The HDB Loan Lends You 11% More. The Bank Loan Costs 45% Less.

For most of the last decade the HDB loan question answered itself. If you qualified, you took it; if you earned too much, you went to a bank. On 24 August 2026 the monthly household income ceiling for an HDB housing loan rose from $14,000 to $16,000 — $7,000 to $8,000 for singles — for anyone applying for an HFE letter from that date (HDB). A band of households that was bank-only in July now has two doors, and almost every comparison they will read is built on a rule that stopped being true two years ago.

This is the at-purchase decision, not the refinancing one. Whether to leave an HDB loan you already hold is a different question with a different answer.

The advantage everyone still quotes is gone

The standard case for the HDB loan used to open with loan-to-value: HDB lent 80%, banks lent 75%, so the HDB loan needed a smaller downpayment. That stopped being true for complete resale applications received on or after 20 August 2024. Both now cap at 75% of the purchase price, or of the lower of resale price and valuation (HDB; MAS).

What survives is the composition of the 25% you put down. With a bank loan, at least 5% must be cash and the remaining 20% can be cash or CPF Ordinary Account. With an HDB loan there is no minimum cash component at all — the whole downpayment can come from CPF (CPF Board). On a $700,000 flat that is $35,000 of cash you must find for the bank and need not find for HDB. For a young household whose savings sit almost entirely in OA, that is the difference between transacting and waiting.

The real gap: HDB stress-tests you at 3%, the bank at 4%

Both loans are capped by the same Mortgage Servicing Ratio — monthly instalments up to 30% of gross monthly income. What differs is the interest rate each lender uses to convert that 30% into a loan size.

HDB computes your eligible loan at the higher of the prevailing concessionary rate and its own 3.0% interest rate floor. Banks must use MAS's 4.0% medium-term interest rate floor, raised from 3.5% on 30 September 2022 (MAS). Neither figure is the rate you pay. Both are purely sizing assumptions — and one percentage point of assumption, compounded over a 25-year tenure, is a lot of flat.

The gap is 11.3% at every income, because it is the ratio of two annuity factors and nothing else. A household at the new ceiling can carry roughly $103,000 more flat on an HDB loan than on a bank loan, on identical income and identical rules. Banks also apply the 55% Total Debt Servicing Ratio across your car loan and credit lines (MAS); HDB runs its own credit assessment of income, job stability and existing commitments instead. If you carry other debt, the bank gap widens further.

And the gap the other way: the rate you actually pay

The HDB concessionary rate is pegged at 0.1 percentage point above the CPF Ordinary Account rate, which sits at its 2.5% floor — so 2.6%, unchanged again for 1 July to 30 September 2026 (CPF Board). Bank fixed packages for HDB buyers run roughly 1.40% to 1.78% as at September 2026 (PropertyNet.SG). On a $700,000 flat at the full 75%:

$282 a month, $84,600 over the tenure — the bank loan costs about 45% less in interest, on the assumption that 1.50% holds for twenty-five years. It will not. A bank fixed rate is contractually fixed for two or three years and then reprices into whatever the cycle has become; the concessionary rate has barely moved through an entire rate cycle. The honest version of the table above is that the bank saves you a known amount now in exchange for an unknown amount later, and the breakeven is clean: the bank wins only if your average rate across the whole remaining tenure stays below 2.60%.

The cost nobody puts in the comparison: your OA gets emptied

This is the term that decides the question for more households than the rate does, and it appears in almost no comparison table.

Take an HDB loan and you may retain up to $20,000 of available savings in each applicant's CPF Ordinary Account. The remaining OA balance must be used to pay for the flat before the loan is granted (HDB). A couple with $120,000 between them keeps $40,000 and deploys $80,000 whether they wanted to or not. A bank loan imposes no such rule: beyond the 5% cash, how much OA you use is your decision.

Whether that matters depends entirely on the rate you are giving up. OA pays 2.5%. Against an HDB loan at 2.6%, forced deployment is close to neutral — you give up 2.5% to avoid paying 2.6%, a net gain of a tenth of a point. Against a bank loan at 1.50%, the same money is worth 2.5% sitting still and costs 1.50% borrowed, a positive carry of one percentage point a year that the HDB rule takes away from you.

For a household with a large OA balance and access to a 1.5% bank rate, the drawdown rule is a real cost — on the order of the entire interest saving in the table above. For a household with $50,000 in OA it is nearly irrelevant. Note also that every CPF dollar you put into the flat has to be refunded with 2.5% accrued interest when you sell, which is a cash-proceeds question, not an interest-rate one.

Two things that are not symmetric

The HDB loan is reversible; the bank loan is not. You can refinance from HDB to a bank at any time. You cannot go back. Taking the HDB loan at purchase preserves the option to move to a bank rate later; taking the bank loan spends that option on day one.

The HDB loan has no lock-in and no prepayment penalty. You can make partial repayments whenever you like. Bank packages carry a lock-in — typically two years — with a penalty of around 1.5% of the amount prepaid, and you will be back in a refinancing conversation every two or three years for the life of the loan. Some households want that. Most, in practice, do not reprice reliably, and a rate you never renegotiate is worth less than the board rate suggests.

Both loans are capped at the shortest of 25 years, 65 minus the average applicant age, and the flat's remaining lease minus 20. HDB disburses only at key collection, and once disbursed you cannot take another HDB loan for 30 months. Each household gets two HDB loans in a lifetime, and only one of the ways out of one is free.

So which

Take the HDB loan if the 11.3% sizing advantage is what gets you the flat, if your cash is thin and your downpayment is coming from CPF, if your OA balance is modest enough that the drawdown rule costs you little, or if you value not thinking about your mortgage again. You keep the option to refinance to a bank in two years and lose nothing by waiting.

Take the bank loan if you comfortably clear the MSR at the 4% floor with the flat you actually want, you have the 5% cash, and you are carrying a large OA balance you would rather keep earning 2.5%. Price in that you are giving up the return path to 2.60% permanently, and that you will be shopping rates every couple of years.

The one answer that is wrong is the one the comparison tables still print: that the HDB loan is the high-LTV option. It is not, and has not been since August 2024. It is the option that lends more against the same income, asks for no cash, and takes your CPF in exchange.

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General information only, not financial advice. Income ceilings apply to HFE letter applications from 24 August 2026. The HDB concessionary rate of 2.6% is as announced for 1 July to 30 September 2026 and is reviewed quarterly; indicative bank rates are as at September 2026 and change without notice. Worked figures assume a 25-year tenure, level instalments and the stated rates held constant, which no bank package guarantees beyond its lock-in. LTV limits, MSR and TDSR treatment, CPF usage limits and eligibility all depend on your specific circumstances — verify with HDB, CPF Board and your bank before committing.