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Homeownership is a cornerstone of Singapore’s public housing policy Regardless of income level, everyone needs a place to live, and owning a home is a significant milestone for many in Singapore. However, as most of us know, buying a home is also a major financial decision that requires careful consideration. This applies whether one is a high-income household looking to purchase private property or a low-income household aiming to buy a modest 2-room flat. Housing grants, such as the , provide subsidies for lower and middle-income households purchasing their first HDB flat in Singapore. The EHG offers a grant of up to $120,000, with households earning an average monthly income of less than $1,500 receiving the maximum amount. For households with a monthly income of $1,500 to $2,000, the grant amount is $110,000. While the EHG grant is substantial, an important question is whether this and other available grants are sufficient to help a low-income household with a monthly income of $1,500 purchase an HDB flat. According to Singstat, about 6.2% of Singapore households with an employed person have a household income of less than $2,000 monthly. Let’s consider a Singapore household with an average monthly income of $1,500 who are first-time buyers. They would be eligible to receive $110,000 in EHG. During the , a 2-room Flexi flat (Type 2) at Tampines with a floor area of about 46 square metre (about 495 square feet) cost a median price of *$152,500 ($67,000 – $238,000). With the EHG amount of $110,000, the price reduces to just $42,500. If financing is done through an HDB housing loan of 2.6% taken over 20 years, the monthly repayment is $227 a month. Assuming the household takes an HDB housing loan at 2.6% over 20 years, the monthly repayment would be $227. Based on their monthly income of $1,500, the household would receive $345 in CPF Ordinary Account (CPFOA) contributions each month. This amount is sufficient to cover the monthly repayment of $227, meaning no additional cash outlay is required. From an affordability perspective, this household can borrow up to around $64,000.  For reference, here are the median prices for some of the 2-room flats (Type 2) in the June 2024 BTO Launch. We omitted the PLH locations. $122,500 ($45,000 – $200,000) $152,500 ($67,000 – $238,000) $116,000 ($43,000 – $189,000) $107,500 ($45,000 – $170,000) Based on the price shown above, flat buyers with a monthly household income of $1,500 can still afford a 2-room flat in most BTO locations. . Assuming a first-time household buys a 2-room resale flat within 4km of where their parents live, they would be eligible for the CPF housing grant of $80,000 and the PHG of $20,000. In addition to the $110,000 EHG, they will receive $210,000 in housing grants. Based on the same housing loan assumption, a household can (borrowing $64,000 over 20 years at 2.6%) without any monthly cash outlay. However, the median price of 2-room resale flats tends to be higher. As of 2Q2024, the median price of a 2-room resale flat in Yishun was $327,500. A quick search on PropertyGuru indicates that a buyer would likely need around $300,000 to find options on the resale market. To purchase a flat priced at $300,000, the homebuyer must borrow approximately $90,000. This would result in a monthly repayment of about $481 over 20 years, assuming a 2.6% interest rate. With the household’s CPF Ordinary Account (CPFOA) contribution of $345 per month, a cash outlay of $136 per month would be required to cover the difference. The advantage of choosing a resale flat is the broader selection of locations available and the shorter waiting time compared to new BTO flats. For a low-income household earning an average of $1,500 a month, the BTO route is the more viable option to ensure affordability due to the lower price point. Although resale flats offer more grants, the higher prices typically associated with resale flats mean that home buyers may still pay more and require a larger loan. This could result in higher monthly repayments and potentially stretch the household’s finances, making the BTO option a more prudent choice for long-term financial stability.