HDB Loan vs Bank Loan: How to Calculate Which Saves You More in Singapore

The Two Main Home Loan Options in Singapore

When buying an HDB flat, you have two financing choices:

HDB Concessionary Loan — provided directly by HDB
Bank Loan — from a commercial bank or financial institution

Both have very different interest rate structures, down payment requirements, and flexibility — all of which affect your total cost over the loan tenure.

Key Differences at a Glance

Feature	HDB Loan	Bank Loan
Interest Rate	2.6% p.a. (fixed to CPF OA rate + 0.1%)	1.5%–3.5% (variable or fixed packages)
Down Payment	10% (can use CPF OA)	25% (5% must be cash)
LTV Limit	80%	75%
Flexibility	Can refinance to bank later	Cannot switch to HDB loan
Prepayment Penalty	None	Usually 0–1.5% in lock-in period

Calculating Total Interest Paid

The total interest you pay is determined by:

Loan amount
Interest rate
Loan tenure (up to 25 years for HDB, 30 years for bank)

Example: S$400,000 loan over 25 years

HDB Loan at 2.6%:

Monthly repayment: ~S$1,810
Total repaid: ~S$543,000
Total interest: ~S$143,000

Bank Loan at 1.8% (initial fixed rate for 2–3 years):

Monthly repayment: ~S$1,650 (during fixed period)
After fixed period, rate typically reverts to a floating rate (~3.0–3.5%)
Total interest over 25 years at avg 2.5%: ~S$132,000

Note: Bank loan rates fluctuate. The apparent savings in early years can be eroded if rates rise significantly.

The Hidden Risk of Bank Loans: Rate Volatility

Bank loan interest rates in Singapore are typically pegged to:

SORA (Singapore Overnight Rate Average)
Fixed Deposit Rate (FDR)
Board Rate (lender's internal rate)

When rates rise (as they did sharply in 2022–2023), your monthly repayment increases. The HDB loan rate, while higher on paper, has historically remained stable and predictable.

When a Bank Loan Wins

A bank loan is typically better when:

Rates are low and you lock in a multi-year fixed package
You have a significant cash down payment (reducing the loan amount)
You plan to refinance strategically every 2–3 years
You're buying a larger, more expensive flat where the interest savings are material

When an HDB Loan Wins

An HDB loan is typically better when:

You want certainty and stability in monthly payments
You don't have 5% cash for the down payment
You're a first-time buyer wanting simplicity
Rates are rising and the HDB rate becomes competitive

The Down Payment Calculation

This is often the deciding factor. For a S$500,000 flat:

HDB loan: 10% down = S$50,000 (all from CPF OA is fine)
Bank loan: 25% down = S$125,000 (at least S$25,000 must be cash)

If you don't have S$25,000 in cash savings, HDB loan may be your only viable option.

Use the Calculator

Our Mortgage Calculator lets you compare total interest, monthly repayments, and total cost side-by-side. Also check the HDB Affordability Calculator to see what flat price fits your income, and the TDSR Calculator to check your debt limits.