Should I use CPF or cash when buying a home?

Should I use CPF or cash when buying a home?

Buying your home could be one of the few occasions in life when you begin to appreciate the contributions you have been making to your Ordinary Account (OA) with the Central Provident Fund (CPF) every month, which may be used to buy a property.

How can you utilise your CPF contributions and what are the advantages or downsides of using your CPF OA savings to finance your home? Find out more in this article.

CPF OA funds – what can you use them for?

When buying a house, your CPF OA savings may be deployed to pay for the following:


Your CPF OA savings may be utilised for your downpayment. Do note, however, that in most cases, you are still required to top up with some cash for this down payment.

Housing Development Board (HDB) flat buyers taking a HDB Concessionary Loan:
Downpayment is 10% of the purchase price, which can be completely paid with CPF OA savings.

HDB flat buyers taking out a bank loan:
Downpayment is 25% of the purchase price, of which up to 20% may be paid with CPF OA savings, and the remaining 5% in cash.

Private property buyers taking a bank loan:
Downpayment is 25% of the purchase price, of which up to 20% may be paid with CPF OA savings, and the remaining 5% in cash.

Deposits for HDB resale flat and Private Resale Property:
Deposits & Option Fees cannot be paid with CPF savings. They must be paid with cash.

Legal fees and stamp duty

CPF OA savings may be used to pay your relevant stamp duty, survey fees and legal fees. Your lawyer can assist you with your application to utilise your CPF OA savings.

As stamp duties are payable within 14 days from the date of the sale and purchase agreement or the date of acceptance of the option to purchase, you will need to use cash to pay the stamp duty first. Subsequently, you may apply for a one-time reimbursement from your CPF account together with your application to use your CPF savings to buy a property.

Home loan repayments

Your CPF OA savings can also be used to make your home loan repayments. Although you are likely to have exhausted most of your CPF savings for your downpayment, ongoing CPF contributions may be set up to service the monthly instalments for your home loan.

Home protection scheme (HPS) fees

The Home Protection Scheme (HPS) is a mortgage-reducing insurance scheme that protects its members and their families through paying the outstanding HDB housing loan amount (based on the amount insured) in the event of death, terminal illness or total permanent disability before the insured person turns 65.

HPS is compulsory for HDB home buyers who are using their CPF OA savings to pay the monthly instalments of their HDB loans. For HDB home buyers with a bank loan, you may choose to be insured under HPS or purchase a mortgage insurance from a private insurer. HPS insures members up to the age of 65 or until the housing loans are paid up, whichever is earlier.

The premium is paid annually using your CPF savings or cash.

Perks and downsides of using your CPF

What are the considerations to determine if you should use cash or CPF savings to finance your home?

Limited alternative uses of CPF OA savings

The primary purpose of your CPF contributions is to secure your retirement during old age. So, the usage of your CPF OA savings is naturally, quite restricted before you turn 55 years old.

Your home is an exception, though. As illustrated above, CPF OA savings may be used for most of your home financing needs, be it your downpayment, stamp fees, loan repayments or even your home insurance.

As cash can be deployed for immediate needs like wedding expenses, renovation or vacations, you might have the mindset to maximise your CPF OA savings for the house.

Home ownership might not be possible without CPF savings

Even without splurging on luxuries, our cash savings are likely not enough to finance our home for most of us. With HDB resale flats costing above S$400,000 and private property prices approaching S$1 million, a house is likely one of the costliest purchases in our lives.

A 25% downpayment on a HDB flat will amount to S$100,000 and this is an amount not to be sniffed at, especially for young couples who have only recently entered the workforce. Relying on your CPF savings might be the booster that enables you to buy your dream home in a choice location.

The opportunity costs of using CPF savings for a home

However, there is a trade-off when you utilise your CPF savings to finance your home. The more CPF savings you use to service your home loan, the less you have for your retirement.

CPF members currently earn interest rates of up to 3.5%* per annum on their OA monies. If these savings are not needed to finance the monthly home loan repayment, you could even transfer them to your CPF Special Account where you can earn up to 5%* per annum on interest.

This will surely help provide a golden nest egg during your retirement, thus make sure not to over-extend yourself financially to buy a house!

*Source: as of time of writing

Start Planning Now

Check out DBS MyHome to work out the sums and find a home that meets your budget and preferences. The best part – it cuts out the guesswork.

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Alternatively, prepare yourself with an In-Principle Approval (IPA), so you have certainty on how much you could borrow for your home, allowing you to know your budget accurately.

Apply In-Principle Approval

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