HDB Loan vs Bank Loan: What Changes When You Upgrade to a Condo

HDB loan vs bank loan is a decision most flat owners made once and forgot. When you upgrade to a private condo, the choice is made for you: HDB lends only for HDB flats, so the new home must be financed by a bank. For an upgrader weighing LinkTown Residences (Hougang Central Residences), the private condo planned above Hougang MRT (NE14), that switch changes the rate you pay, the test you must pass and how much cash you need on booking day.

The two loans compared

	HDB housing loan	Bank loan
Can finance	HDB flats only	HDB flats, ECs and private property
Interest rate	0.1 point above the CPF OA rate, reviewed quarterly (2.6% a year while OA pays 2.5%)	Set by the bank; usually floating (SORA-based) or fixed for an initial period
Loan-to-value	Up to 75%	Up to 75% on a first housing loan, lower for later loans or long tenures
Cash needed	Down payment can come fully from CPF OA	At least 5% of price in cash (more with an existing loan)
Repayment limit	Instalments up to 30% of income (MSR)	All debts up to 55% of income (TDSR), tested at 4% for private property
Maximum tenure	Shortest of 25 years, age 65 less average age, or remaining lease less 20 years	Up to 35 years for private property; LTV drops if tenure exceeds 30 years or runs past 65
Switching	Can refinance to a bank	Cannot refinance to HDB

Sources: HDB pages on the HDB housing loan and loans from financial institutions; CPF Board’s OA interest rate; MAS limits as summarised in our TDSR guide.

What changes for an upgrader

1. The rate starts to move

The HDB rate tracks the CPF OA rate, which has a legislated floor of 2.5%, so it has barely moved in years. A bank loan on an uncompleted condo is usually floating, pegged to SORA plus a spread, because fixed packages are uncommon for projects under construction. Your instalment can rise or fall every few months. The SORA guide explains how the reference rate feeds through.

2. MSR gives way to TDSR

For a flat, HDB and the banks cap housing instalments at 30% of income. For a private condo that cap does not apply. Instead, TDSR limits all monthly debts, including car loans and credit facilities, to 55% of income, with the home loan tested at 4% whatever the actual rate.

3. You need real cash

With an HDB loan, the down payment can be paid fully from CPF. With a bank loan, at least 5% of the price must be cash, and it is due first: the 5% booking fee when you take the Option to Purchase. BSD follows within weeks. For property under construction, CPF can be used to pay stamp duty directly; check your limits with CPF Board.

4. The loan draws down in stages

For a new launch, the bank releases money as construction milestones are certified, and you pay interest only on what has been drawn. Instalments are small in the early years and step up at TOP and CSC. The payment scheme page shows each stage.

Worked example: same income, two loans

Take a household earning S$10,000 a month with no other debts.

• HDB flat, HDB loan: instalments capped at S$3,000 (30%). At HDB’s 3% assessment floor over 25 years, that supports a loan of about S$632,600.
• Private condo, bank loan: all debts capped at S$5,500 (55%). At the 4% stress rate over 30 years, that supports about S$1,152,000.

The condo test allows a larger loan, but a larger loan still has to be repaid. On the indicative 2-bedroom at S$1,695,000, a 75% loan is S$1,271,250. At the 4% stress rate over 30 years, the instalment is about S$6,070, so the bank would want to see roughly S$11,030 of monthly income with no other debts. The same household would fall short, and would need a bigger cash down payment, a co-borrower or a smaller unit.

Keeping the flat while you buy

Once a flat has met its Minimum Occupation Period, households with at least one Singapore Citizen owner may buy private property and keep the flat. If all flat owners are PRs, HDB requires the flat to be sold within six months of acquiring the private home (for an uncompleted project, counted from TOP or CSC, whichever is earlier). Keeping the flat has knock-on effects on the condo loan:

• If a loan on the flat is still outstanding, the condo loan is a second housing loan: LTV falls to 45% and the minimum cash rises to 25%.
• TDSR counts both instalments.
• ABSD applies to the condo as a second property, with a refund route for married couples who sell the flat in time.

Many upgraders sell first, or line up the timing with a bridging loan. The HDB upgrader guide compares the routes.

If you ever go back to HDB

Owning private property has consequences for future HDB loans. HDB requires applicants for its loan to have no private residential property and not to have disposed of any in the 30 months before applying. A household can also take at most two HDB loans in total. Worth knowing if a condo is a stepping stone rather than a final home.

Register to get LinkTown Residences prices as soon as they’re released, so you can size your bank loan with real figures.

Frequently asked questions

Can I use an HDB loan to buy a private condo?

No. HDB housing loans are for buying HDB flats. HDB also does not lend for Executive Condominium units bought from developers. A private condo such as LinkTown Residences needs a loan from a bank or other financial institution regulated by MAS.

What is the HDB loan interest rate?

The concessionary rate is pegged at 0.1 percentage point above the CPF Ordinary Account rate and reviewed quarterly. With the OA rate at 2.5% for October to December 2026, that works out to 2.6% a year. HDB uses a 3% floor when working out how much you can borrow.

Can I switch from a bank loan back to an HDB loan?

No. HDB states you cannot refinance a bank housing loan to an HDB loan. You can move from an HDB loan to a bank loan, but not back.

Is a bank loan cheaper than an HDB loan?

It depends on the market. Bank rates move with SORA and can sit above or below the HDB rate at different times. For a condo the question does not arise, because only a bank loan is available.