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Date: 2nd Mar 2012, Friday

Can one with $1,000 monthly pay really buy a HDB flat?

A 2-room HDB flat would cost about $40,000 (after rebate) for a first-time applicant who earns S$1,000 a month.

2-room HDB flat, 480 sqft, cost $90,000 before rebate from grant. Low income families are eligible for $50,000 grant. Singapore still have a policy for social housing. The low income families are not treated as normal buyers. Government as well HDB provides extra assistance, concessions and grants are given to them.

According to Minister of National Development, Mr Khaw Boon Wan, his mortgage payment can be fully paid through the applicant’s CPF, without incurring any additional out of pocket money.

Mr Khaw added that most applicants of two-room flats earn above S$1,000. Based on recent BTO launches, the median income for this group is about S$1,400.

Here is the calculation:

Lets say the new 2-Room HDB BTO (Build-To-Order) Flat is really $40,000. Therefore, the 5% down payment required is $2,000. Balance 15% ($6,000) can be from CPF Ordinary Account, if he has been working for the past 3 years, it would be sufficient.

Bank loan can give a max loan of only 80% ($32,000).

According to HDB website, the interest rate was set at 2.6% per year. For 15 years loan, the total interest to be paid is $8,350. Also, there are stamp duty, conveyancing fee, etc... approximately $500 (1%). The total cost of the new flat is $48,500.

15 Years Mortgage for $32,000 = $$215/month (which is deducted from his CPF OA balance).

CPF Calculation

Private Sector Employees, Age Group years and below.
Total Wages: $1,000.00
Deduct Employee Contributions: $180.00
Take Home = $820.00

CPF Contributions by:
Employee: $180.00
Employer: $160.00
Total Contributions $340.00
Ordinary Account $217.27            
Medisave Account $66.09            
Special Account $56.64

So the answer to the question is Yes. But the real question is, with ever rising cost of living, can the small family surive with $820 per month ($27 a day)?

Updated On: 15.05.26