Explainers
Published Date: 05 July 2018

Rules for New Housing Loans

The maximum housing loan borrowers can take depends on their age, loan duration and property type, and whether they have existing housing loans. Joint borrowers are assessed using an income-weighted average age.

Loan Tenure

The maximum loan tenure for housing loans is capped at:

  • 30 years for HDB flats.
  • 35 years for non-HDB properties.

Calculating Age for Joint Borrowers

For joint borrowers, use their income-weighted average age as their present age. This formula calculates their average age as it relates to their ability to repay the loan:

(Borrower 1's Age * Borrower 1’s gross monthly income / (Total of Borrower 1 and 2’s gross monthly incomes)) + (Borrower 2’s Age * Borrower 2’s gross monthly income / (Total of Borrower 1 and 2’s gross monthly incomes))

Example

Mr. Tan is 60 years old and has a gross monthly income of $8,000. His son Alvin is 30 years old with a gross monthly income of $10,000.

Their income weighted average age is:

(60*$8,000 / ($8,000 + $10,000)) + (30*$10,000/($8,000 + $10,000)) = 26.67 + 16.67

= 43.34

Loan-To-Value Limits

The loan-to-value (LTV) limit determines the maximum amount an individual can borrow from a financial institution (FI) for a housing loan.

LTV refers to the loan amount as a percentage of the property’s value. For example, if an individual borrows $800,000 to purchase a property valued at $1,000,000, the LTV is 80%.


LTV Limits and Minimum Downpayment for Individuals

The LTV limits for individuals change depending on the number of outstanding housing loans a borrower has.

For loans on residential properties where the OTP is granted on or after 6 July 2018, the following LTV limits apply:

Outstanding housing loans LTV limit Minimum cash downpayment
None 75% or 55%
  • 5% (for LTV of 75%)
  • 10% (for LTV of 55%)
1 45% or 25% 25%
2 or more 35% or 15% 25%

Apply the lower LTV limit if the loan tenure exceeds 30 years (or 25 years for HDB flats), or the loan period extends beyond the borrower’s age of 65 years.

LTV Limits for Shell Companies

If the borrower is a shell company or not an individual, the LTV limit is 15%.