How much cash down for a house

Before COVID-19 hit our shores, most couples would choose to BTO (Build To Order) for their new home. The waiting time would be around 5 years before the couple can collect their keys and move into their flats.

However, BTO projects have been delayed due to COVID-19.

Instead of 5 years, couples might need to wait for at least 6-7 years before their BTO is ready. Imagine this, a couple who are both 28 years old applies for a BTO today. Should they be successful in their application, they are only able to move into their new HDB when they are 34 or 35 years old. That’s a little too long for some.

It’s no wonder more and more young couples are considering resale flats or even condominiums. To avoid the long waiting time, buying a ready-to-move-in flat becomes their first option.

Of course, resale flats and condominiums are more expensive than the BTOs. Couples will need to replan their finances if they want to afford it.

“How much more expensive is a condominium?”

“Can I use CPF to pay for the condo down payment?”

Are these questions about condominiums on your mind? Let’s answer them and do the math now.

Table of Contents

• How Much Cash Do I Need For A Condo Downpayment?
• How Much Stamp Duty (BSD/ABSD) Do I Need To Pay?
• Can I Use CPF + Cash for My Condo Downpayment?
• How Much Is The Downpayment For A Condo?

How Much Cash Do I Need For A Condo Downpayment?

The short answer is you usually need at least a 5% downpayment for a condo in cash, calculated from the condo’s LTV (loan-to-value) limit. However, there are some cases where you don’t have to pay anything in cash. In other cases, you need 25% in cash.

But let’s back up a little.

The cash advance depends on several interconnected factors:

• The number of outstanding mortgages
• Loan-to-value (LTV) limit
• The minimum condo downpayment

Here is the standard private property downpayment for tenures below 30 years or if you’re below 65 years old when your term ends.

• A condo with no other mortgages will have an LTV limit of 75%. What is a 75% LTV? That means your loan will cover 75% of the condo’s value. The minimum downpayment, in this case, is 25% (aka what’s left), and your cash down payment should be 5% of the purchase price. The other 20% can be paid with your CPF’s OA (Ordinary Account).
• A condo with one mortgage has a 45% LTV limit, meaning the loan only covers 45% of its price. The remaining 55% is the minimum downpayment; 25% of the purchase price should be in cash.
• A condo with 2+ mortgages has a 35% LTV. That means you need to cover 65% of its price with the downpayment. So, the minimum downpayment for a condo, in this case, should be 25%.

If you’re buying a condo in Singapore with a 30 years+ tenure (or if you’ll be over 65 years old before the tenure ends), your condo downpayment will look like this:

• 0 mortgages: 55% LTV; 10% cash downpayment
• 1 mortgage: 25% LTV; 25% cash downpayment
• 2+ mortgages: 15% LTV; 25% cash downpayment

Loan-to-value (LTV) Ratio Example:

You’re 35 and have no other home loan. You’re buying a condo that costs $1,500,000, and the tenure is 25 years. Since you’ll be below 65 when the term ends, the LTV is 75% of the condo’s price. That means you’ll need a minimum condo downpayment of 25%.

25% of $1,500,000 is $375,000. 5% of that amount should be in cash, meaning $75,000.

How Much Stamp Duty (BSD/ABSD) Do I Need To Pay?

If the condo downpayment is like a root canal, stamp duty is the dental drill. You’ll have to pay the buyer’s stamp duty (BSD) for both new and resale condos.

Remember: Include BSD in the budget for your resale condo downpayment.

BSD is calculated on one of the two variables below, and, surprise, it’s the highest one:

• The condo’s purchase price
• The condo’s market value

Pro tip: You may be eligible for a deduction if the seller threw in a cash discount to persuade you to buy. However, this deduction should be specified on the selling contract, and the condo’s price should be within market value.

Unfortunately, other perks like furniture or appliances don’t qualify for the stamp deduction.

Here are the current BSD rates:

• First $180,000: 1%
• Next $180,000: 2%
• Next $640,000: 3%
• Remaining sum: 4%

Now let’s get back to that previous example of the $1,500,000 condo. Here’s what your BSD looks like:

The additional buyer’s stamp duty (ABSD) is that extra drilling at the end when you think the worst is over. Luckily, ABSD doesn’t apply if you’re a citizen buying a condo in Singapore for the first time.

Otherwise, the ABSD rates for Singapore citizens are:

• 17% for the second residential property
• 25% for the third and subsequent properties

If you’re a permanent resident, prepare to fork out:

• 5% for your first property
• 25% for your second purchase
• 30% for your third and subsequent properties

On the other hand, foreigners must pay 30% ABSD for all residential properties purchased in Singapore. Entities have it even worse, having to fork out 35%.

Getting back to that $1,500,000 condo, let’s say it’s your second property and you’re a Singapore citizen. That means your ABSD is 17% of $1,500,000, meaning $255,000.

You can avoid paying ABSD if:

• You’re a citizen or PR in Iceland, Liechtenstein, Norway, Switzerland, or the USA.
• Your spouse is the sole owner of your first property, and you’re the sole owner of the second property.
• You can also use the child’s name to purchase a condo if they’re at least 21 years old.

Can I Use CPF + Cash for My Condo Downpayment?

Yes, you can use your CPF to pay for your condo downpayment. 5% of your condo’s downpayment should be paid in cash. The remaining 20% can be paid using your CPF account (provided there is enough in your OA).

For that $1,500,000 condo above, the advance downpayment is $375,000. However, 20% of that $1,500,000 can be in CPF, meaning $300,000.

How Much Is The Downpayment For A Condo?

If you want to calculate how much downpayment for the condo, you need to add:

• The minimum cash downpayment
• The maximum CPF downpayment
• The cash-first stamp duty

That means you’ll need at least your stamp duty and 5% of the condo’s price in cash. For that $1,500,000 condo we’ve been talking about throughout the article, you’ll want:

• $75,000 cash downpayment
• $44,600 stamp duty
• $255,000 ABSD

In total, that’s $374,600 – apart from the CPF savings you’d need for the rest of the condo downpayment.

That’s a 6-digit sum you may not have in your account. If you’re a foreigner wanting to buy a condo in Singapore, you may have to be prepared with a 7-digit sum.

To make the downpayment for a condo in Singapore requires years of financial planning. Other than your usual full-time job, you can consider saving money and an investment portfolio that would bring you the necessary dividends. Add in side gigs that could bring in hundreds to thousands every month.

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