HDB Loan vs Bank Loan in Singapore (2026)
This is not a “which rate is lower today” choice. It’s: how much rate risk you can survive and whether the eligibility and downpayment constraints fit your plan.
Decision checklist
- Eligibility: Do you qualify for HDB loan (and does your flat’s lease/income profile fit)?
- Buffer: Can you handle a +1–2% rate shock without changing your life?
- Downpayment: Do you have the upfront cash/CPF needed if bank LTV is lower?
- Horizon: Will you likely refinance within 2–3 years, or hold steady?
- Psychology: Do you want predictability, or are you comfortable managing rate cycles?
Worked example (illustrative)
| Option | Rate assumption | Monthly instalment | What to watch |
|---|---|---|---|
| HDB loan | 2.6% stable | ≈ $2,720 | Lower shock risk; fewer refinance levers |
| Bank (promo) | 2.0% for 2 years | ≈ $2,540 | Lock-in + what happens after promo |
| Bank (post-promo) | 3.5% thereafter | ≈ $3,000 | This is the fragility test, not the promo |
HDB loan vs bank loan: what actually matters
- Interest-rate risk: HDB loan is historically more stable (pegged to CPF OA), bank loans can move fast.
- Downpayment: Bank loans often require more cash/CPF upfront (lower LTV), HDB loan can be higher LTV if you qualify.
- Approval constraints: HDB loan eligibility rules can be the real bottleneck (income/ownership/remaining lease).
- Optionality: Bank loans give you more refinancing options; HDB loan is simpler but less flexible.
Decision rules (simple, usable)
- Choose HDB loan if you need maximum stability, smaller buffers, and you qualify comfortably.
- Choose bank loan if you have buffers, you want flexibility, and the rate gap is meaningful after fees.
- If you’re stretching TDSR/MSR, focus less on rate forecasts and more on fragility: what happens if rates + expenses spike together?
Run the numbers (recommended)
FAQ
Is HDB loan interest rate always 2.6%?
It has historically been set at CPF OA + 0.1% (with a floor), but policy can change. Treat it as “more stable than bank”, not “guaranteed forever”.
Can I switch from HDB loan to bank loan later?
Yes, many owners refinance from HDB to a bank loan later. Switching back to HDB loan is generally not allowed, so treat that first switch as one-way.
Is bank loan always cheaper?
Not always. Promotional bank rates can be lower, but you must consider lock-in periods, legal/valuation costs, and what you will pay when the promo ends.
What’s the biggest mistake people make?
Optimising for the lowest initial rate while ignoring buffers. If a rate spike would force lifestyle cuts or a sale, you’re over-levered regardless of the ‘cheaper’ loan.