If you're considering purchasing an new/resale Executive Condominium (EC) in Singapore's current property market, one of the most important questions you'll need to answer is: how much income do I really need to afford one?
ECs have become an increasingly popular option for Singaporeans looking for a comfortable, high-quality living space, but with rising prices and a strict eligibility criteria, it can be challenging to determine what you can realistically afford.
In this blog post, we'll explore the factors that determine the affordability of an EC and provide some insights into how much income you'll need to comfortably finance your purchase.
Table of Contents:
First up, lets talk about Loan.
In this section, we will go through the restrictions and requirements to get a loan to finance your EC unit.
Income Requirements
To be eligible to purchase a new EC, your combined monthly household income must be less than $16,000.
Type of Loan
You will only be eligible for private bank loans where the max Loan to Value(LTV) limit is 75% of your purchase price. ECs are not eligible for HDB loans where you are able to loan up to 80% of the purchase price.
Loan Servicing
For EC, you are subjected to the Mortgage Servicing Ratio(MSR) of 30%, which means that your gross monthly household income that goes towards the repayment of all your property loans cannot exceed 30%. For example, if your monthly household income is $10,000, your max monthly servicing for your EC unit is $3,000. This applies to all HDB and EC flats that are bought directly from developer. Resale units will follow the Total Debt Servicing Ratio(TDSR) of 55% to service all your debts, the same as buying private condominium.
We will put this into perspective on how this affects your overall affordability in a case study later on!
Any Grants?
If you are a first time purchaser, you will be eligible for a CPF housing grant of up to $30,000!
Here's a breakdown of the amount of grant eligible for each tier of income.
Monthly Household Income | Singaporean + Singaporean Household | Singaporean + PR Household | Half Grant(co-applicant have previously taken a subsidy) |
Less than $10,000 | $30,000 | $20,000 | $15,000 |
$10,001 to $11,000 | $20,000 | $10,000 | $10,000 |
$11,001 to $12,000 | $10,000 | Nil | Nil |
$12,001 to $16,000 | Nil | Nil | Nil |
Keep in mind, if you are selling/have previously sold a subsidised HDB flat(e.g. BTO, SBF, DBSS) or an EC unit that was bought directly from the developer, or have taken any CPF housing grants for the HDB/EC, you will have to pay a resale levy when purchasing your new EC unit depending on the date your previous flat was sold.
For Subsidised Flat that was sold on or After 3 March 2006:
Housing Type | Resale Levy Payable(Household) | Resale Levy Payable(Singles) |
2 room HDB | $15,000 | $7,500 |
3 room HDB | $30,000 | $15,000 |
4 room HDB | $40,000 | $20,000 |
5 room HDB | $45,000 | $22,500 |
Executive Flat | $50,000 | $25,000 |
EC | $55,000 | Nil |
For Subsidised Flat that was sold Before 3 March 2006:
Housing Type | Resale Levy (based on purchase price or 90% of valuation, whichever was higher) | Resale Levy (Singles) |
2 room HDB | 10%(for larger 2 room flat types) or 15% | 5%(for larger 2 room flat types) or 7.5% |
3 room HDB | 20% | 10% |
4 room HDB | 22.5% | 11.25% |
5 room HDB / Executive flat | 25% | 12.5% |
Let us keep these extra miscellaneous numbers in mind before moving to the case study example!
Now lets move on to a case study example!:
Purchase Price
Using the most recent EC launch at of the time of writing for an example - LUMINA GRAND, with 3 bedroom units still in stock with prices starting from $1.35mil
Household Income
During the recent May Day Rally 2023, our Deputy Prime Minister Mr Lawrence Wong mentioned that the median Singaporean household income is $9,000. So let's assume this figure for our example, to see if an average Singaporean household can really afford a 3 bedroom EC!
Case Study
Using the figures from above, let us say that Mr Tan(35y/o) and Mrs Tan(35y/o), both Singaporeans, are looking to get a new launch EC and they are both earning a monthly income of $4,500 each, adding up to a total of $9,000 monthly household income. How much are there able to loan based on the MSR of 30%?
Using our loan calculator, they will be able to loan up to an estimate of $565,000. This will leave them with a remaining of $785,000 to be paid using their Cash/CPF and sales proceed from the selling of the current flat if applicable. This figure might look like a huge sum to come up with upfront, but do keep in mind that this figure is paid progressively over the next 2.5 to 3 years of construction!
Assuming that they are selling off their 4 room HDB to upgrade to an EC, let us break down the exact costs that Mr and Mrs Tan will incur in total!
Payment Type | Amount |
Initial Downpayment | $67,500(Cash) $202,500(Cash/CPF) |
Stamp Duty | $38,600(Cash/CPF) |
Resale Levy | $40,000(Cash/Sales Proceed from sale of existing flat) |
Remaining Payment | ​$515,000(Cash/CPF) |
Loan | $565,000 |
Total | $107,500(Cash) - $67,500 if Resale Levy not applicable $717,500(Cash/CPF) $565,000(Loan) |
So, what is the commitment like for Mr and Mrs Tan?
For the purchase price of $1.35mil, they would have to come out with the 5% booking fee($67,500) immediately when they proceed to book the unit. In the next roughly 8 to 9 weeks, they would have to make the remaining 15% exercise fee($202,500) and Buyer Stamp Duty($38,600). This will add up to $296,000 for the initial downpayment stage, after which the rest($515,000 + $40,000) will be paid slowly over the course of roughly 3 years based on the payment scheme you opt for. Resale Levy is payable either upon key collection of their EC or sale of the existing HDB, whichever is later.
One of the most frequent questions we encounter is -
How much CPF can we use for the initial downpayment?
Well, bear with us while we go through this with you!
Payment will always follow a flow of Cash > CPF > Loan, which means that to determine your CPF usage, you will have to work backwards! Using the above example, Mr and Mrs Tan would only be able to utilise their CPF for their initial downpayment if their CPF can cover the remaining payment of $515,0000. So, lets say they only plan to use their CPF to cover as much of the initial 20% downpayment, their combined CPF account would need to have at least $515,000.
If their CPF accounts is any less than $515,000, the 20% downpayment will have to be paid in FULL CASH. Still confused at this point? Fret not, feel free to contact us and we can help you determine if you are able to use any CPF for your downpayment based on a certain purchase price!
In short, with Mr and Mrs Tan's financial capability, they would be required to pay $308,600 downpayment + stamp duty, followed by $515,000 either in parts throughout the construction period of 2.5 to 3 years, or in bulk at the end of the construction period, depending on the opted payment scheme. And not to forget, the $40,000 resale levy at the end as well.
Of course, all these are just estimated numbers, as the loan size has not factored in their bonus or other sources of income, it is only based off their basic salary of $4,500 each. With a bigger loan size, their CPF and Cash portion will be reduced, which will help with their affordability.
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