Using your CPF for housing: what to know before you buy
Most Singaporeans use their CPF to buy a home. How the Ordinary Account pays for housing, HDB vs bank loans, and why accrued interest matters when you sell.
For most Singaporeans, CPF savings are what makes home ownership possible. Your Ordinary Account (OA) can pay for the down payment, stamp duties and legal fees, and your monthly mortgage instalments. Using CPF well can make a home affordable without draining your cash, but using too much can leave you short in retirement. This guide explains using CPF for housing in Singapore: what CPF can pay for, HDB versus bank loans, accrued interest, and how to protect your retirement savings.
What CPF can pay for
Your OA savings can be used for the down payment, buyer's stamp duty and legal fees, and monthly repayments for an HDB flat or private property, subject to limits. For private property and some resale flats, the amount you can use depends on the property's value or price, whichever is lower, and on the remaining lease, which must be long enough to cover the youngest buyer to age 95 for full use. Check the rules with CPF's housing calculators before committing.
Some costs cannot be paid from CPF, such as renovation, furnishing and, for private property, the option fee. Budget cash for these.
HDB loan or bank loan?
For HDB flats, eligible buyers can choose an HDB concessionary loan or a bank loan. The HDB loan rate is pegged at 0.1 percentage points above the OA interest rate, so it is stable, currently 2.6%, and HDB loans allow a smaller cash down payment. Bank loans can be cheaper when market rates are low, but their rates can rise. Once you switch from an HDB loan to a bank loan, you cannot switch back. Private property must be financed with a bank loan.
To compare, consider a $400,000 loan over 25 years. At 2.6%, the monthly instalment is about $1,815. A bank loan at 2.0% would cost about $1,695 a month, but if rates rose to 3.5%, it would cost about $2,002. Our loan calculator lets you test different rates and tenures.
Accrued interest when you sell
When you use CPF for housing, the amount you withdraw, plus the interest it would have earned in your OA, must be refunded to your CPF account when you sell the property. This is called accrued interest. It is your own money going back to your retirement savings, not a charge, but it reduces the cash you receive from the sale, which surprises some sellers. Your CPF statement shows the amount.
Protecting your retirement
Using your OA for housing means less money compounding for retirement. A useful habit is to keep some savings in your OA rather than using every dollar on the mortgage, and to avoid stretching the loan to the maximum just because you can. Remember that from 55, part of your savings goes to your Retirement Account; see our CPF accounts guide. Paying part of your instalments in cash, when you can, leaves more in CPF to grow at its guaranteed rates, explained in our guide to CPF interest rates.
Plan the whole picture
Before buying, work out the total cost including stamp duties, renovation and furnishing, and leave a cash emergency fund. Consider how a change in income, such as one partner stopping work, would affect your ability to pay. Home protection insurance is also important: the Home Protection Scheme covers HDB loans paid with CPF if a member dies or becomes permanently disabled, while private property owners often take out mortgage insurance.
Frequently asked questions
Can I use CPF to pay for a house in Singapore?
Yes. Ordinary Account savings can pay the down payment, stamp duty, legal fees and monthly instalments, subject to limits.
What is the HDB loan interest rate?
It is pegged at 0.1 percentage points above the OA rate, currently 2.6%.
What is accrued interest on CPF housing?
The interest your CPF savings would have earned, which is refunded to your CPF account with the amount used when you sell.
Sources
This article is general information, not financial advice.