Introduction

When purchasing a home in Singapore—whether it is a private condominium or an HDB resale flat—buyers must carefully consider how much to commit upfront as their down payment. With factors like CPF Ordinary Account usage, bank loan limits (75% maximum LTV), and loan servicing frameworks such as TDSR and MSR, the size of your down payment can have a significant impact on your long-term financial flexibility.

A large down payment can reduce your mortgage burden, but it also ties up capital that might otherwise be used for investments, retirement savings, or emergency funds. Let’s explore the key pros and cons of making a large down payment in the Singapore context.

The Pros of a Large Down Payment

• Lower Monthly Mortgage Repayments — Paying more upfront reduces the principal amount you need to borrow, easing monthly cash flow pressures. This can be especially important with TDSR and MSR limits.
• Less Interest Paid Over Time — With a smaller loan quantum, the total interest paid across your loan tenure will be significantly lower, helping you save in the long run.
• Stronger Financial Position — A higher initial commitment reduces your loan-to-value (LTV) ratio, giving you more security if interest rates rise or property values fluctuate.
• Potentially Higher Loan Approval Chances — Banks may view buyers with larger down payments as lower-risk borrowers, which can increase the likelihood of smooth loan approval.

The Cons of a Large Down Payment

• Reduced Liquidity — Committing too much upfront (cash or CPF) may leave you with limited funds for renovation, furnishing, or emergencies.
• Opportunity Cost — Capital tied up in property could potentially earn higher returns if invested elsewhere—such as in equities, bonds, or retirement funds.
• CPF Refund Obligations — Using a large amount of CPF savings means that, upon selling the property, you’ll need to refund the principal plus accrued interest back into your CPF account. This may reduce your cash proceeds at sale.
• ABSD and Other Upfront Taxes Still Apply — Even if you make a large down payment, Additional Buyer’s Stamp Duty (ABSD) and Buyer’s Stamp Duty (BSD) are based on the property price, not loan size. These taxes must still be paid in cash/CPF upfront.

Conclusion

A large down payment can bring peace of mind and lower financial risk, but it is not the right choice for everyone. In Singapore’s property market, buyers must weigh the benefits of reduced debt against the drawbacks of lower liquidity and lost investment opportunities.

Before deciding how much to put down, consider your cash flow needs, long-term investment plans, and CPF strategy. Consulting with a financial advisor or property consultant can also help you strike the right balance between security and flexibility.