For many Singaporeans, using our CPF Ordinary Account (OA) savings to repay an HDB home loan, or even a bank loan, feels like the most natural choice. After all, these funds are already earmarked for housing, earn a steady interest rate, and help reduce your monthly cash outlay. Over time, tapping on your OA can make home ownership feel more affordable and manageable.
However, what seems like a straightforward decision comes with important trade-offs that are often overlooked. From accrued interest and future retirement needs, to resale implications and refund obligations, it’s important to know about the key mechanics of using CPF monies to service your HDB loan, so as to avoid any surprises in the future. Before you commit to using your OA savings, here are some key facts you should be aware of, to make a more informed decision.
1. There’s no limit on CPF usage for new flat purchases
Image credit: MyNiceHome
Most of us, save for those sitting on a pot of wealth from a windfall or inheritance, would naturally use our CPF as a means to finance our home purchase. After all, that’s one of the main use cases for the money in our Ordinary Account (OA). We use it not only to pay for the upfront amount, but most of us also use it to repay our loan instalments, so that we don’t have to pay any additional amount out of pocket.
While CPF usage is strong especially for HDB loans, it’s important to know that there are certain limits and rules on its usage.
Mainly, this involves the lease-age rule. ICYMI, how much you can actually use is determined by whether the property’s remaining lease can cover the youngest buyer, who’s paying with CPF, until that buyer is 95 years old. If it does, you can fully utilise your OA for your purchase. For new flats, this won’t be an issue, because new flats come with a 99-year lease, which would naturally cover you until you’re 95 years old.
If your property’s remaining lease cannot cover you until the age of 95, for example if you are buying a mature resale flat or leasehold condo, then your CPF usage will be subject to limits. You and any co-owners may use your respective OA savings only up to a specific percentage of the purchase or valuation price of the property at the time of purchase━whichever is lower. This percentage varies, and is dependent on factors like the age of the youngest owner and the remaining lease duration, so it’s advisable to use the CPF housing usage calculator to be certain.
In the event that you’re buying a second or subsequent property, then there are additional limits as well. You will only be able to use your OA savings after setting aside your Basic Retirement Sum if you have at least one property that can last you till age 95, or Full Retirement Sum if you don’t have a property to last you till age 95. In calculating your Basic or Full Retirement Sum amount, savings from both your OA and Special Account (SA) or Retirement Account (RA) can be used to meet this requirement.
2. You can be insured under the Home Protection Scheme (HPS), and use your CPF to pay for its premiums
Image credit: CPF
Along with your HDB purchase, you will be offered the option to be enrolled in the Home Protection Scheme (HPS) as long as you’ve started working and have made sufficient CPF contributions. If you’re using your CPF savings to pay your monthly housing instalments, enrolment in the HPS is required. If you’re using cash, it’s technically not mandatory, but is highly encouraged.
In short, the HPS is insurance for your mortgage loan. It offers you and your family protection in the event that you pass on, get diagnosed with a terminal illness, or become totally and permanently disabled, rendering you incapable of repaying your loan. In this scenario, the HPS will help ensure that you and your family do not lose your HDB flat.
The HPS is not compulsory; you can opt out if you prefer to be covered by other types of private insurance plans. However, as per CPF, these policies must cover your outstanding housing loan up to the full term of loan or until you turn 65, whichever is earlier. The HPS is also often more affordable than other types of private insurance plans, and you’ll be able to use your CPF savings to pay for the annual premiums.
3. You can opt to keep $20,000 in your OA
When purchasing a property, you will have the opportunity to decide how much of your CPF OA you want to utilise to reduce the amount of loan you’ll have to take, after deducting all the necessary upfront costs like stamp duties and fees.
If you are taking a HDB housing loan, you’ll have the option of retaining up to $20,000 in your OA. If you’re taking a bank loan, you can choose to retain any amount.
Mathematically though, depleting your OA to zero in the first instance might not be the best option, and there are benefits for keeping at least $20k in your OA. This is because the first $20k in your OA enjoys 3.5% interest (25% floor rate + additional 1% for those below 55), which is higher than the HDB loan interest rate of 2.6%.
Of course, other benefits of retaining $20k in the account include having a safety net to service your monthly instalments in the event of unforeseen circumstances like unemployment. The OA also earns 2.5% interest P.A. after the first $20k, and this is risk-free━so it does help to compound and grow your savings for retirement.
4. Legal & stamp fees can also be paid with CPF
Image credit: Alpha Law LLC
As you would know, property purchases also come with an assortment of small fees and other miscellaneous costs, such as transaction fees, legal fees, and stamp duties. The good news is that you can also use your CPF OA savings for these costs.
The first fee you’ll have to pay are legal fees, for processes such as conveyancing, registration and other legal admin work. If you’re taking a HDB loan, you can pay through HDB, and if you’re taking a bank loan, you can pay through your lawyer.
The other big fee that you can pay with your CPF is the stamp duty, which is calculated using differentiated tier rates based on the property’s value: 1% for the first $180k, 2% for the next $180k, 3% for the next $640k and so on. Unlike the other fees, do note that this process can be different, depending on the property you are purchasing. If you are buying a resale property, you will need to use cash to pay the stamp duty first, and it will be reimbursed from your CPF OA. If you are buying a property that has yet to be completed, such as a BTO, you can often pay directly with CPF funds or apply for reimbursement once the legal completion date is near.
Lastly, you can use your CPF OA to pay for your transaction fees and lodgement fees. These refer to fees charged by your lawyer’s appointed bank, and also Singapore Land Authority’s lodgment fees for managing and disbursing your CPF savings.
5. You’ll need to pay back both the principal & interest when you sell
Image credit: JCP Law LLC
When you eventually sell your property, one of the most common misconceptions is that you’ll be able to pocket all the proceeds from the sale. A windfall is certainly nice, but it isn’t quite like that, unfortunately.
After you sell your property, you will have to refund the principal amount that you withdrew from your CPF, plus the accrued interest. Essentially, the amount will be whatever you chose to pay from your CPF upfront, for example the downpayment and any other upfront amount, the total amount of monthly instalments that you’ve paid using your CPF, and an accrued interest that’s basically the amount that you would have earned in interest had your CPF savings not been withdrawn for housing.
So as you can see, if you sell your house for say, $800k, it doesn’t mean that you’ll get $800k in cash into your bank account. Of course, this isn’t necessarily a bad thing per se. Realistically, most people will just see that CPF OA amount temporarily enter into their OA account, before it’s used again for their next property.
To minimise the amount of accrued interest, one method is to use as much cash as possible to pay upfront. This way, you’ll reduce the amount of CPF that you utilise for housing, which in turn brings down the amount of accrued interest. However, this would mean a larger strain on your out-of-pocket expenses, so do keep that in mind as well.
6. Voluntary refunds = less to repay later
If you’ve used your CPF OA for your property━which is most of us━you will have the option of making a voluntary housing refund. The mechanics are pretty simple: you repay the CPF funds you used to buy your property back into your OA in cash, and this will reduce the mandatory refund amount when you sell your property, which works out to more cash in your pocket from your sales proceeds. In essence, it’s paying up for your CPF loan ahead of time.
CPF has always been recognised for having a risk-free interest of 2.5% in OA, which is not amazing, but is relatively decent compared to those in banks. Of course, the downside is that you’ll have to come up with cash, and putting it into your CPF removes its liquidity, since it’s ‘stuck’ in CPF.
7. Sell after 55? Refund goes to retirement first
Image credit: kandlstock via Shutterstock
We’ve already established that when you sell your home, you will have to make several repayments to CPF. That said, there are some slight differences depending on whether you’re selling your home before or after you’re 55 years old.
If you’re below 55, it’s pretty straightforward━you will just have to refund your principal and interest to your OA, as mentioned above.
If you’re above 55 years old, you will first have to refund your principal and interest, plus any voluntary pledged amount to your CPF. From this refunded amount, you will have to first top up your Retirement Account to the Full Retirement Sum (FRS). Only then can any remaining amount left in your OA be used to buy a new home, be transferred to your RA for higher interest, be withdrawn as cash, or simply just left as is.
Take note too that the FRS is adjusted yearly; for those turning 55 in 2026, that amount is $220,400.
8. You can change or stop your CPF usage during the loan term
You can choose to stop repaying your loan with CPF for whatever reason there may be. To do so, all you have to do is apply online via the CPF Board website by selecting ‘Cease Monthly Instalment’ and waiting a couple of days. For HDB loans, you’ll have to change your payment method, whereas for bank loans the bank should start to charge you from your nominated bank account tied to the loan.
If you choose to stop your CPF usage during the loan term, you can also apply to terminate your Home Protection Scheme cover.
Using your CPF OA to pay a HDB home loan
Purchasing your new home is a huge step and investment, but you’ll want to make sure that you have covered all your bases━both financially and otherwise━before making a decision. HDB and CPF have put in lots of failsafes to protect us in the long run, but it’s wise to ensure that you’ve got everything checked out, especially if you’re buying a mature leasehold property.
For more reads:
- How much income you need to afford a condo in 2026
- I spent $700 to revamp my room as a young adult living with my parents
- HDB loan vs bank loan: all you need to know about financing your first home
Cover image adapted from: iPleaders, Google Maps
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