10 Things You Must Think About Before Buying Your First HDB BTO

Most Singaporeans lives in HDB flats. Buying a HDB Build-To-Order (BTO) flat is usually the first, and the most often. As such, it is an important topic that everyone needs to understand. I'm one of the confused ones when queue-ing for my very own BTO and I learnt a lot along the way.
BTO kind of means we “order” a flat, and the government proceeds to “build” it over the next four to five years. Since BTO flats are regarded as subsidised public housing, and we can even receive housing grants when we apply for one, there are certain and eligibility criteria we may need to meet to be able to apply for one.

(1) Knowing the Schemes:

While many people often apply for BTO flats when they decide to get married, there are a few main schemes for applications:

Public Scheme
Under the Public Scheme, applicants need to form a family nucleus that will live in the BTO flat. This could include any combinations such as applying with your spouse, children, parents, siblings or children under your legal custody.

Fiancé/Fiancée Scheme
Under the Fiancé/Fiancée Scheme, we need to form a family nucleus with our spouse-to-be. While this means we do not have to be married at the point of our application, we need to submit our Marriage Certificate before taking possession of the BTO flat. In some instances, we may be able to submit it after taking possession of the flat.

Orphans Scheme
Under the Orphans Scheme, siblings applying for a BTO flat must be both orphans and unmarried be eligible.

Non-Citizen Spouse Scheme
Under the Non-Citizen Spouse Scheme, Singapore Citizens can still apply for a 2-room BTO flat in a non-mature estate if their spouse is not a Singapore Citizen or Permanent Resident. However, their spouse have to be holding a valid Visit pass or Work Pass at the point of application.

Single Singapore Citizen Scheme
Under the Single Singapore Citizen Scheme, applicants, who are at least 35 years-old, need to be a first-timer and single (unmarried, divorced or widowed) to be eligible for a new 2-room flat in non-mature estates.

Joint Singles Scheme
All co-applicants (up to three) have to be first timers and single. All co-applicants must also be Singapore Citizens and at least 35 years-old.


(2) Minimum Age

This is quite straight-forward. We must be at least 21 years-old at the point of application.

Under the Fiancé/Fiancée Scheme applicants who are below 21 years-old but above 18 years-old can apply for a BTO with a written consent from the applicant’s parents or guardians.

Under the Single Singapore Citizen Scheme applicants should be at least 35 years-old.


(3) Income Ceiling

To ensure that only those that need it the most are able to get BTO flats, there is an income ceiling for applicants. The current income ceiling for a BTO flat is $12,000 per month.

This figure may rise up to $18,000 for the extended family/multi-generation family income ceiling, if we’re applying for a 3Gen flat. However, you need to take note of the method of calculations for this $18,000 ceiling.

It can also fall to as little as $6,000 if you’re applying for a 2-room flat under the 2-Room Flexi Scheme.

To assess your income, you will be expected to submit your payslips as well as other relevant documents when you apply for your BTO.

If your income is above $12,000 monthly, you can opt for an EC (Executive Condominium).


(4) Citizenship

At least one person applying for the BTO needs to be a Singapore Citizen and at least one other person applying (if applicable) needs to be a Singapore Citizen or Permanent Resident.


(5) Property Ownership

We will not be eligible to apply for a new BTO flat, if you currently own other residential properties, either locally or overseas and have disposed them within a period of time before getting your new BTO flat.

Applicants must also have only purchased up to one HDB or EC in the past. This is because Singapore Citizens are only eligible for two subsidised flats from the government.

We also need to note that we need to pay a resale levy= if we sell our subsidised flat and want to apply for a second subsidised flat from HDB or EC from a developer.

(6) HDB Grants

Parenthood Priority Scheme (PPS)
The Parenthood Priority Scheme helps first-timer married couples with children get homes more easily. As one of the most common priority schemes, up to 30% of BTO flats and 50% of Sales of Balance Flats (SBF) are allotted under the PPS.

In addition, applicants under the PPS can also apply for other priority schemes such as the Third Child Priority Scheme or the Multi-Generation Priority Scheme listed below.

Applicants under this scheme must be first-timers applying as a married couple. They must also be either expecting their first Singapore Citizen child or have at least one Singapore Citizen child below 16 years-old at the time of the application.

Multi-Generation Priority Scheme (MGPS)
The Multi-Generation Priority Scheme helps parents and their married children get new BTO flats in the same estate.

Under the MGPS, parents and their married children must submit a joint application. In this case, parents can only apply for a 2-room Flexi or 3-room flat, while married children can apply for a 2-room Flexi or larger flat.

Selected applicants will be given three queue numbers – one for the MGPS and two for the Public Scheme. This means that applicants can either apply together (with their MGPS queue number) or separately (with their respective Public Scheme queue numbers).

Married Child Priority Scheme (MCPS)
The Married Children Priority Scheme helps married children live closer to their parents, either in the same flat or estate, or in a neighbouring estate. This makes it easier for married children to care for their ageing parents.

Up to 30% of BTO and SBF flats are allotted to first-timer applicants, and up to 15% of BTO flats and 3% of SBF flats are allotted to second-timer applicants.

Under the MCPS, at least one of the parents or the married child/child’s spouse has to be a Singapore Citizen or Permanent Resident. Applicants’ parents or married children must be either living with them or staying in the same town or within two kilometres of the flat they are applying for.

You need to note that your parents must continue living in the same estate or within two kilometres of your BTO flat for the MOP (of five years) as well.

Third Child Priority Scheme (TCPS)
The Third Child Priority Scheme helps families with more than two children get a flat more easily. Up to 5% of BTO and SBF flats are allotted to eligible applicants.

Under the TCPS, either you or your spouse must be a Singapore Citizen, and your family must consist of at least three children (with the 3rd child born after 1 January 1987). Your other children must also be Singapore Citizens or Permanent Residents. In addition, you must not have bought a flat under the TCPS before.

Assistance Scheme for Second-Timers (Divorced/Widowed Parents) (ASSIST)
The Assistance Scheme for Second Timers, or ASSIST, provides assistance to divorced or widowed parents with children under 16 years-old.

Tenants’ Priority Scheme (TPS)
Up to 10% of 2-room Flexi and 3-room BTO and SBF flats are allotted to applicants under the Tenants’ Priority Scheme. This is to help tenants of HDB rental flats purchase their own home or those applying under the Selective En Bloc Redevelopment Scheme (SERS) get a flat more easily.

To qualify for this scheme, you and your family must be living in a HDB rental from for at least two years.

Senior Priority Scheme (SPS)
The Senior Priority Scheme helps elderly residents live in a familiar environment or near their married children, in a 2-room flat. Up to 40% of 2-room Flexi flats on offer during sales launches are set aside for those applying under SPS.

Applicants need to apply for a 2-room Flexi flat in the same town or estate, or within two kilometres of the flat they current occupy. At least one of the parents must also be a Singapore Citizen or Permanent Resident.


(7) HDB Loan vs Bank Loan

HDB concessionary loans are a provision for Singaporeans. Currently, the interest rate for an HDB loan is 2.6%. HDB loans have certain restrictions:

-At least one buyer must be a Singapore citizen
-Buyers’ monthly income must not exceed $12,000 (or $18,000 for extended families)
-Buyers must not own any private residence (in Singapore or overseas)
-Buyers must not have taken more than two previous HDB loans
-Buyers have not disposed of private residential property within 30 months before the loan application
-Buyer’s monthly income must not exceed $6,000 for singles buying a 5-room or smaller resale flat, or 2-room new flat in a non-mature estate under the Single Singapore Citizen (SSC) Scheme
-These are just the most pertinent restrictions. There are other restrictions for people who own and operate commercial properties.



For the past few years, almost everyone thinks taking a bank loan is better because of the lower interest rates offered. It is important to bear in mind that interest rates offered by banks for home loans are usually subjected to macroeconomic factors. If the Singapore Interbank Offered Rate  increases, the interest rate on your home loan and hence, your mortgage payment will increase.

Verdict:
-HDB loans have a higher interest rate, but it’s fixed
-Bank loans have lower interest rates, but they are only valid for up to 2 to 3 years at best
-You can borrow more from HDB (90%) compared to a bank (75%)
-HDB loans allow you to pay your downpayment fully using CPF if you have enough savings. For bank loans, you need to pay at least 5% in cash
-There is no early repayment penalty for HDB loans, but for banks it is 1.5%



(8) Documents and Checklists
When you attend the appointment to select your flat, you are required to have a valid HDB Loan Eligibility Letter (HLE) if you are taking a housing loan from HDB. In addition, you must bring along the following documents, of all persons listed in the application:
-Identity cards. If you are employed, or serving National Service under the Singapore Armed Forces/ Civil Defence/ Police Force, you must provide a certified true copy of your Singapore pink/ blue identity card from your Personnel Department or Passport for non-citizens
-Birth certificates of your children (if you've children)
-Your birth certificate and your parents' marriage certificate if you are buying a flat under the Multi Generation Priority Scheme or Married Child Priority Scheme
-Marriage certificate, if you are married; or divorce certificate, if you are divorced
-Student Pass or Letter from School/ College/ Institute of Learning for persons who are 18 years old and above
-Income documents for assessment of income ceiling to buy a flat 
-Income documents for assessment of income ceiling if taking Additional CPF Housing Grant (AHG) or Special Housing Grant (SHG)
-Either a doctor's certification of pregnancy, or your child's birth certificate, if you have applied for a flat under the Parenthood Priority Scheme (PPS)

(9) Working Out Financial 
Now that you have made a decision to get either a BTO  flat, it's time to figure out how to pay for it. Handling the full cost of a home can be intimidating, but financial planning goes a long way to ensure you are up to the task.

For starters, work backwards to calculate how much housing repayments you can afford to make every month. Deduct your monthly expenses from your take-home pay, and come up with a comfortable estimate.

Next, use the CPF Monthly Instalment Calculator to determine how much your flat options (after grants) would set you back every month. If the monthly instalments are taxing on your finances, you may wish to reconsider your choice of flat.

You can make use of the CPF savings in your Ordinary Account (OA) for your monthly housing repayments, but it's important to check whether you will reach the Valuation Limit or Withdrawal Limit for using CPF before your loan tenure ends.

(10) Housing Insurance
Other than paying back loan monthly, there will be monthly price to pay being a home owner. Flat owners with HDB loans commencing on or after 1 September 1994 must buy and renew the HDB fire insurance for your homes, for as long as you have an outstanding HDB loan.

The advantage is the HDB Fire Insurance Scheme was introduced to help relieve flat owners of the financial burden of repair work in the unfortunate event of a fire.

The HDB fire insurance covers the cost of reinstating damaged internal structures, fixtures, as well as areas built and provided by HDB. It excludes home contents such as furniture, renovations and personal belongings.

The current appointed insurer for the HDB Fire Insurance Scheme is Etiqa Insurance Pte Ltd and the insurance is valid for a 5-year period; renewal is done once every 5 years.


You need to ask yourself many tough financial questions as well as understand the many eligibility criteria you need to meet to be eligible to buy a BTO flat from the HDB. You should also be well-versed with the various priority schemes and options available to ensure you get your home much easily, smooth and earlier.

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♥ Thanks for reading as always!

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