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​Understand the costs of buying a home
handing over keys

5 min. read

Buying a home needs careful planning. Find out what you have to pay upfront and on a monthly basis, and why you should be insured.

Key takeaways
  • Be prepared for one-time downpayment and recurring costs.
  • Find out what you can afford before deciding to buy.

What do you have to pay?

Buying a home is a big financial commitment that needs careful planning.

The home that you buy should meet you and your family's needs now and in the future. With this in mind, take a moment to think about what's important and what's nice to have.

Before looking for a home to buy:

What you can afford depends on your income, expenses, debts and savings as well as the amount you may be eligible to borrow. You'll need to make some upfront payments, and keep up with monthly housing loan instalments, and other recurring charges.

Upfront payments

The payments you need to make to purchase your home include:

Let's look at a few of these in detail.

Option fee

You pay the option fee to reserve the property of your choice. The tables below show the option fees for the various housing types, all payable in cash. If you choose not to exercise the option, you must be prepared to forfeit the option fee paid.

For an HDB flat:

Type Option fee (cash)
New 4-room, 5-room, Executive Flat $2,000
New 3-room $1,000
New 2-room $500
Resale flat

Up to $5,000 in total, comprising:

  • Up to $1,000 before signing the Option to Purchase (OTP)
  • The rest up to $4,000 on exercising the OTP

Learn more: Costs and fees when buying an HDB flat.

For an Executive Condominium (EC) or private property:

Type Option fee (cash)
EC or private property 5%
Resale EC or private property 5% comprising:
  • 1% to obtain the Option to Purchase (OTP)
  • Remaining 4% upon exercising OTP


How much downpayment you have to pay in cash or from your CPF savings depends on:

  • The value and type of property.
  • Whether you have an existing housing loan and the tenure of the new loan (capped at 25 years for HDB flats and 30 years for private properties).
  • The loan-to-value (LTV) limit (loan ceiling) of the property.

For an HDB loan

Flat type Downpayment in cash or CPF
Build-To-Order Flats (BTO) 20% of purchase price
Includes booking fee and balance (both only in cash and/or CPF)
Resale 20% of purchase price
Includes booking fee and balance (both only in cash and/or CPF)

For a bank loan

No outstanding housing loan 2nd housing loan 3rd housing loan
Minimum cash downpayment
  • 5% (for LTV of 75%)
  • 10% (for LTV of 55%)
25% 25%

Rest of downpayment

Can be paid using cash and/or CPF

Third-party costs

Fees Paid to What it's for
Valuation fee Professional appraiser Valuation report on the property to be financed.
Legal fee Lawyers Processing the mortgage over the property to be financed.
Stamp duty Government A tax payable for registration of the mortgage.
Insurance premium Insurance company Insurance cover for your property against fire and other damage. Lenders will require you to adequately insure assets being financed.

Recurring payments

In addition to your monthly home loan repayments, you'll also want to budget for other recurring costs that come with owning a home. These include:

  • Maintenance, conservancy charges and utilities
  • Property tax
  • Mortgage insurance and other home-related insurance

Maintenance, conservancy charges and utilities
HDB homeowners pay monthly service and conservancy charges to their town councils for maintaining their housing estates. You pay a higher fee for a larger flat.

Owners of private properties such as condominiums and apartments typically pay monthly maintenance fees.

Utility charges (power, water and gas) depend on their usage.

Property tax
The property tax payable annually is computed based on a percentage of the annual value of the property. The annual value is the estimated annual rent that your property can fetch, regardless of whether you rent it out or not.

Find out more about property tax from the IRAS website.

You pay lower property tax if you live in the property you own, compared to if you rent out your property.

Mortgage insurance
For HDB flats

If you're buying an HDB flat and using your CPF savings to pay your monthly instalments, you must be insured under the CPF’s Home Protection Scheme.

This insurance scheme protects you and your family against losing your home should you become permanently disabled, or pass away before the housing loan is paid up.

Even if you're not using your CPF monies to pay for your monthly instalments, you're still encouraged to be insured under the Home Protection Scheme. You can use your CPF monies to pay for this.

For private properties

A mortgage reducing term insurance protects your dependants if you (the borrower) should pass away or become permanently disabled and can no longer service the loan.

All properties

If your property is mortgaged to a bank, you may be required to take up a mortgagee interest policy.

Insurance for your home
For peace of mind, it's a good idea to insure your home against fire and other perils. The cost of such insurance is generally low relative to the potential loss.

Some policies, like fire insurance and mortgagee interest policies, may be required by your bank. Here's a comparison of the different types of home insurance and what they are for:

Fire insurance

Who should buy Homeowners. Recommended for all properties.
Mandatory? Mandatory for HDB flats.
What is covered Fire and extraneous perils.
Amount to insure
Covers the cost of reinstating the damaged structures.

Home contents insurance

Who should buy

Homeowners and tenants. Recommended for all properties.

Mandatory? No.
What is covered

Fire, extraneous perils and home contents.

Amount to insure

Up to your requirements (based on estimated value of fittings, furniture and valuable appliances).

Mortgagee interest policy

Who should buy Borrowers. Policy is usually required for home loans from banks.
Mandatory? Required by most banks for existing home loans.
What is covered Loan default in the event of a fire.
Amount to insure
Based on reinstatement value or outstanding loan amount whichever is lower.

Note: Extraneous perils include earthquake, windstorm, flood, riot and strike damage, landslip, smoke, damage, sprinkler leakage, explosion, water damage due to overflowing or bursting water tank. These are subject to policy terms.

Find out more

Getting Married - Planning your finances together booklet - A booklet targeted at couples who are planning to get married or newly married. The booklet provides financial planning tips on the various financial decisions that couples have to make in their marriage journey.

Download : Getting Married - Planning your finances together

Last updated on 04 Oct 2022