Below article will help you know whether you can afford for HDB or not. Let us continue
ou’ve decided to apply for the latest HDB BTO Launch and now have to decide what HDB flat type to choose.
Should you just buy the largest flat that you can afford?
What if you only wish to live in the flat until you meet the Minimum Occupation Period (MOP) and want to sell it?
Are there any considerations that you should think about when deciding between a 3-Room, 4-Room, or a 5-Room flat?
Only Buy a House That You Can Comfortably Afford
For this exercise, I determined what is the minimum average monthly household income needed when considering what type of HDB flat to get.
How did I do this?
Simple.
I just…
- used the Tampines August 2021 HDB BTO Launch prices as a reference (since it’s one of the most recent launches which has almost all of the existing HDB flat types)
- assumed that I would be taking an HDB housing loan and would put down a 10% downpayment
- calculated how much Enhanced CPF Housing Grant I would get with respect to my household’s monthly income bracket
- applied the Mortgage Servicing Ratio of 30%
This is what I found out:
| HDB BTO Flat Type | Average Price (Excluding Grants) | Minimum Monthly Household Income Needed |
|---|---|---|
| 2-Room Flexi | $169,000 | $1,093 |
| 3-Room | $267,500 | $2,660 |
| 4-Room | $398,500 | $4,743 |
| 5-Room | $541,000 | $6,987 |
Note: this price and income range is ONLY a guide, a flat in a high-demand estate is definitely going to cost more
Feel free to apply my calculations to your respective BTO or Resale flat purchase to see which type of HDB flat you can comfortably afford.
And if you’ve got questions about buying your first property, why not ask our friendly Seedly Community for help?
How Much Does the Average HDB Flat Cost?
Before we get started, I’ll be using the Tampines August 2021 HDB BTO Launch as a reference.
Since it’s one of the few (and more recent) HDB projects which has almost all the various HDB types to choose from, namely:
- 2-Room Flexi
- 3-Room
- 4-Room
- 5-Room
Take note that this is a BTO project in a mature estate, so it’s gonna be a little more expensive than usual.
Average Price of the Various HDB Flat Types (Excluding Grants)
Using the indicative prices as listed on HDB, here’s how much the various HDB flat types cost:
| HDB Flat Type | Average Price (Excluding Grants) |
|---|---|
| 2-Room Flexi | $169,000 |
| 3-Room | $267,500 |
| 4-Room | $398,500 |
| 5-Room | $541,000 |
Average Price of the Various HDB Flat Types (Including Grants)
Assuming you and your partner are first-timers who meet all the eligibility criteria for the Enhanced CPF Housing Grant (EHG).
You can expect to receive between $5,000 to $80,000 in grants.
Naturally, the final amount you qualify for will ultimately depend on your average monthly income.
| Average Monthly Household Income* Over 12 Months | EHG Grant Amount | 2-Room Average Price (after EHG) | 3-Room Average Price (after EHG) | 4-Room Average Price (after EHG) | 5-Room Average Price (after EHG) |
|---|---|---|---|---|---|
| Not more than $1,500 | $80,000 | $89,000 | $187,500 | $318,500 | $461,000 |
| $1,501 to $2,000 | $75,000 | $94,000 | $192,500 | $323,500 | $466,000 |
| $2,001 to $2,500 | $70,000 | $99,000 | $197,500 | $328,500 | $471,000 |
| $2,501 to $3,000 | $65,000 | $104,000 | $202,500 | $333,500 | $476,000 |
| $3,001 to $3,500 | $60,000 | $109,000 | $207,500 | $338,500 | $481,000 |
| $3,501 to $4,000 | $55,000 | $114,000 | $212,500 | $343,500 | $486,000 |
| $4,001 to $4,500 | $50,000 | $119,000 | $217,500 | $348,500 | $491,000 |
| $4,501 to $5,000 | $45,000 | $124,000 | $222,500 | $353,500 | $496,000 |
| $5,001 to $5,500 | $40,000 | $129,000 | $227,500 | $358,500 | $501,000 |
| $5,501 to $6,000 | $35,000 | $134,000 | $232,500 | $363,500 | $506,000 |
| $6,001 to $6,500 | $30,000 | $139,000 | $237,500 | $368,500 | $511,000 |
| $6,501 to $7,000 | $25,000 | $144,000 | $242,500 | $373,500 | $516,000 |
| $7,001 to $7,500 | $20,000 | $149,000 | $247,500 | $378,500 | $521,000 |
| $7,501 to $8,000 | $15,000 | $154,000 | $252,500 | $383,500 | $526,000 |
| $8,001 to $8,500 | $10,000 | $159,000 | $257,500 | $388,500 | $531,000 |
| $8,501 to $9,000 | $5,000 | $164,000 | $262,500 | $393,500 | $536,000 |
*Includes ALL working persons’ (applicants and occupiers) income
So… What’s the Takeaway Here?
At the risk of stating the obvious…
The lower your monthly household income, the more grants you’ll receive.
This means that (ideally) you should apply for an HDB BTO as early as possible.
Let’s look at two scenarios:
Couple A
- One is a final-year university undergraduate ($0 monthly income)
- The other is a fresh grad with a first job ($2,500 monthly income)
Their monthly household income would be $2,500 which means they qualify for $70,000 in EHG.