How to Choose Your Home Loan in Singapore (2026): A Step-by-Step Guide

There is no single best home loan in Singapore. The right loan depends on how long you will keep it, how much rate risk you can carry, and whether you might sell or repay early. In October 2026, floating packages cost about 1.5–1.8% and fixed packages about 2.0–2.2%, so you pay a premium for certainty. The lock-in, the fees and the rate after year two can still matter more than the headline rate.

At a glance

• Find your borrowing limit first. For a first housing loan, a bank lends up to 75% of the price or valuation, whichever is lower. Your total debt repayments must stay within 55% of gross income when the bank tests the loan at 4%.
• HDB buyers choose between two loan types. The HDB loan is 2.6%, with no lock-in, and HDB tests it at a lower 3% rate. Bank packages cost less today, at about 1.5–2.2%. You can move from HDB to a bank, but not back.
• Fixed now costs more than floating. After the US Fed hike of 16 September 2026, floating packages are about 1.5–1.8% and fixed packages about 2.0–2.2% (The Business Times, 2 Oct 2026). In early September, both started at about 1.4%.
• Read the terms that cost money. Lock-ins are commonly two years, with a 1.5% penalty for early repayment. Fee subsidies are often clawed back if you refinance within two to three years.
• Compare total cost over the lock-in, not the first-year rate. Get an in-principle approval before you sign an option to purchase.

Step 1: Work out how much you can borrow

Your loan size is capped by three sets of rules. You should know all three before you compare rates.

Loan-to-value (LTV) limit. For your first outstanding housing loan, banks can lend up to 75% of the price or valuation, whichever is lower, and you must pay at least 5% in cash. The limit falls to 45% for a second loan and 35% for a third. It drops by 20 points if the tenure is longer than 30 years (25 years for HDB flats) or if the loan runs past age 65. Our LTV guide explains each factor.

Debt servicing ratios. Under the Total Debt Servicing Ratio (TDSR), all your monthly debt repayments, including the new loan, must stay within 55% of gross monthly income. For HDB flats, and for ECs bought from a developer within the minimum occupation period, the Mortgage Servicing Ratio (MSR) also limits property loan repayments to 30% of income. Banks must test the loan at the higher of 4% or the actual rate. That is why a cheap 1.5% package does not let you borrow more.

Tenure. The maximum is 35 years for private property and 30 years for a bank loan on an HDB flat. An HDB loan runs up to 25 years.

Run your numbers in the Propwise mortgage calculator. If you are near the limit, small changes such as clearing a car loan can make a large difference.

Step 2: HDB loan or bank loan (HDB buyers only)

	HDB loan	Bank loan for an HDB flat
Interest rate	2.6% (CPF OA rate + 0.1 point)	About 1.5–1.8% floating, 2.0–2.2% fixed (late Sep 2026); changes with the market
Maximum loan	75% of price (resale: lower of price or value)	75% of price or valuation, whichever is lower, if tenure is 25 years or less
Maximum tenure	25 years	30 years (LTV falls to 55% above 25 years)
Rate used to test affordability	3% floor	4% floor
Early repayment	No penalty	Depends on package, often a penalty in the lock-in
Eligibility	Income ceiling S$16,000 (families), at least one Singapore Citizen, no private home in the past 30 months, fewer than two previous HDB loans	No HDB-specific conditions, but TDSR and MSR apply
Switching	You can refinance to a bank later	You cannot refinance back to an HDB loan

Sources: gov.sg HDB loans guide (23 Aug 2026); MAS; package rates as reported by The Business Times (2 Oct 2026) and CNA (18 Sep 2026).

Right now, a bank loan is cheaper. On an S$400,000 loan over 25 years, 2.6% costs about S$1,815 a month and a 1.8% floating package costs about S$1,657. The HDB loan’s value is its stability and flexibility: no lock-in, no penalty, and a rate tied to the CPF OA rate and not to the market. The HDB loan guide covers the details.

Step 3: Floating (SORA) or fixed

Floating packages in Singapore now reference SORA, usually the three-month compounded rate, plus a spread. SIBOR and SOR, which older guides mention, no longer exist. Fixed packages lock the rate for two to three years. After that, they usually revert to a floating rate.

• Floating suits you if you can absorb higher instalments, you might repay or sell early, or you expect rates to fall.
• Fixed suits you if your budget is tight, or you simply want to know your instalment for the next two to three years.

In early September 2026, fixed and floating packages cost almost the same. After the Fed hike, fixed packages cost roughly 0.3–0.7 point more than floating ones, so certainty now has a price. That gap can change quickly. Our SORA vs fixed rate guide explains how SORA packages reset.

Step 4: Read the terms that actually cost money

Two packages with the same first-year rate can cost very different amounts. Check these points in the letter of offer:

• The rate after the lock-in. Many packages are cheapest in years one and two. After that, the spread rises. Compare the rate for year three and later, not only year one.
• Lock-in and penalty. A two-year lock-in with a 1.5% penalty is common. On an S$1 million loan, that penalty is S$15,000. Check whether the penalty is waived if you sell, and whether partial prepayments are allowed during the lock-in.
• Subsidies and clawbacks. Banks often pay legal and valuation fees. PropertyNet notes that loans below S$500,000 are often not fully subsidised (these fees are typically S$2,000–3,000), and that subsidies are usually clawed back if you refinance within two to three years.
• Repricing terms. Some banks let you switch to another of their packages, for a fee or for free after the lock-in. This “repricing” is often easier than refinancing to another bank. Our refinancing guide compares the two.
• Extras. Offset or linked-deposit features can make sense if you keep large cash balances. Interest-only periods, where offered, cost more over time. Ask the bank for the full terms in writing before you accept.

Step 5: Compare total cost over the lock-in, not the headline rate

Here is a worked example. Say you borrow S$1 million over 30 years and compare two packages for the first two years:

• Package A: fixed at 2.0% for two years.
• Package B: floating at 3M SORA plus a spread, which is 1.6% today.

What SORA does in year two	Interest paid over 24 months: A (fixed)	B (floating)	Cheaper
Stays flat	S$39,055	S$31,195	B, by about S$7,900
Rises 0.5 point after 12 months	S$39,055	S$36,022	B, by about S$3,000
Rises 1 point after 12 months	S$39,055	S$40,857	A, by about S$1,800
Falls 0.25 point after 12 months	S$39,055	S$28,785	B, by about S$10,300

Floating scenarios assume the rate changes once, after month 12, and the instalment is recalculated. Example only; check your bank’s actual reset dates.

At today’s prices, floating starts with a head start. In this example SORA would have to rise by about 0.8 point within the first year before the fixed package comes out cheaper. Fixing is still worth it if a sudden jump in your instalment would hurt your budget, because you are buying insurance, not a bargain. Now add your plans: if there is a real chance you will sell within two years, a S$15,000 penalty is bigger than any of these differences. A package without a lock-in, even at a slightly higher rate, could then be the cheapest choice.

Step 6: Shop around, get an IPA, and review your loan

Get an in-principle approval (IPA) before you commit. An IPA shows roughly what a bank will lend before you pay an option fee. HDB buyers also need an HDB Flat Eligibility (HFE) letter, which sets out whether you can take an HDB loan and how much.

Compare at least three banks, or use a broker. Mortgage brokers are usually paid by the bank, so you normally pay no fee. Ask which banks they compare and whether any package is excluded. It also costs nothing to ask your own bank for a better rate.

Review the loan every two to three years. A mortgage consultant interviewed by Propwise in 2015 gave advice that still holds: you cannot control the benchmark, but you can control the spread you pay. Start comparing repricing and refinancing offers about three months before your lock-in ends.

Bottom line

Choose your home loan in this order: borrowing limit, loan type, floating or fixed, then the fine print. In late 2026, fixed packages cost a little more than floating ones, so decide how much that certainty is worth to you. Fixed suits a tight budget; floating or a no-lock-in package suits you if you can absorb higher instalments or might sell or repay early. Then compare the total cost over the lock-in, including penalties and clawbacks, and put a review date in your diary.

Sources

• Loan tenure and loan-to-value limits — Monetary Authority of Singapore, updated 27 Mar 2024
• MSR and TDSR rules — Monetary Authority of Singapore, updated 16 Dec 2021
• Calculating TDSR for property loans — Monetary Authority of Singapore, updated 29 Sep 2022
• HDB loans guide — gov.sg (MyNiceHome), 23 Aug 2026
• Latest bank mortgage loan rates across Singapore — PropertyNet, 4 Sep 2026
• S’pore mortgage rates rise following Fed hike: What home owners should look out for — The Business Times, 2 Oct 2026
• CNA Explains: Should Singapore home owners review their mortgages after the Fed’s rate hike? — CNA, 18 Sep 2026