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Which HDB Type Can You Buy From Your Monthly Wage?

Recalling how Minister of Home Affairs & Minister for Law, Mr. K Shanmugam mentioned about the unrealistic real estate goals of young Singaporeans, we pondered about what is the dream home we can afford given our current wage levels.

With the Mortgage Servicing Ratio (MSR) being brought down from 40% to the current level of 30%, we have to consistently be mindful of how our wage levels will determine the type of dwelling we are able to afford.

Though it may seem unbelievable, the cheapest HDB apartment costs only $17,500, once you factor in deduction from government grants.

Read Also: How Much You Should Pay For Your First HDB

How Much Does The Average HDB Cost?

Using the HDB’s May 2015 Sales Launch as reference, here’s the average price (excluding government grant) of the brand new flats at Northshore Residence I & II, EastLink I & II and Tampines GreenWeave:

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Exhibit 1: Average Price of Each Type of HDB

HDB Type

Average Price

Studio

$97,500

2-Room

$104,625

3-Room

$190,000

4-Room

$299,500

5-Room

$406,000

3Gen

$413,500

Source: Housing Development Board

We will assume that applicants are first-timers who are eligible to enjoy the Additional Housing Grant (AHG) and Special CPF Housing Grant (SHG).

Grants amount ranges from $0 to $80,000 depending on household income. As such, average HDB prices will differ depending on income levels

Exhibit 2: Cost of An Average HDB Type After Allocation of Grants

Monthly Wage

Studio

2-Room

3-Room

4-Room

5-Room

3Gen

Up to $1,500

17,500

24,625

110,000

219,500

366,000

373,500

$1,501 to 2,000

22,500

29,625

115,000

224,500

371,000

378,500

$2,001 to 2,500

27,500

34,625

120,000

229,500

376,000

383,500

$2,501 to 3,000

32,500

39,625

125,000

234,500

381,000

388,500

$3,001 to 3,500

37,500

44,625

130,000

239,500

386,000

393,500

$3,501 to 4,000

42,500

49,625

135,000

244,500

391,000

398,500

$4,001 to 4,500

47,500

54,625

140,000

249,500

396,000

403,500

$4,501 to 5,000

52,500

59,625

145,000

254,500

401,000

408,500

$5,001 to 5,500

62,500

69,625

155,000

264,500

406,000

413,500

$5,501 to 6,000

67,500

74,625

160,000

269,500

406,000

413,500

$6,001 to 6,500

N.A.

N.A.

165,000

274,500

406,000

413,500

$6,501 to 7,000

N.A.

N.A.

170,000

279,500

406,000

413,500

$7,001 to 7,500

N.A.

N.A.

175,000

284,500

406,000

413,500

$7,501 to 8,000

N.A.

N.A.

180,000

289,500

406,000

413,500

$8,001 to 8,500

N.A.

N.A.

185,000

294,500

406,000

413,500

Note: Households earning more than $6,000 are not eligible to purchase HDBs Studio apartment and 2-Room flat.

Source: Housing Development Board

As you can see, a higher income household will encounter more expensive average HDB prices. This is because they enjoy lower grants. In other words, average HDB prices do vary depending on your income level due to the reduction in grant as a household income increases.

How much do I need to pay for my monthly mortgage?

First of all, you will need to make at least a 10% down payment if you intend to take a HDB housing loan. We assume homeowners will make a 10% down payment and borrow the rest at an interest rate of 2.6% per annum for 25 years.

Exhibit 3: Monthly Mortgage For Each Household Income and HDB Type

Monthly Wage

Studio

2-Room

3-Room

4-Room

5-Room

3Gen

Up to $1,500

71

101

449

896

1,494

1,525

$1,501 to 2,000

92

121

470

917

1,515

1,545

$2,001 to 2,500

112

141

490

937

1,535

1,566

$2,501 to 3,000

133

162

510

957

1,556

1,586

$3,001 to 3,500

153

182

531

978

1,576

1,607

$3,501 to 4,000

174

203

551

998

1,596

1,627

$4,001 to 4,500

194

223

572

1,019

1,617

1,648

$4,501 to 5,000

214

243

592

1,039

1,637

1,668

$5,001 to 5,500

255

284

633

1,080

1,658

1,688

$5,501 to 6,000

276

305

653

1,100

1,658

1,688

$6,001 to 6,500

N.A.

N.A.

674

1,121

1,658

1,688

$6,501 to 7,000

N.A.

N.A.

694

1,141

1,658

1,688

$7,001 to 7,500

N.A.

N.A.

715

1,162

1,658

1,688

$7,501 to 8,000

N.A.

N.A.

735

1,182

1,658

1,688

$8,001 to 8,500

N.A.

N.A.

755

1,202

1,658

1,688

Note: Calculation using a mortgage calculator with interest rate of 2.6% paid monthly for 25 years

The lower your household income is, the lesser you need to pay each month for your monthly mortgage. Incredibly, a household with less than $1500 income per month, will only need to pay $71 for a studio apartment.

The largest HDB (3Gen) is still affordable for the higher income bracket. They pay about $1,688 per month, which represents about 20% of their monthly wage for those in the $8,001 – $8,500 bracket.

Which HDB type should I be getting based on my monthly wage?

So the golden question is “which type of HDB should I buy based on my monthly wage?”

Using the MSR as a guideline, we take the monthly mortgage payment and have it divided by 30% to obtain how much you would need to earn in order to purchase the type of HDB you aim to get, and still be within the MSR.

As long as the amount is above your household income bracket, we would locate it as N.A. That means you will not be eligible to make the purchase of that HDB type because your monthly income would be insufficient to sustain the mortgage based on not using more than 30% of your monthly income for mortgage repayment.

Read Also: Why Singaporeans Should Stop Using Their CPF Money To Pay Their HDB Home Mortgage

Exhibit 4: Minimum Household Income In Order To Purchase A Specific HDB Type

Studio

2-Room

3-Room

4-Room

5-Room

3Gen

Up to $1,500

238

335

1,497

N.A.

N.A.

N.A.

$1,501 to 2,000

306

403

1,565

N.A.

N.A.

N.A.

$2,001 to 2,500

374

471

1,633

N.A.

N.A.

N.A.

$2,501 to 3,000

442

539

1,701

N.A.

N.A.

N.A.

$3,001 to 3,500

510

607

1,769

3,260

N.A.

N.A.

$3,501 to 4,000

578

675

1,837

3,328

N.A.

N.A.

$4,001 to 4,500

646

743

1,905

3,396

N.A.

N.A.

$4,501 to 5,000

715

811

1,973

3,464

N.A.

N.A.

$5,001 to 5,500

851

948

2,110

3,600

N.A.

N.A.

$5,501 to 6,000

919

1,016

2,178

3,668

5,526

5,628

$6,001 to 6,500

N.A.

N.A.

2,246

3,736

5,526

5,628

$6,501 to 7,000

N.A.

N.A.

2,314

3,804

5,526

5,628

$7,001 to 7,500

N.A.

N.A.

2,382

3,872

5,526

5,628

$7,501 to 8,000

N.A.

N.A.

2,450

3,940

5,526

5,628

$8,001 to 8,500

N.A.

N.A.

2,518

4,008

5,526

5,628

Note: Take the monthly mortgage from Exhibit 3 and divide by 30% to obtain the minimum monthly household income required in order to obtain the figures in this exhibit

As you may have noticed, 3-room HDB would be eligible for most household income categories. It also shows that the 5-room HDB and above should only be targets for those earning a minimum household income of $5,500 or more.

Are you intending to make your first HDB purchase soon? Feel free to share with us on Facebook your preferred repayment strategy, (1) using only CPF Ordinary Account monies, (2) Cash, (3) or a mixture of both.

DollarsAndSense.sg is a website that aims to provide interesting, bite-sized financial articles which are relevant to the average Singaporean. Subscribe to our free e-newsletter to receive exclusive content not available on our website. Follow us as well on Instagram @DNSsingapore to get your daily dose of finance knowledge through photos.

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