How much cash do you need to buy an HDB resale flat?
I budgeted 5% of the price in cash. I needed a lot more than that.
When I started looking at resale flats, I thought the cash part was simple. 5% of the price, and CPF and the loan would cover the rest.
Then an agent for a flat I wanted to view asked me what my COV budget was. I said $50k. He ghosted me. I never got to view it.
I’d also forgotten about stamp duty completely. Once I added everything up properly, I needed wayyy more cash than 5%.
5% is only the minimum
The 5% isn’t wrong. If you take a bank loan, at least 5% has to be paid in cash (MoneySense has the loan limits). But it’s 5% of the lower of the price and HDB’s valuation, and it’s only the minimum. Everything below comes on top.
COV is all cash
Cash over valuation (COV) is how much you pay above HDB’s valuation of the flat. If you agree on $600,000 and HDB values it at $550,000, the $50,000 difference has to be cash. CPF can’t pay for it and the loan won’t cover it, because the loan is based on the valuation.
The annoying part is you agree on the price before you know the valuation. You only ask HDB for it after the seller gives you the Option to Purchase, and you have to submit the request by the next working day. So you’re committing to a price with a guess for COV.
Have a COV number ready before you start talking to agents. Mine came up before I’d even seen the flat.
Then stamp duty
Buyer’s Stamp Duty (BSD) is charged on the higher of the price and the market value. For a $600,000 flat:
| Slice of the price | Duty |
|---|---|
| First $180,000 at 1% | $1,800 |
| Next $180,000 at 2% | $3,600 |
| Remaining $240,000 at 3% | $7,200 |
| Total | $12,600 |
IRAS has the full bands. CPF can pay for it, but you may have to pay cash first and get reimbursed, so I’d keep it in your cash budget. If your household owns other property, there’s also Additional Buyer’s Stamp Duty.
What it actually adds up to
Made-up numbers, not my flat: a $600,000 flat valued at $550,000, a bank loan for 75% of the valuation, CPF paying the other 20% of the valuation, no ABSD.
| Cash payment | Amount |
|---|---|
| 5% minimum cash (5% of $550,000) | $27,500 |
| COV | $50,000 |
| BSD | $12,600 |
| Request for Value fee | $120 |
| Resale application fee (3-room or bigger) | $80 |
| Total | $90,300 |
5% of the price would have been $30,000. This is three times that, and it still leaves out the lawyer, renovation, moving, and an agent’s fee if you’re paying one (I’d buy without one).
Don’t count the deposit twice
The option fee and exercise fee, up to $5,000 together, are paid in cash. They’re part of the price though, so they come out of the $77,500 of 5% and COV above, not on top of it. CPF Board explains the fees.
Know when each payment is due
The option fee is due when the seller grants the OTP, the exercise fee when you exercise it, and the application fee when you submit your part of the resale application. Ask HDB or your lawyer when the rest is due. If you’re counting on a CPF reimbursement or money from selling your current place, check it arrives before you have to pay.