Why Singapore Families Are Opting for Two-Bedroom Homes in 2025
TLDR By 2025, Singapore families are increasingly choosing two-bedroom condos as practical long-term homes rather than temporary stepping stones. This...
Read More
TLDR
When it comes to purchasing a house in Singapore using CPF funds, there are several myths that need to be debunked. From the misconception that grant money needs to be returned to the government to the belief that CPF funds can only be used for HDB loans, there are various aspects to consider. It’s important to understand that grant money does not need to be repaid to the government but returned to the CPF account with interest. Additionally, when selling a house at a lower price, you only need to return the actual cash value without any additional payment. It’s crucial to retain a portion of your CPF Ordinary Account funds when taking an HDB loan and to be aware of the CPF housing limits based on the remaining lease duration. Moreover, CPF funds can be used for both HDB and private property loans, with certain differences in Loan-To-Value percentage. Finally, even at 55 years old, you can still utilize your CPF OA for housing needs without affecting retirement payouts if you remain employed.
Are you aware of the myths around CPF and how it can help with purchasing a flat?
Let us clear things up for you so you can confidently make your home-buying decision!
As Singaporeans, we may grumble about a large part of our salary going into our CPF accounts – but when it comes to buying a house, it’s practically a gift from the gods!
Suddenly you’ve got access to a huge fund that can be used instantly. To those who are unfamiliar with the process, purchasing property may mean completely emptying out all your CPF accounts and topping up the additional amount.
However, there are countless aspects to using your CPF that will make you rethink how you use it for your home purchase.
Have you ever wondered whether the grant money from the government needs to be paid back, or if CPF funds are only accessible if an HDB loan is taken?
Well, if you or anyone you know has been misled by any of these common CPF house-buying misconceptions, it’s time to stop the misinformation and gets the facts straight.
Myth #1 – Grant Money Has To Be Returned To The Government
It’s often said there’s no such thing as a free lunch, however this does not apply when it comes to housing grants. The government can provide homebuyers with monetary assistance depending on their income, who they’re living with, the size of their home, and the proximity to their parents’ house.
So, take advantage of these fantastic housing grants :
- Enhanced Housing Grant (EHG) — up to S$80,000
- Family Grant (FG) — up to S$50,000 for resale flats and up to S$30,000 for ECs
- Proximity Housing Grant (PHG) — up to S$30,000
- Singles Grant — up to S$25,000
It is a common misunderstanding that grant money must be given back to the government when selling a home, but this is not the case!
Rather, the grant money must be returned to the CPF account, along with the interest of 2.5%. This ensures the grant money you had originally credited to your CPF Ordinary Account will not be deprived of the regular 2.5% annual interest it can earn.
Paying back the grant money and accrued interest may feel like a burden, yet the money is still yours to keep!
Myth #2 – If The Sale Of My House Resulted In A Negative Sale, I Still Need To Make Up The Difference To My CPF In Cash
It’s no secret that you must return the original sum of money with a 2.5% interest to your CPF account in order to prevent people from taking their funds out of the CPF prematurely by buying and selling a house.
But what if you’ve sold your home at a lower price than what you paid? Many think you’ll have to replenish the gap with cash into your CPF account.
Despite what some may think, you don’t have to pay the government anything that isn’t part of the actual cash value of your home.
For instance, if you purchased your house for S$600,000 but sold it for S$550,000 (including interest), you would just need to return the S$550,000 to your CPF account – no need to pay any extra money.
Myth #3 – I Can Secure A HDB Housing Loan Without Needing To Draw From My OA Funds
If you’re considering taking an HDB loan, you should retain up to S$20,000 of your available CPF Ordinary Account (OA) funds.
That way, you can have a financial cushion to fall back on in case of any unforeseen circumstances and avoid late payment penalties.
The remaining balance must be used to cover the purchase of the flat before the loan is taken up. So, the CPF Board advises setting aside the full S$20,000 in your OA.
Myth #4 – I Can Wipe Out My Entire OA To Pay For My House
Although it may be contrary to what was mentioned before. Sure, you can use funds from your OA to buy a home, but that is contingent on the house you’re getting.
Starting May 10, 2019, the total CPF savings you can use to cover either the initial purchase or the monthly mortgage payments of your flat will depend on the duration of the remaining lease; it must last until the youngest buyer is 95.
When purchasing a BTO flat or a recently MOP-ed resale flat, you’ll likely be able to finance your entire purchase with your OA funds.
But if there are only a few years left on the lease, be sure to check the guidelines to understand how much of your OA funds can be put towards the purchase.
Myth #5 – I Can Only Use CPF for HDB Loans
It is commonly believed that CPF funds are restricted to the repayment of HDB Concessionary Loans.
Nonetheless, there is no such limitation when it comes to repaying bank loans. You can apply your CPF money to both HDB or private properties.
But be aware of the Loan-To-Value (LTV) percentage that differ between HDB and bank loans.
You are eligible up to 85% of the purchase price for HDB loans and only 75% for bank loans, meaning that you’ll need to pay a higher down payment for a bank loan as opposed to an HDB loan.
Myth #6 – I Can’t Pay For My Home Loan With My CPF When I Reach 55
Once you hit 55, your Retirement Account will be set up for you automatically with your CPF SA savings transferred first, followed by CPF OA savings to fulfil the Retirement Sum.
You can still take advantage of the CPF OA to cover your housing needs without it affecting your retirement payouts – provided you remain in employment and actively earning an income.
At 55, you have the option to reserve your OA savings for your house before it is transferred to your Retirement Account. Yet, any unallocated savings in your OA account will be relocated to your RA by the CPF Board.
- No payments are made for your property for six months
- You have not started using your CPF savings for your house for five years
- Your property is sold
- When the purchase of the property is aborted
It’s possible that certain CPF housing limits may still be in effect to stop homeowners from recklessly using their loan repayments for housing, sacrificing their retirement savings in the process.
Should You Buy, Sell or Wait?
If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?
It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.
I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.
I can help you by:
- Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
- Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.
You May Also Like …
Navigating the 2025 Singapore Property Market: Why Informed Buyers Can Stay Confident
TLDR Despite global economic uncertainties, Singapore’s property market remains resilient due to robust financial regulations, conservative loan assessments, and effective...
Read More
Should You Keep Your Resale HDB Flat When Buying a Private Property? 5 Key Factors to Consider
TLDR In Singapore, owning both an HDB flat and a private property has become complicated due to factors like Additional...
Read More
Discover Affordable Executive Condos in 2024 Starting at $560,000
TLDR The Executive Condos (ECs) offer affordable options compared to private properties in Singapore. Despite price variations, most ECs remain...
Read More
Housing Affordability in 2023: Is Singapore Property Truly Unaffordable?
TLDR Singapore’s property market faces challenges with high prices, especially in private housing. While public housing remains more affordable, the...
Read More
Top 5 : Best Quirky Museums in Singapore
Singapore, a vibrant and diverse city-state, is known for its rich history, cultural heritage, and modern attractions. While the city...
Read More
6 Indicators and Measures to Determine if Your Home Has Unrecognized Profits
TLDR The booming real estate market presents opportunities for homeowners to profit from selling their properties. Two key signs that...
Read More
Singapore’s Priciest Districts Are Shifting—4 Key Buyer Trends Driving the Change in 2026
TLDR The Core Central Region (CCR) property market in Singapore is shifting from luxury trophy assets to practical, lifestyle-driven homes....
Read More
Discover the 3 Top Factors Impacting HDB Resale Valuation in Singapore: What Every Buyer Must Know!
TLDR The blog post discusses the increased demand for HDB resale flats and the impact on prices. It emphasizes the...
Read More
Top 5 Places to Learn About Singapore’s History
Singapore, a thriving metropolis with a rich history and diverse cultural heritage, offers numerous opportunities for visitors and locals alike...
Read More
The 15-Month Wait-Out Period: An Unnecessary Burden in a Challenging Economy
TLDR The 15-month wait-out period introduced in September 2022 requires private property owners to wait before buying a resale or...
Read More
Punggol Northshore HDB Flats Reaching MOP: Navigating the Resale Window
TLDR In 2025, around 1,765 HDB flats from Northshore Residences I & II and Northshore StraitsView in Punggol’s Northshore will...
Read More
Top 5 Boutique Shopping Streets in Singapore
Singapore, a cosmopolitan city-state known for its vibrant culture and diverse shopping scene, offers a unique blend of modern malls...
Read More
Navigating the Singapore Property Market as a Foreign Investor: What You Need to Know
Singapore, a thriving hub of business and commerce in Southeast Asia, boasts a highly developed economy and a robust real...
Read More
Simplified Guide to Buying Landed Property in Singapore
TLDR When considering buying a landed property in Singapore, you have options like terrace homes, semi-detached houses, and bungalows. Understanding...
Read More
Top 5 Factors : Location More Important Than Freehold Status?
When it comes to purchasing a property, there are numerous factors that potential buyers need to consider. While the debate...
Read More
Ouch! How Owning a Million-Dollar Home Can Sting with a Whopping $300K Interest in Just a Decade!
TLDR When considering property investments in Singapore, it's crucial to monitor home loan interest rates closely. Even a slight increase...
Read More
Transforming Your Home Loan Situation with Rate Cuts
TLDR When comparing fixed and floating mortgage rates, the present fixed rate of 3% is favorable, but predictions hint at...
Read More
Should You Splash Your Cash on a Condo Despite the Sky-High PSF?
TLDR The blog post discusses various aspects of investing in condos in Singapore, covering topics such as leasehold versus freehold...
Read More
5 Most Common Property Investment Scams To Watch Out For In Singapore
Property investment scams are unfortunately prevalent in Singapore, and unsuspecting investors can fall victim to these scams, leading to significant...
Read More
