# Why would first-time home buyers splash out on a condo?

## 1. COVID-19 delayed a bunch of BTO flats

COVID-19 has caused delays in the completion of Housing Development Board (HDB) Built-to-Order (BTO) flats. Many first-time home buyers were planning to purchase these flats but were disappointed to learn that their flats would be delayed by up to a year or more due to COVID-19 restrictions. This has prompted some buyers to consider purchasing executive condominiums (EC) instead of BTO flats.

## 2. Some of us don’t qualify for a BTO flat

There are certain restrictions around purchasing HDB flats. For instance, you need to be a citizen, form a nuclear family, or be over the age of 35, and earn within the income ceiling. Some individuals may not meet these criteria and therefore are unable to purchase a BTO flat.

## 3. Some of us can’t afford a resale flat

The prices of HDB resale flats have been increasing, with some units selling for seven-digit prices. This makes it difficult for some individuals to afford a resale flat, especially considering the downpayment required.

## 4. With BTO flats, you don’t really get a choice

When you are offered the chance to book a BTO flat, you may not have a choice in the remaining units available. Even if the units are not what you wanted, HDB may pressure you to book them. If you refuse, you risk losing your BTO priority status, which grants you additional ballot chances. This can be frustrating for first-time home buyers who have already faced multiple unsuccessful attempts at securing a BTO flat.

# How much is the condo downpayment in Singapore for first-timers?

The condo downpayment in Singapore for first-time home buyers depends on several factors, including the loan-to-value limit, outstanding condo downpayment, minimum cash downpayment, and stamp duty. Let’s assume you are looking for a small condo in a non-central neighborhood priced at $800,000.

## Loan-to-Value Limit (75%):
– Singaporeans: $600,000
– Permanent Residents (PRs): $600,000
– Foreigners: $600,000

## Outstanding Condo Downpayment (25%):
– Singaporeans: $200,000
– Permanent Residents (PRs): $200,000
– Foreigners: $200,000

## Minimum Cash Downpayment (5%):
– Singaporeans: $40,000
– Permanent Residents (PRs): $40,000
– Foreigners: Not Applicable

## Stamp Duty (BSD + ABSD):
– Singaporeans: $18,600
– Permanent Residents (PRs): $58,600
– Foreigners: $498,600

## Total Condo Downpayment (CPF + cash):
– Singaporeans: $218,600
– Permanent Residents (PRs): $258,600
– Foreigners: $698,600

## Cash money you must have on hand:
– Singaporeans: $58,600
– Permanent Residents (PRs): $98,600
– Foreigners: $698,600

# How much do I need in cash + CPF for my condo downpayment?

You can use your CPF funds to pay for your condo downpayment, so you don’t have to pay the full sum in cash. In the example of an $800,000 condo, with a total downpayment of $200,000 (25% of the condo’s price), you would need to pay at least $40,000 in cash (5% of the purchase price). The remaining $160,000 can be paid using your CPF Ordinary Account (OA). However, keep in mind that if you don’t have enough funds in your CPF OA, you will need to pay more in cash for your condo downpayment.

# Do I need to pay stamp duty (BSD or ABSD) in cash?

Buyer’s Stamp Duty (BSD) is an additional cost that you need to consider when saving up for your condo downpayment. It applies to all residential property purchases, regardless of whether you are a first-time buyer. The amount of BSD you need to pay depends on the purchase price of the property.

If you are a Singapore citizen purchasing an $800,000 condo, the Buyer’s Stamp Duty would be $18,600. However, if you are a Permanent Resident (PR) or a foreigner, you would also need to pay Additional Buyer’s Stamp Duty (ABSD). For PRs, the ABSD would be 5%, resulting in a total of $58,600. For foreigners, the ABSD would be a staggering 60%, resulting in a total of $498,600.

To pay stamp duty, you need to use funds from your bank account, but you can request a reimbursement from your CPF. Keep in mind that you need to have enough balance in your CPF to be reimbursed.

# How much are the monthly repayments for my condo with a home loan?

The monthly repayments for your condo with a home loan will depend on the interest rate and the loan amount. Typical home loan bank rates currently range from 3.7% to 5.5% per annum, with a lock-in period of 1 to 3 years.

For an $800,000 condo, assuming you take a loan of $600,000, you can expect a monthly repayment of at least $3,520 for 20 years. However, keep in mind that these rates assume you are taking a fixed home loan. There are other types of home loans available, such as fixed interest rate or floating interest rate loans. It’s important to keep up to date with interest rates and consider refinancing your home loan if necessary.

# Do I have enough money for a condo downpayment?

To summarize, if you’re a Singaporean first-time home buyer, you will need at least $160,000 in your CPF Ordinary Account (OA) and $58,600 in cash for a condo downpayment. If you don’t have enough funds in your CPF OA, you will need to pay more in cash. It’s important to consider your financial situation and explore different options, such as HDB BTO flats, HDB resale flats, and executive condominiums.

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Benjamin Low
Benjamin Low

Benjamin is known as The Passive Income Guy. He has helped hundreds of people to build passive income. He is also a member of the Million Dollar Round Table, and Certified Financial Planner™ (CFP®) and Certified Private Banker (CPB).

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