Singapore Buyers Cut Loans, Raise Down Payments

By Megan Collins 26/10/2026 3 min read 5 views

Senior couple calculating expenses at home office desk with documents and notes. Photo: Kampus Production/Pexels

Recent data show that Singaporeans are borrowing less to buy homes, yet the shift toward larger down payments may conceal new vulnerabilities for many families.

Higher Down Payments and Loan Limits

The maximum loan quantum for a property purchase is capped at 75% of the price or valuation, whichever is higher, leaving a minimum down payment of 25%. The first 5% must be paid in cash; the remaining 20% can be a mix of cash and CPF funds, even entirely from CPF if the buyer chooses.

Since the end of the Covid-19 pandemic, private home prices have risen steadily. OCBC reports that buyers are increasingly tapping cash reserves and CPF to meet the larger down payment, despite the higher price tags.

Regulatory limits also shape payment patterns. The Total Debt Servicing Ratio (TDSR) caps monthly loan repayments at 55% of combined household income, while the Mortgage Servicing Ratio (MSR) for HDB flats is stricter at 30%. When borrowers approach these thresholds, they often must increase their cash contribution to stay within the limits.

Putting more cash down reduces monthly repayments and limits exposure to interest-rate swings, especially for bank loans that adjust more frequently than HDB loans. This effect is pronounced for buyers of Executive Condominiums, which do not qualify for HDB financing.

Parental Support and Hidden Risks

Many larger down payments are funded by parental loans or gifts. While assistance from a family office or trust is financially sound, there is no full data on how many parents can sustain such support without compromising their own retirement savings.

In some cases, parents sell their own homes to help children purchase a larger property, often assuming a multigenerational living arrangement. This strategy leaves little flexibility if family relationships change.

One recent incident involved a parent who contributed to a condo’s down payment and covered the first few years of loan repayments. When the child decided to move abroad, the parent was asked to sell the unit, leading to a potential civil dispute.

While the immediate benefit of a lower loan amount is clear, the long-term financial picture may be less secure. Reliance on parental funds can strain older households, especially in a super-aged society where many seniors depend on their own CPF savings for retirement.

For a typical $2 million condo, a buyer who pays 40% down commits an extra $300,000 compared with the minimum 25% down payment. That sum is unavailable for emergencies, career breaks, medical expenses, or supporting ageing parents.

Using CPF’s Ordinary Account (OA) also has an opportunity cost. Excess OA balances can be transferred to the Special Account (SA), which yields an interest rate above 4%.

Mortgage insurance, such as the Home Protection Scheme available for HDB flats, can cover the outstanding loan if the borrower passes away. However, this protection is not mandatory for private properties, and many buyers may be unaware of its existence.

According to the latest transaction data, 76% of the 191 private home sales recorded this week were resale transactions, with 38 new sales, 8 sub-sales and 145 resales.