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Applying For Your HDB Loan Eligibility (HLE) Letter

Singapore HDB

Planning to buy a house is already a struggle; let alone actually buying it. It is very important that one has a strategic plan to make the purchase of an asset. If you are looking out to apply for an HDB Housing Loan, you will need to attain your HDB Loan Eligibility (HLE) letter, a crucial document for reference that could help you go through the process because “no letter, no loan” basically.

How to get it, you ask? Keep on reading.

1. What is an HDB HLE Letter

First and foremost, the HDB HLE letter is a document that states the necessary reference for HDB to know one’s financial standing and condition before lending the fund to buy the HDB flat. The HLE letter will supply you with the mandatory information that you need to get ownership of a flat or helps you in setting up a personal budget. Also, it could function as a financial planning apparatus.

Listed below are the particulars that are provided in the letter:

  • Eligible loan amount
  • Monthly installments
  • Repayment period
  • Amount of cash proceeds from the disposal of your existing or previous flat to be used to pay for the next flat (if applying for second HDB concessionary housing loan)
  • Other terms and conditions

The validation of this letter may last up to 6 months and the HLE letter may need up to 3 weeks to get to you starting from the date it was issued. Furthermore, re-assessment is not required within this period so long as there is no alteration in financial position and family members. Moreover, you may apply for a new HLE letter once the existing one is a week away from its expiration.

Loan Application papers

2. Eligibility to Make an Application

In order to be eligible to apply for HDB Housing Loan, and thus be eligible for an HLE application, one must fulfill these criteria listed.

Citizenship At least one buyer has Singapore citizenship
Household Status
  • Have not gotten 2 or more housing loans from HDB
  • Have gotten 1 housing loan from HDB and the latest owned asset is not a private housing property (local or overseas) such as:
    • HUDC flat
    • Gifted property
    • Inherited property as a beneficiary of a will or through Intestate Succession Act
Income Ceiling Average gross monthly household income is not more than:

  • $14,000 and above for families
  • $21,000 and above for extended families
  • $7,000 and above for singles buying a 5-room or smaller resale flat or a 2-room new flat in a non-mature estate, under the Single Singapore Citizen (SSC) Scheme

If an applicant has been unemployed for under 3 months, his/her average gross monthly income will be valued based on the number of months worked.

Ownership/ Interest in Property
  • Cannot own or sell any private housing property in the last 30 months prior to the date of application of an HLE letter.
  • Must not own or have disposed of any private residential property in the 30 months before the date of application for an HDB Loan Eligibility (HLE) letter. A private residential property (local or overseas) will include:
    • Gifted property
    • Inherited property as a beneficiary of a will or through Intestate Succession Act
    • Property owned through a nominee
  • Not an owner of more than 1 market or any industrial property
  • If any 1 market or any industrial property is owned, one should have no other sources of income
Remaining Lease
  • The loan amount depends on the longevity the remaining lease able to cover from one’s youngest age to 95 years old
  • You can use these online calculators to plan your budget:

Home key

3. Types of Loans: LTV, MSR, TDSR

Loan-to-value limit (LTV limit)

LTV limit is the maximum percentage of one’s property worth value you are permissible to pay with loan funding. Generally speaking, it could be equal to 90% of property value inasmuch as the remaining lease of the assets you wish to buy is sufficient for you to depend on until 95 years old. If you are going to apply for a BTO flat, your LTV limit will most definitely equate to the 90% of property value. This is because a BTO flat comes together with a 99-year lease.

Mortgage servicing ratio (MSR)

For MSR, an applicant is only allowed to pay off the 25-years HDB loan with up to 30% of income. You can ask advice from a mortgage broker for a guide with regards to MSR.

Total Debt Servicing Ratio (TDSR)

The rule-of-thumb with TDSR is that, if you are free from any debts, this will not be applicable to you and your application. By right, not any more than 60% of your monthly income should be set aside in paying off debts. This includes most (if not all) an ordinary Singaporean commitment such as; housing loan, car loan, credit card instalment even.

Hence, if let say you are earning a fixed income of $5000 per month, your TDSR will be:

60% of %5000 = $3000

From the amount of your TDSR, if you are already committed to paying off debts up to $1200 monthly, this brings to $1800 left. Meaning to say, you are only eligible to apply for an HDB loan with a maximum of $1800 repayment per month. If we were to assume you are taking the HDB loan for its full term 25 years long tenure, the maximum amount you will be able to borrow is:

$1800 x 12 months x 25 years = $540,000

Bear in mind, similar to the MSR, only 70% of your variable income will be included towards the TDSR.

Happy family

4. Now… How do I apply for the Letter?

Now, your HLE letter application will start logging onto the HDB website. In the process, you will be required to fill in your necessary particulars along with the needed documents. This may include your payslip in order to prove your income or a record of your CPF contribution history.

When you want to apply for your HLE letter, do it at the right time. Overall, the complete application may take a span of time of 2 weeks, for this reason, it is best and highly recommended for you to apply it in advance before you decide to reach a verdict for your dream HDB flat.

Next, when your application has finished, went through and succeeded (hopefully), you may have a look and retrieve your own copy of the HLE letter from this link. If you wish to keep track of your application process, you may do so on the same platform.

5. What Documents Should I Prepare When Applying?

For the inquiry, below are the documents you are expected to present when making your application for HLE letter:

Before that – one thing to be noted, before settling HDB downpayment it will require different types of documents with people from different backgrounds and commitments. Therefore, to make it easier, just get this – the lower your income is, the more documents will be needed by HDB to approve your loan.

For applicants who are an employee with CPF contributions:

  • Latest three months’ payslips
  • 15-month CPF history

For applicants who are an employee without CPF contributions

  • Latest 12 months’ payslips
  • Latest 12 months’ bank statements
  • Credit Bureau report

For applicants who are self-Employed

  • A valid Accounting and Corporate Regulatory Authority (ACRA) Business Profile computer or a valid license of business/trade
  • Latest notice of assessment from the IRAS or a Certified Annual Statement of Accounts from an audit firm

For applicants who are commission-based and part-time workers

  • The Commission statements and payslips for the last 12 months
  • Latest 15 months’ CPF history
  • Credit Bureau report
  • Latest 12 months’ bank statements

For odd job workers

  • Latest Notice of Assessment from the IRAS or a recent letter from the employer certifying your job designation, commencement date, and your commission/salaries for the last 12 months
  • Latest 15 months’ CPF history
  • Credit Bureau report
  • Latest 12 months’ bank statements

For applicants who are a pensioner

  • Latest 3 months’ payslips or a recent letter from the previous employer stating the monthly pension received for the last 3 months
  • Credit Bureau report
  • Latest 12 months’ bank statements

For applicants who are

  • If you have been unemployed for under 3 months, you are to prepare the previous pay slip of your gross monthly income from the months you were still working and state the last day of your service with the last 15 months’ CPF history
  • If you have been unemployed for more than 3 months, you are required to submit a Statutory Declaration, which is attainable through the HBD hub loan counter or from any HDB branch

With that said, below are the important reminders for you. Be VERY sure to apply your HLE letter as early as you can, this because, it is very much needed when you:

  • Reserve a new flat from HDB
  • Wants to purchase from a resale flat seller
  • Applies to take over the ownership of a flat (by way of transfer)

Important to note, there will be no mortgage loan financing for an applicant who wishes to buy a 2-room Flexi flat on a short lease coverage. This is because you will have to go to the place with your own cash or CPF savings. To add to that, couples who fulfill the criteria of applicants and are applying for the first time – those who are both full-time students or National Servicemen, or completed their studies or National Service in the last 12 months before their application, they may be exempted from any income assessment by HDB until just before key collection.

Loan Papers

6. If I have Gotten My Letter, What’s Next?

Firstly be reminded that if you are to apply for an HDB flat without the letter, or a letter that is validated, you will not be eligible to apply for an HDB housing loan in the future. Secondly, as said earlier on, your HLE letter has a lifespan of 6 months before it expires from the issuance date.

Now, how are you going to put your letter in use? This is how:

  • When you buy an HDB flat
  • When you resell an HDB flat

Specifically, your HLE letter will be much needed when you book your BTO flat. Also, within the period, you will also need to settle your down payment and other miscellaneous fees. Your down payment cost is usually more or less of 10% of the overall purchase price.

Going forward, when you can finally collect your keys – which may take about 2 years (or more), your existing HLE letter may be expired. Of course, you will have a validated one – hence, be alerted of when your first letter expires and apply for a new one when the time comes. Be sure that by then, you are still financially stable and meet the criteria.

The loan funded to you is repayable by cash or through your CPF account. The important details you will be aware of are:

  • Total loan amount
  •  Amount of monthly repayment
  • Period of tenure
  • Interest rate

By now, we would assume you are quite ready to apply for your urgent loan Singapore and grab your dream house! As hassling as all of this process may be, it is just as essential as getting the home you dream of owning. With no further ado, you can now go house-hunt! We wish you the very best of luck with it!

If you enjoy your read, don’t forget to share the article on your other platforms. With all that said, if you are in any circumstances needing immediate cash or financial help, you may visit 365 Credit Solutions – one of the most trustworthy moneylenders in Singapore.

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