How Much Do You Need To Earn To Buy A Home In Singapore [Updated HDB 2024 Edition]

Recently, I have met a number of young couples who are looking for their first home. As this will be the biggest purchase of their lives, it is only natural that they are anxious about their finances, the weight of their loan instalments and more. Plus, this is going to be a decision that they will have to live with for the next few years.

Actually, a personalised consultation would be most ideal, but we often hear that buyers could be a little shy to meet with agents or fearful of possible hard-sell tactics.

So, this article aims to give you information to some of your home-buying questions. So how much would you need to earn to buy a home in Singapore.

First up, what types of homes are there?

This is simple. We have:

1. HDB BTOs

2. HDB resale units

3. Executive condomiums

4. New launches

5. Condo resale units

6. Landed properties

Let's first look at the HDB BTOs and HDB resale units:

What Are The Prices Of HDB BTOs In Singapore?

In the recent February 2024 HDB BTO Launch, there are various estates with different affordability range for buyers.

Table of Feb 2024 HDB BTO Indicative Starting Prices

Based on the selling price (excluding grants), it ranges from $102,000 upwards for a 2-room BTO at Choa Chu Kang to $575,000 upwards for a 5-room BTO at Bedok.

These are the starting prices so higher floor units will come with a higher price tag. Don't be alarmed that a 40-storey unit in a skyscraper block could add another $150,000 to $200,000 to these starting prices.

What Are The Prices Of HDB Resale Units In Singapore?

Being successful in a HDB BTO ballot often requires luck. I have come across clients who were unsuccessful for years. They started balloting while they were dating and now their wedding is just round the corner and they are still unsuccessful in their BTO attempts. It is inevitable that they start looking into the HDB resale market for immediate alternatives.

Extracted from HDB website, the below table shows the median transacted resale prices [aka middle value transacted prices] of HDB resale flats across various towns.

Table Of Median HDB Resale Transacted Prices As At Q4 2023 [From HDB]

HDB resale are non-subsidised homes and thus their resale prices are higher than HDB BTOs. Looking at this table, the median prices range from $319,000 for a 2-room resale HDB in Choa Chu Kang to $918,000 for a 5-room HDB in Bishan.

These are the median prices so do expect higher price premium for units that :

• are newer e.g. units that just met the 5-year Minimum Occupancy Period

• are located near amenities, MRT station and bus interchange

• are on high floors

• are renovated

• come with unblocked views etc.

Now, that we have an idea of the prices. Let's start looking at the math.

How Much Can You Loan From The Bank For Your HDB BTO or HDB Resale?

To simplify the math, let's assume that the buyers are Singapore citizens taking bank loan.

For HDB BTOs, HDB resale units and executive condominiums (ECs), buyers are subject to the 30% Mortgage Debt Servicing (MSR) ratio.

What Is Mortgage Debt Servicing (MSR)?

MSR is a financial guideline that limits the amount of salary that buyers can use to repay loans. The main purpose of MSR is to ensure that buyers do not overextend themselves financially when buying HDB and EC units.

Illustrated Example of 30% Mortgage Servicing Ratio

A 30% MSR means that your maximum loan instalment for each month cannot exceed 30% of your household income. For example, if your combined monthly income is $10,000, the maximum monthly instalment allowed for loan is $3,000.

If the buyers have existing debt obligations e.g. car loan, school loan etc, this will form part of the 30% MSR and reduce the loan quantum for your property loan.

What Is Our Loan Quantum For A 25-Year Loan Tenure?

All of us can take a loan up to 65 years of age, and the standard loan tenure is up to 25 years for HDB BTOs and HDB resale. You can explore with the bank to take a longer tenure but this will come with more conditions. If you wish to know more about this, PM me.

Buyers below 40 years old can safely take the full 25-year loan tenure. Buyers who are older than 40 will be faced with a shorter loan tenure and their loan quantum would be reduced accordingly.

Based on a 25-year loan tenure, these are the estimated loan quantum for HDB BTOs and HDB resale units for the various income tiers:

Estimated Loan Quantum For 25-Year Bank Loan For HDB BTO And Resale

How to read this chart: For example, a household income of $5,000 is likely to be able to secure a bank loan of about $280,000.

So How Much Do We Need To Earn To Buy A HDB BTO In Singapore?

Now that we know the possible loan quantum, let's go into the payment milestones of buying a HDB BTO or HDB resale across the various price range.

Artist's Impression Of Tanjong Tree Residences At Hougang [From SRX]

Math for Non-Mature Estate Hougang HDB 4-Room BTO With $400K Selling Price

Payment Milestones	Type of Payment	Amount
Option Fee To Book Flat	Cash	$2K for HDB 4-room
5% Downpayment	Cash	$18K [less $2K option fee]
Remaining 20% Downpayment	CPF/Cash	$80K
Stamp Duty	CPF	$6.6K
75% Loan	Loan	$300K
TOTAL		$406.6K

Based on a selling price of $400K, do make sure that:

• you have cash of $20K

• your CPF accounts have $86.6K

• your IPA allows for $300K

So for a HDB 4-room flat in Hougang that may cost about $400,000, you will need to have a combined income of $5,000+ [use table 1 to check need loan quantum vs household income].

Artist's Impression Of Bedok North Spring BTO

Math for Mature Estate Bedok HDB 4-Room BTO With $600K Selling Price

Payment Milestones	Type of Payment	Amount
Option Fee To Book Flat	Cash	$2K for HDB 4-room
5% Downpayment	Cash	$28K [less $2K option fee]
Remaining 20% Downpayment	CPF/Cash	$120K
Stamp Duty	CPF	$12.6K
75% Loan	Loan	$450K
TOTAL		$612.6K

Based on a selling price of $600,000, do make sure that:

• you have cash of $30K

• your CPF accounts have $132.6K

• your IPA allows for $450K

So for a HDB 4-room BTO in Queenstown that may cost about $600,000, you will need to have an household income of $8,000 and above [use table 1 to check need loan quantum vs household income].

Well, according to the data released in February 2024 by the Department of Statistics, the median monthly household income from work is $10,869 in 2023. So this means that HDB BTO flats are relatively affordable for buyers. And this should be the case because BTOs are subsidised housing option for Singaporeans. On top of owning a brand new unit, buyers are almost guaranteed capital appreciation from these BTOs.

BTOs are such popular options that we often hear buyers lamenting that they aren't able to get a ballot number for these BTO launches.

How Much Do We Need To Earn To Buy A HDB Resale In Singapore?

Well, the amount of cash, CPF and loan that you will need for a HDB BTO and HDB resale is the same, if the HDB resale does not have any cash over valuation.

What Is Cash Over Valuation (COV)?

Cash Over Valuation (COV) refers to the amount that a buyer pays above the market valuation of a resale HDB flat.

When buyers are keen to buy a HDB resale, they will need to submit a valuation request to HDB. HDB will update the buyers within seven working days of the valuation price of the unit.

Illustrated Example Of Cash Over Valuation

If the agreed selling price is within HDB valuation, then the buyers do not need to pay any COV. If the agreed selling price is higher than HDB's official valuation, then buyers will need to pay COV.

For example, if buyers agree to buy a resale HDB at $1m, and HDB values the flat at $950,000, then buyers will need to pay cash for the difference of $50,000.

This matters a lot to buyers because COV must be paid in cash, as CPF funds cannot be used for this purpose. Therefore, buyers should carefully consider their budget and financial situation before agreeing on a purchase price that is above the market valuation.

Let's look at the payment milestones for a Bishan 5-room resale with a likely price tag of $1m.

Photo Of Bishan Resale Homes

Math for Mature Estate Bishan HDB 5-Room Resale With $1M Selling Price With $50K COV

Payment Milestones	Type of Payment	Amount
Cash Over Valuation	Cash	$50K
Option Fee To Book Flat	Cash	$5K
5% Downpayment of HDB Valuation	Cash	$42.5K [less $5K option fee]
Remaining 20% Downpayment of HDB Valuation	CPF/Cash	$190K
Stamp Duty of Selling Price	CPF	$24.6K
75% Loan of HDB Valuation	Loan	$712.5K
TOTAL		$1.0246m

Based on a selling price of $1m, do make sure that:

• you have cash of $97.5K

• your CPF accounts have $214.6K

• your IPA allows for $712.5K

So for a HDB resale 5-room in Bishan that may cost about $1m with $50K, you will need to have an household income of $12,000+ [use table 1 to check need loan quantum vs household income].

This is only a guideline assuming that you have just sufficient cash savings and CPF OA funds needed for the purchase. What if you have more cash and CPF funds?

How Do You Calculate Your Own Home Budget?

We strongly encourage you to have a one-to-one chat with a real estate agent to work through your math. Nonetheless, you can use this rule of thumb as a guide:

A Simplified Formula To Calculate Home Budget

This means that your cash savings + your CPF OA funds + loan quantum must be able ot cover the property's selling price and its stamp duty.

The amount of stamp duty varies according to the selling price. You can use the IRAS tax calculator to calculate the stamp duty.

By now, you should have a rough idea of how much you would need to earn to buy a HDB BTO or HDB resale.

What Other Options If We Are Keen On Capital Appreciation?

We also hear of buyers who aren't keen to buy HDB resale as they aren't the best option for capital appreciation. For those who wish to see strong paper gains in their properties to hedge against inflation, you can consider executive condominiums, new launches or resale condos.

Stay tuned for the next blog article about - How Much Do You Need To Earn To Buy A EC or Condo In Singapore?

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ABOUT THE AUTHOR

Pris Low has close to 20 years experience in the non-profit sector - representing consumers in their conflicts with retailers and advocating for the less privileged in our community.

Her social service background has helped her to be sensitive and attentive to her clients' needs and feelings so that she can prepare them, both financially and emotionally, to welcome their new homes.

She has thrived because she doesn't tell her clients what to do. She hears their needs and explains the options to them. She respects every choice made by her clients because she feels that there is no wrong decision as long as it meets their needs and they are aware of the possible pitfalls and prepare for it.

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Her Clients' Interests Over Hers. Always.