HDB Loan vs Bank Loan 2026: Which Is Better?

Hand holding a set of house keys at a front door — New keys, whichever loan pays for them. Photo: Jakub Żerdzicki on Unsplash

At a glance

HDB loan rate: 2.6% a year (CPF OA rate + 0.1%), held for 1 Oct to 31 Dec 2026
Bank rates (Sept to Oct 2026): Fixed about 1.4% to 1.8%; floating SORA plus 0.2% to 0.5%
Loan-to-value: 75% for both (bank drops to 55% if tenure exceeds 25 years or runs past 65)
Instalment cap: MSR 30% of income for HDB flats; banks also apply TDSR 55%
Switching: HDB to bank allowed; bank to HDB not allowed

The short answer

For most HDB buyers in late 2026, a bank loan has the lower rate and an HDB loan has the lower risk. HDB charges 2.6% a year. Mortgage broker tables from September and October 2026 show bank fixed packages for HDB flats from about 1.4% to 1.8%. Both lend up to 75% of the lower of the price and the valuation. The HDB loan wins on flexibility and predictability; the bank loan wins on today’s cost. The decision is lopsided because you can move from HDB to a bank later but never back. We checked all rates and limits on 12 October 2026.

	HDB loan	Bank loan (HDB flat)
Interest rate	2.6% (CPF OA rate + 0.1%), reviewed quarterly	Fixed about 1.4% to 1.8%, or SORA plus a spread (Sept to Oct 2026)
Loan-to-value	Up to 75% of the lower of price or value	Up to 75%; 55% if tenure exceeds 25 years or runs past age 65
Downpayment	25% of the lower of price or value, from CPF OA and/or cash	25%, at least 5% in cash (45% with 10% cash at the 55% limit)
Maximum tenure	25 years, or shorter by age and remaining lease	Up to 30 years
Instalment cap	30% of monthly income	MSR 30% and TDSR 55%
Eligibility limits	Income ceiling $16,000 (families), $8,000 (singles); no private property in 30 months	Bank’s own credit checks
Early repayment	No penalty	Lock-in usually 1 to 3 years with penalties
Switch later	Can refinance to a bank	Cannot refinance to HDB
Legal work	HDB can act	Private solicitor, often from the bank’s panel

Interest rates now

HDB’s concessionary rate is 2.6% a year. It sits 0.1 percentage point above the CPF Ordinary Account rate, which is at its 2.5% floor, and CPF Board has held both rates for the October to December 2026 quarter.

Bank rates are lower at the moment. In broker tables dated September 2026, the lowest two-year fixed rate for HDB flats was 1.45% (Maybank) and the lowest three-year fixed was 1.65% (DBS). Another broker’s October 2026 table shows fixed rates of 1.75% to 1.80% at UOB, Bank of China and HSBC. Floating packages were priced at compounded SORA plus 0.2% to 0.5%, with three-month compounded SORA quoted at about 1.1% to 1.2%. These are broker figures, not bank rate cards, so get quotes directly before you commit.

The gap has not always run this way. MoneySmart notes that fixed bank rates were in the low 3% range in early 2025, above HDB’s 2.6%. The HDB rate has stayed flat throughout.

On a $500,000 loan over 25 years, the difference looks like this:

Rate	Monthly instalment	Total interest over 25 years
1.6%	About $2,023	About $107,000
2.6% (HDB)	About $2,268	About $180,500
3.0%	About $2,371	About $211,300
3.5%	About $2,503	About $250,900

The 1.6% figure only holds while the fixed period lasts, usually two to three years. After that, the bank rate floats or you refinance. That is the trade: a lower rate today against the risk of a higher one later, with no way back to 2.6%.

How much you can borrow: LTV, MSR and TDSR

Both lenders cap the loan at 75% of the lower of the price and HDB’s valuation. A low valuation therefore cuts the loan and leaves more to pay in cash. Our HDB valuation and COV guide explains how that works.

For a bank loan, the 75% limit falls to 55% if the tenure is more than 25 years for an HDB flat, or if the loan runs past age 65. The cash part of the downpayment rises from 5% to 10% at the same time.

Income limits differ in name more than in effect. The Mortgage Servicing Ratio caps instalments for an HDB flat at 30% of gross monthly income, and MAS applies it to bank loans on HDB flats too. HDB’s own loan uses the same 30% cap. Banks also apply the Total Debt Servicing Ratio, which keeps all your monthly debts, including car loans and credit cards, under 55% of income. Banks test affordability at a stress rate rather than your actual rate, so the loan you qualify for can be smaller than a simple calculation suggests.

Who can get each loan

You can only take an HDB loan if your household fits HDB’s rules: at least one Singapore Citizen, household income within $16,000 a month for families or $8,000 for singles, no private property owned or sold in the 30 months before your HFE application, fewer than two HDB loans taken, and in work when you apply. The HFE letter tells you whether you qualify and how much.

Bank loans have no income ceiling and no private property rule, but the bank assesses your credit and the TDSR. HDB lists DBS, Hong Leong Finance, Maybank, OCBC and UOB as lenders you can compare inside the HDB Flat Portal.

The one-way switch

HDB lets you refinance an HDB loan with a bank at any time, without a penalty from HDB. A bank loan can be refinanced only with the same or another bank. HDB will not take it back.

That makes the choice asymmetric. Starting with HDB keeps both doors open: you can move to a bank if rates stay low. Starting with a bank closes the HDB door for that flat. If you value a fixed, predictable instalment or think your income may drop, that option is worth something, even if it costs a little more today.

For upgraders

The loan you need depends on what you’re upgrading to.

From an HDB flat to a bigger HDB flat. You can take a second HDB loan, since households can have two. Before HDB lends again, you must use your full CPF refund and part of the cash from your sale. You can keep $25,000 or 50% of the cash proceeds, whichever is more. A bank loan avoids that rule but closes off HDB financing on the new flat.

From an HDB flat to private property. HDB loans don’t cover private homes, so you will need a bank loan. If you still have an outstanding loan on the flat when you take the new one, the LTV for the second loan drops to 45% or lower under MAS rules. Most upgraders time the sale so the HDB loan is repaid at completion first. Our HDB resale process guide shows the sale timeline, and our decoupling guide covers what HDB does and doesn’t allow if you want to keep the flat.

How to decide

Get your HFE letter and at least two bank in-principle approvals so you know both loan amounts.
Compare the instalment at 2.6% with the bank rate, and also at 3.5% to see whether you could carry a rate rise.
If the gap is small or you want certainty, start with HDB. You can still refinance later.
If you take a bank loan, check the lock-in period and what happens to the rate after the fixed years.

This page is general information, checked on 12 October 2026. Rates change often, so confirm current packages with HDB and the banks.

Common questions

What is the HDB loan interest rate in 2026?

2.6% a year. It is pegged at 0.1 percentage point above the CPF Ordinary Account rate, which is at its 2.5% floor, and CPF Board has kept it at 2.6% for October to December 2026.

Is a bank loan cheaper than an HDB loan right now?

On headline rates, yes. Broker tables in September and October 2026 show fixed bank packages for HDB flats from about 1.4% to 1.8%. Bank rates move with SORA, though, and were in the low 3% range in early 2025.

Can I switch from a bank loan back to an HDB loan?

No. HDB lets you refinance an HDB loan with a bank, but a bank loan can only be refinanced with another bank. Once you leave HDB financing for that flat, you can't return.

Can I use an HDB loan to buy a condo?

No. HDB loans are only for HDB flats. Upgraders moving to private property need a bank loan, and HDB loan eligibility also requires no private property owned in the previous 30 months.

How much cash do I need with a bank loan?

At the 75% limit, the 25% downpayment must include at least 5% in cash, with the rest from CPF or cash. If the loan is capped at 55%, the downpayment is 45% with at least 10% in cash.

Can I take a second HDB loan when I upgrade to a bigger flat?

A household can take up to two HDB loans. For the second, you must first put in your full CPF refund and part of your cash proceeds from the sale, keeping $25,000 or 50% of the cash proceeds, whichever is more.

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Sources

Facts on this page were checked against these sources on 12 October 2026.