Buying a home is not a one-time investment as it requires massive capital. 

You can take out a loan to ease the burden, but the question in your mind could be “how much housing loan can I get?”

The amount of home loan you can get depends on how much you can afford. 

Always purchase a property within your means. The amount you can get is also influenced by how much your bank is willing to lend you based on its eligibility criteria. 

Here is a detailed guide to help you know the mortgage amount you can afford, what loan-to-value (LTV) ratio means and how it works, and the maximum LTV you can get from banks. 

How To Know The Loan Amount You Can Afford 

Most Singaporeans dream of owning a home where they can settle with their families.

However, before you buy a property, it is essential to ask yourself “how much can I borrow for a home loan?” 

This is because a home loan is not free money – you must repay the debt according to the agreed terms and conditions. 

You can know how much you can afford by considering the: 

Upfront Cost 

This refers to the cash needed to start a home transaction with the buyer. 

This includes the downpayment, legal cost, option fee, stamp duty, renovation, agent’s commission fees, plus miscellaneous charges. 

You can calculate how much you have saved for your property’s upfront cost depending on your Central Provident Fund (CPF) Ordinary Account savings, cash savings, or net proceeds from your old property, if any. 

Ongoing Expenses 

After paying the upfront cost, there are other expenses that you cannot cover with your CPF savings. 

Therefore, you will need additional income streams, such as employment, to meet them. Examples include: 

• Monthly expenses: This includes fire and mortgage insurance, conservancy fees, property taxes, and management services. 
• Monthly installments: Depending on your HDB loan amount, you will make monthly payments to cover the loan costs. It would be best if you shopped around to find the cheapest interest rates when taking a home loan. Also, choose a longer loan duration to reduce the amount you will be paying per month. 

Calculating How Much Do You Need For A Mortgage Loan 

Knowing how much you need for your mortgage loan is vital before sending your loan application.

You can determine the amount you need to borrow by first calculating how much you already have at your disposal. These include your: 

• Cash savings
• Sale proceeds from your old property, if any 
• CPF savings 
• Income 

After knowing the cash you have to cover your home buying cost, you can subtract it from the total purchase price plus additional expenses of your new property. 

From there, you can answer “how much mortgage loan can I get?” 

After deciding the amount to borrow, you can calculate your monthly installment and total repayment amount. 

All you need to do is get a trusted loan calculator online. For example, licensed money lender BST Credit provides a simple calculator where you can compute your loan numbers.

What Is The Loan-To-Value Ratio? 

The LTV ratio is the loan amount you can borrow to finance your new property. 

For example, if the LTV is 75%, you can take out a loan worth up to 75%, depending on how much you need.

This ratio can differ based on the lender. Therefore, the amount you will get from a bank, HDB loan, or licensed money lender may not be the same. 

Usually, the HDB loan amount is higher than that of banks in Singapore.

Sometimes, a home can be priced higher than its actual value. This difference is called the Cash Over Value (COV).  

Maximum LTV You Can Get From A Bank Loan And HDB Loan 

If you are asking “how much can I get from a bank?” here is the answer;

Banks offer a maximum of 75% LTV. This means you will get up to 75% to finance your housing loan and then top up the 25% from other sources. 

You can pay 20% with your CPF savings or any other source, but the rest of the 5% minimum must be paid in cash. 

On the other hand, if you choose to take out an HDB concessionary loan, you can get up to 85% LTV. 

The amount was reduced from 90% on 16 Dec 2021. You can pay the remaining 15% with your cash or CPF savings, or combine both.

Apart from the two, you can also get a mortgage loan from licensed money lenders. 

For example, you can approach the BST Credit for such loans if you do not meet bank or HDB loan requirements. 

The Ministry of Law regulates legal money lenders, hence it is safe to borrow from them.  

How LTV Works

Let’s say you want to purchase a five-room new house in Singapore worth $600,000. However, the seller has quoted the selling price as $615,000. 

The difference, which is $15,000, is what is referred to as the COV. 

If you choose to take out your loan from the bank, you can take up to 75% of $600,000, which is $450,000. 

Then, you can use your CPF savings to pay off 20% ($120,000) to cover the downpayment. Finally, you can source the remaining 5% ($30,000), plus the COV ($15,000) from your savings, because it has to be paid in cash. 

On the other hand, if you opt for an HDB loan, the maximum amount you can borrow is 85%, which is $510,000 of the value of the new property. 

You can pay the remaining 15% ($90,000) with your CPF savings or cash. However, the COV ($15,000) must be paid in cash. 

Borrowers often wonder “how much housing loan can I get?” 

It is important to know that the Monetary Authority of Singapore (MAS) regulations allow them to take a bank loan to cover the downpayment. 

You can do so if you do not have any savings to cover this cost.

What MSR AND TDSR Are

When a bank wants to know the maximum bank loan for HDB you can borrow, it will assess it through the Mortgage Servicing Ratio (MSR) and the Total Debt Servicing Ratio (TDSR). Other lenders will also do the same. 

So, what are MSR and TDSR?

MSR

This is the proportion of your gross monthly income you use to pay your home loan. It is calculated as follows: 

MSR = monthly mortgage repayment/ gross monthly income 

The maximum MSR for HDB and bank home loans should not exceed 30% of your gross monthly income. 

Therefore, if you earn $5,000 per month, your maximum mortgage repayment should not be more than $1,500, that is, 30% of $5,000. 

It is important to note that your spouse’s monthly income will be included in the MSR calculation. 

For instance, if both of you earn $5,000 each, you will pay a maximum of $3,000 for your home loan. This is 30% of the $10,000. 

Also, MSR is inclusive of all your property’s loan obligations. For example, if you are currently paying $500 for a home loan, it will affect the MSR. 

The calculation will be as follows: 30% of $5,000 is $1,500. Instead of paying $1,500, the $500 will be deducted. Therefore, your new loan repayment amount will be $1,000. 

TDSR 

Unlike MSR, which focuses on mortgage payments, TDSR considers all your monthly loan repayments. 

For example, if you have a car loan or a credit card debt, it will be calculated in the TDSR. 

Currently, your TDSR should not exceed 55% of your monthly income. 

Therefore, before you ask “how much housing loan can I take?”, think of all the debts you owe banks and lenders. 

This is because you cannot borrow an amount that will make your total monthly repayments exceed 55%. 

TDSR is calculated as follows: 

TDSR = total monthly debt payments/ Gross monthly income

Factors That Affect The LTV Ratio

As mentioned earlier, the maximum LTV for a bank loan is 75%, while that of an HDB loan is 85%. However, this is not always guaranteed. 

Your LTV may be lower due to the: 

Loan Tenure And Your Age

The LTV for private properties was set at 55% from 6 Jul 2018 if the loan tenure is more than 30 years or if the term plus your age is more than 65. 

On the other hand, if you are buying an HDB flat, you can take out a loan worth 55% LTV if the max HDB loan tenure exceeds 25 years. 

The same applies if your age plus the loan tenure extends to more than 65 years.

Therefore, if you take out a private home loan at age 35, you need to repay it before you turn 65 to qualify for the maximum LTV of 75%.  

Your Unpaid Home Loans 

If “How much can I loan from a bank?” is the question on your mind, you need to consider other outstanding home loans you owe lenders. 

This is because if you have one unpaid home loan, your LTV of a second home loan is capped at 45%. 

For the remaining amount (which is 55% representing the downpayment), half should be paid in cash, while the rest can be settled with your CPF savings or cash. 

If you have two outstanding home loans, you can only borrow a third loan worth 35% LTV. 

It is important to note that these LTVs are eligible for home loans with 30 years or less loan tenure (or 25 years or less for HDB).

If the loan tenure is more than 30 years or exceeds the age limit of 65, the LTV may be lower.

State And Location Of Your Property

When sourcing a home loan from lenders, your property’s location and state matter. 

If your property has significant defects, such as cracked walls risking the lives of the residents, its LTV may go lower.

Also, if it is located abroad or in an area that is not easily accessible, you may receive a lower LTV.

Remaining Lease Period 

If your property has 36 to 40 years left for leasing, its maximum LTV is capped at 60%. You can still cover 15% of its value with your CPF to meet 75% of its price. 

However, getting a home loan is usually impossible if your property has 35 years or less left for lease. 

In addition, you cannot use your CPF savings for a property that is 30 years or less left on its lease.

Such properties are, however, purchased via monthly repayments. This can happen through a private contract with the help of a law firm between the buyer and the seller. 

It can also be possible for wealthy buyers who can access special loans from private banking institutions.    

Your Credit Rating

Another factor affecting your HDB loan amount that you can qualify for is your credit score. 

Lenders will check your credit rating through your credit history. If your score is bad (close to 1,000), your LTV will go down. 

This could be caused by late payments or default, indicating that lenders take on considerable risk by giving you a mortgage. 

Always Know How Much You Can Afford For A Housing Loan

If you are in the process of buying a new property in Singapore, you might be asking, “how much housing loan can I get?”. 

Before you know the amount you qualify for, you should determine how much you can afford. This depends on the upfront and ongoing expenses you need to cover the cost of the property. 

You can get a mortgage from banks or source an HDB loan. However, you can approach a licensed money lender if you do not meet the bank’s requirements. 

The maximum bank loan for HDB is 75% which reflects your LTV, while that of HDB loan is 85%. 

However, this amount can be affected by your outstanding home loans, age and loan tenure, credit score, and remaining tenure period. 

If you want to know how much housing loan you can get, don’t hesitate to contact BST Credit. 

We are a licensed money lender that will help you find your home loan numbers through our simple-to-use calculator. 

You can also apply for a mortgage, and enjoy some of the best rates in the market.