What’s the HDB Earnings Cap for BTO, EC, and Resale Housing ?, Cash Information

When buying an HDB apartment, the Singaporeans are stuck between the devil and the deep blue sea.

A delicate balance has to be struck between two extremes: work harder so you have more money to actually buy an apartment, but don’t work too hard or you could break the HDB income limit.

If your income barely exceeds the HDB income limit, you are in the no man’s land of people who cannot buy HDB apartments, but who are having a hard time affording private apartments in the millions. Not cool.

We scoured the various government websites to extract the information we needed.

HDB income limits at a glance

HDB is a form of government subsidized housing, and the income cap is designed to be a form of means testing to ensure that only those who need it are eligible. The price of new HDB apartments is artificially kept lower than that of private apartments in order to keep us all off the street.

In other countries, social housing means “for poor people”, but since almost everyone in Singapore lives in social housing, the income limit is more of a protection to ensure that the rich don’t take advantage of it.

The above income limits apply to those who shop in the typical family core.

How is HDB’s monthly household income calculated?

The income limits of the HDB relate to the combined household income. So if you buy the apartment with your spouse, the sum of your two monthly incomes must not exceed the income limit.

For example, let’s say you make $ 5,000 a month and your spouse makes $ 2,000 a month. That means your combined household income is $ 7,000.

For salaried employees, your gross monthly income corresponds on average to your wages for the last three months. This is especially important if you have a variable salary.

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The official amount on your pay slip will be used, which is your wages before CPF deductions, but excluding the employer’s CPF contributions.

It does not include bonuses and income from ad hoc overtime. However, it does include all the supplements, fixed or variable, that you receive on a regular basis. So if your boss gives you a flat rate travel allowance, it has to be factored into your income.

Let’s say you earned $ 3,000 in the month prior to your BTO application, $ 3,500 in the month before, and $ 4,000 in the month before. Your gross monthly income would be ($ 3,000 + $ 3,500 + $ 4,000) / 3 = $ 3,500.

For employees with a fixed wage, the HDB uses your last salary when calculating your income. If you take 6 months or less of unpaid leave, your most recent wages will be used, but if your unpaid leave extends to 6 months or more, you are considered unemployed.

In the case of freelancers or self-employed persons, the HDB bills an average income for the last 6 months before the application.

HDB BTO upper income limit 2021

* Income cap will be set in the launch press release

The above numbers apply to your typical family core (e.g. couple). If you are applying as a single buyer or as a multi-generational family, however, different income limits may apply.

For singles, the only BTO flats you can buy are 2-bedroom flexi flats in sub-mature settlements. So the income cap of $ 7,000 remains unchanged.

For families / couples, the usual BTO income limit is $ 14,000, but there are certain special cases for 2-bedroom and 3-bedroom apartments. Make a note of these details – you will find them in the information sheets for the start of the BTO project.

For those shopping in extended and multigenerational families, there is a higher income limit of $ 21,000.

HDB EC upper income limit 2021

The income limit for purchasing Executive Condominiums (ECs) from HDB is $ 16,000, slightly higher than the $ 14,000 limit for HDB BTO apartments.

Singles are not allowed to buy ECs alone. However, you can team up with up to three other singles under the Joint Singles Scheme to purchase an EC. The same income limit of $ 16,000 applies to the entire household of a single person.

Remember that you are not allowed to take out an HDB loan to finance an EC. Instead, you’ll need to take out a bank loan that requires a 25 percent down payment – 5 percent of which must be in cash. To qualify for a European Championship, you have to have amassed enough money, but not earn too much.

HDB resale flat rate 2021

There is no income limit for resale apartments – they can be bought and sold in the open market without HDB imposing income restrictions. That’s why there are so many resale homes for over $ 1 million these days …

HDB resale apartments are subject to market fluctuations and their prices tend to rise sharply once the first owner ends their minimum occupancy (MOP) and decides to sell.

In other words, their prices are no longer artificially pushed down by the HDB. You can even buy and sell at a price above HDB’s valuation, with the excess paid by the buyer in the form of Cash Over Valuation (COV). With all of these factors in mind, it no longer makes sense to set an income cap for resale homes.

However, if you need a reason not to become a millionaire, HDB will consider your income when awarding CPF housing allowances when buying a resale home.

And of course all other HDB criteria also apply. Didn’t think they’d let go of you that easily, did they? So you have to buy within the framework of one of the HDB authorization models (e.g. as a family member or as a single over 35). In addition, the HDB quotas for ethnic and non-citizens continue to apply.

Are the HDB’s income limits fair?

In 2020, the median gross monthly wage was $ 4,534, including employer’s CPF contributions, and the median monthly wage for households was $ 9,198.

In comparison, the $ 14,000 income limit for couples buying a BTO apartment is actually quite high. About 80 percent of Singaporean households will fall below the income limit.

Some argue that the cap is too high. Since a primary goal of the HDB is to ensure that low-income Singaporeans have access to affordable housing, the HDB should limit housing to those who really need it.

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But there are others who argue otherwise. Last year Parliament raised the idea of ​​lifting the BTO income limit for first-time buyers.

This means that all young Singaporeans, regardless of income, could buy an HDB apartment as their primary residence. But of course this would make it even more difficult for households with lower incomes to get apartments allocated due to increasing competition.

So what does the government think? HDB has raised the BTO income caps over the years, so it’s likely they’ll keep track of income numbers to make sure a fixed percentage of household income qualifies for housing.

But it is of course important to keep housing affordable for lower-income families as well. For now, the HDB’s solution appears to focus on restructuring BTO launches in expensive mature properties rather than lowering the income cap.

This article was first published in MoneySmart.