How much can you afford? A practical guide to planning your property budget
The price on a brochure is only the start. To know what you can really afford, you need to look at three numbers together: how much the bank will lend, how much cash and CPF you need upfront, and what you can comfortably pay every month.
Step 1: How much can you borrow?
Two rules set your ceiling.
- Loan-to-value (LTV). With no outstanding housing loan, banks can lend up to 75% of the price or valuation, whichever is lower. The limit falls if you already have a housing loan, or if the loan tenure runs past 30 years or beyond age 65.
- Total Debt Servicing Ratio (TDSR). All your monthly debt repayments, including car loans and the new mortgage, must stay within 55% of your gross monthly income. Banks test this at an interest rate of at least 4% for private property, not today's rate.
Whichever is lower is your real borrowing limit.
Step 2: What you need upfront
- Down payment. With a 75% loan, you pay 25%. At least 5% must be in cash; the rest can come from CPF Ordinary Account savings or cash.
- Buyer's stamp duty. Tiered from 1% to 6% of the price. On a $1.5M home it's $44,600.
- ABSD, if it applies to you: 0% for a citizen's first home, and 20% or more for others.
- Other costs. Legal fees, valuation fees and, later, renovation and furnishing.
Stamp duties are due within 14 days of exercising the option, so they need to be ready early.
Step 3: What you can pay every month
Passing TDSR doesn't mean a repayment is comfortable. Add maintenance fees, property tax and insurance to the mortgage, and make sure you'd still manage if interest rates rose by 1% to 2%. Many buyers also keep six months of instalments in reserve.
A worked example
Take a Singapore Citizen buying a first home at $1,505,000 with no existing loans and a 30-year tenure:
For a new launch, the remaining 5% of the down payment falls due at the foundation stage, and the bank loan is drawn progressively as construction goes on.
Upgrading from an HDB flat?
You must have met your flat's Minimum Occupation Period before buying private property. If you're a married couple with at least one Singapore Citizen and you buy before selling, you'll pay ABSD first. You can then apply for a refund if you sell the flat within the time IRAS allows. Plan the sale carefully so the timing works.
Try your own numbers in our cash outlay calculator, or read 7 things to consider before you start.
General information only, not financial advice. Get an in-principle approval from your bank for an exact figure.
Interested in Dunearn House?
Dunearn House is the first private condominium in the Bukit Timah Turf City transformation. Get the latest price list, balance units and floor plans on WhatsApp, or work out your cash outlay with our calculator.