increase supply have helped moderate the rise in prices, resale prices are still climbing due to strong demand and limited supply.
To further stabilize the market, the HDB loan-to-value limits are being adjusted. This comes after the loan limits were last reduced in September 2022, from 85% to 80%.
However, the impact of these new limits on first-time buyers will be softened by the significant housing grants available. For example, eligible families buying a resale flat could receive up to $230,000 in housing grants, including the revised EHG, CPF Housing Grant, and Proximity Housing Grant. Eligible singles could receive up to $115,000.
The EHG increase varies based on household income, with families earning $1,500 or less per month eligible for the maximum grant of $120,000.
If you’ve already received an HDB Flat Eligibility (HFE) letter, don’t worry—you won’t need a new one. The letter will be updated automatically to reflect the new grant amounts, and if your resale flat purchase is pending, you’ll also receive the additional grant.
HDB and MND emphasized that resale flats are still affordable for most buyers. In fact, eight in 10 first-timer families who bought resale flats in 2023 used 25% or less of their monthly income to service their loans, often using just their CPF contributions.
The government is committed to ensuring that public housing remains within reach for all Singaporeans. They’ll continue to monitor the market and make adjustments as needed to keep things stable and sustainable.