A Singaporean Couple’s Guide to Buying Their First BTO

15 Dec 2017 

Everyone knows Singapore's version of “Will you marry me?" is “Shall we apply for a BTO flat?".  With an increasing number of Singaporeans opting to propose this way, it sheds some light on priorities here. To feed this growing appetite for housing, Singapore has seen a swift rollout of new initiatives, from shorter waiting times for certain BTO flats to a faster resale transaction process.


If you and your partner are looking to get your first BTO flat, speed and time may be of the essence but it's also important to deal with other equally critical aspects of the process. Becoming a homeowner is a lot more than just balloting and collecting your keys.

Here are four other things to take note of when buying your first BTO flat.

1) Suitability
The key aspect of this decision is that it's a joint one. Start the process with a candid and detailed discussion about the things that matter most to your shared lifestyle. Factors to consider include the location, whether you intend to have children, how close you'd like to live to your parents/in-laws, etc.


For example, if you intend to have children, you might want to reconsider knocking down that wall to have a walk-in wardrobe, and convert the extra room into a nursery or playroom in future. If you have no plans to get a car, location may be key and you may want to look for a flat within walking distance to an MRT station for convenience.

Be realistic with your needs and once you've decided on your priorities, you will have a set of criteria to help assess potential homes.

2) Eligibility
There is no point falling head over heels in love with a house when you do not qualify for it. Before you begin the house hunting, do not forget to check on your eligibility, which you can find out here.

Examples of things to consider are:


Citizenship: First-timer households with only one Singapore Citizen (SC) and one or more Permanent Resident (PR) will be liable for a $10,000 premium that will be incorporated into the flat's selling price. The $10,000 premium will be deducted from the selling price of the flat, when a qualifying household member becomes an SC, i.e. the SPR family member in the SC/SPR household takes up Singapore citizenship or if the couple has an SC child.  For SC/SPR households who have taken possession of the new flat, they may apply for a Citizen Top-Up of $10,000 when a qualifying household member becomes a SC. You can find out more about this here.


  • Income: The income ceiling you will need to abide by depends on the type of flat you want. For example, to be eligible for a 3-room flat, your average gross monthly household income cannot exceed $6,000 or $12,000 (depending on the project) for non-mature estates, and $12,000 for mature estates.


  • History: Your partner's and your past actions affect your eligibility too. For example, if you have previously booked a flat and cancelled your application, you will need to wait out a 1-year period from the date of cancellation.

3)  CPF Housing Grants for BTO Flats

Getting a home is probably one of the most significant and expensive decisions a couple makes together. It is best to get a clear understanding of what kind of housing subsidy you qualify for.

Here's an overview of the CPF Housing Grants for BTO flats that Singaporean couples should take note of:
A Singaporean Couples Guide to Buying Their First BTO 1.PNG

a) Additional CPF Housing Grant (AHG)
Meant for first time buyers, the AHG allows you to receive up to $40,000 for both new and resale flats. The income ceiling is $5,000 and at least one of the applicants must have worked continuously for 12 months prior to the application, and is employed at the point of flat application

b) Special CPF Housing Grant (SHG)
If your household income exceeds the income ceiling for the AHG, you may wish to consider the SHG instead, which grants up to $40,000.  It comes with a higher income ceiling of $8,500 but is only applicable for 4-room or smaller flats in non-mature estates.

A couple can apply for the SHG, on top of the AHG, if they qualify for both! Find out more about the CPF grants for flat buyers here. Still not sure if you can afford a BTO flat? Have a look at this case study.


4) Loan Limitations
While home loans are a great help with the cost of your BTO flat, it is wise not to assume you are guaranteed one. One thing to take note of is the Loan-to-Value (LTV) ratio, the loan amount that a bank or mortgage lender will offer based on your property value. You can find out more here.

Do check your loan eligibility and find out the LTV ratio from the relevant financial institution as soon as possible.  You can find out more on the eligibility conditions to take an HDB housing loan her​e.


As it's not a requirement to take up the maximum loan offered, and in order to avoid overstretching your finances, you should consider the expenses involved and take into account the downpayment required before committing to a loan amount.

Here are two other things that will affect how much you can borrow:


  • Total Debt Servicing Ratio (TDSR)
    The TDSR was implemented by the Monetary Authority of Singapore (MAS) to curb irresponsible borrowing. It limits the amount you can borrow to 60% of your gross household monthly income.
  • Mortgage Servicing Ratio (MSR)
    If you are buying public housing such as a BTO flat, you are also subject to the MSR. This limits the amount you can borrow for a home loan to no more than 30% of your gross household monthly income.

Here is an illustration to help you understand how the TDSR and MSR work:
A Singaporean Couples Guide to Buying Their First BTO 2.png

Another key decision here is whether to use cash or CPF savings for your monthly loan repayments.


To accumulate more savings (and take advantage of the attractive interest rate!) in your Ordinary Account, you might want to consider paying your monthly housing instalments in part-cash, part-CPF. If you can afford it, pay for your home fully in cash. With less CPF used for housing, you can ensure enough savings for your retirement years, which grows with risk-free interest.


Read more: Should We Use All Our CPF for Housing or Save It for Retirement


These are just four things buying your first BTO flat involves. Being a homeowner comes with a lot of planning and research — the biggest mistake you can make is to be complacent and lazy. As much as possible, you and your partner should encourage each other to do due diligence and stick it out because it comes with a deep sense of fulfilment, and best of all, a place to call your own.​

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