Why Are More Homebuyers Using Cash and CPF for Down Payments Even as Mortgage Loans Rise

Singapore’s property market presents an interesting financial trend: homebuyers are taking out larger mortgage loans, yet many are also contributing more of their own money through cash and Central Provident Fund (CPF) savings.

At first glance, these developments might seem contradictory. If buyers are borrowing more money, why are they also putting more money down upfront?

The answer lies in a combination of rising property prices, accumulated household savings, income growth, and changing borrowing decisions. While mortgages are becoming larger in dollar terms, some buyers are financing a smaller proportion of their property’s value through debt.

According to The Straits Times, which reported on lending data from OCBC, the median mortgage size for new private residential property purchases increased by 35% between 2021 and the first half of 2026. However, the prices of those properties rose by 49% over the same period. For private resale properties, prices increased by 36%, while mortgage sizes grew by 32%.

These figures suggest that some buyers are contributing a greater share of their property’s purchase price from their own resources rather than borrowing the entire additional amount.

But what is driving this trend, and what does it mean for Singaporeans planning to buy their first home?

1. Rising Property Prices Are Pushing Mortgage Loans Higher

The most straightforward explanation is that Singapore homes have become more expensive.

When a property costs more, the amount a buyer needs to borrow can increase even if the buyer is financing a smaller percentage of its value.

Consider a private property purchased for $1 million. With a mortgage covering 75% of the purchase price, the buyer would borrow $750,000 and provide the remaining $250,000 through the required down payment and other eligible funds.

Now imagine a similar property costing $1.5 million. Even if the buyer contributes 30% upfront, the remaining 70% would require a mortgage of $1.05 million.

The second buyer borrows $300,000 more than the first buyer, despite contributing a larger absolute amount upfront.

This illustrates an important distinction: a larger mortgage does not automatically mean a buyer is borrowing a larger proportion of a property’s value.

Singapore’s private residential property market experienced particularly strong price increases in 2021 and 2022. Although annual price growth subsequently moderated, the higher price levels continued to influence the amount buyers needed to finance.

According to OCBC’s figures reported by The Straits Times, nearly eight in 10 borrowers purchasing new private residential launches through the bank in the first half of 2026 took out mortgages of at least $1 million. In 2021, the comparable proportion was around four in 10.

Consequently, a million-dollar mortgage is becoming more common in certain segments of the private property market. However, the size of a loan should always be considered alongside the property’s value, the borrower’s income, and the amount contributed upfront.

2. Buyers Have Accumulated More Cash and CPF Savings

Another possible explanation is that many buyers have accumulated savings over several years of employment.

For Singaporean employees, CPF contributions form an important part of long-term financial planning. A portion of CPF contributions goes into the Ordinary Account (OA), which can be used for eligible housing expenses.

As buyers progress in their careers, they may accumulate larger OA balances and cash savings. These resources can help them meet down-payment requirements without relying entirely on mortgage financing.

OCBC attributed the trend partly to income growth and the savings accumulated by its borrowers. The bank reported that its median borrower was around 38 years old, an age at which some buyers may have had years to build their savings.

However, this does not mean every buyer is becoming wealthier or that everyone has enough savings to purchase a home comfortably. Household circumstances vary significantly, and younger buyers may face different affordability challenges.

CPF savings also require careful consideration. Although OA funds can reduce the immediate cash required for a property purchase, using them for housing means less money remains available to earn CPF interest and support future retirement needs.

The CPF Board explains that buyers should consider how much OA savings to use rather than automatically committing their entire available balance to a home.

In other words, accumulated savings can make a larger down payment possible, but using those savings wisely remains essential.

3. Borrowing Less Relative to Property Value Can Reduce Financial Risk

Some buyers may be choosing to contribute more upfront because they want to keep their mortgage manageable.

A smaller loan generally means lower monthly repayments, assuming the interest rate and loan tenure are otherwise the same. It can also reduce the total interest paid over the life of the mortgage.

For example, consider a property priced at $1.5 million.

If a buyer borrows $1.125 million, equivalent to 75% of the purchase price, the remaining 25% is $375,000.

If the buyer instead borrows $1.05 million, the mortgage falls by $75,000, while the upfront contribution increases to $450,000.

The second buyer takes on less debt, potentially reducing monthly repayment obligations. However, the buyer also commits more capital to the property, leaving less money available for other needs.

This trade-off is particularly important when mortgage interest rates can change.

A household that takes on a large loan may be more exposed to increases in monthly repayments, particularly if it has limited savings or other outstanding debts.

Singapore’s financial safeguards are designed to help borrowers avoid excessive borrowing. The Monetary Authority of Singapore (MAS) imposes a Total Debt Servicing Ratio (TDSR) limit of 55% of a borrower’s gross monthly income. For applicable HDB flats and executive condominiums, the Mortgage Servicing Ratio (MSR) limit is 30%.

These limits help assess whether borrowers can manage their debt obligations. However, passing the assessment does not necessarily mean a mortgage will feel comfortable alongside childcare expenses, insurance premiums, retirement savings, and everyday living costs.

4. Singapore’s Loan Rules Require Buyers to Provide Upfront Funds

Singapore’s housing loan framework also influences how much buyers must contribute themselves.

For a bank loan on a residential property, an eligible borrower with no outstanding housing loan can generally borrow up to 75% of the property’s value, subject to the applicable loan-to-value (LTV) limit and other conditions.

Under this 75% LTV arrangement, at least 25% must be funded outside the housing loan. At least 5 percentage points of the purchase price must be paid in cash, while eligible CPF savings may be used for part of the remaining down payment.

The rules differ depending on the buyer’s circumstances. For example, a lower LTV limit may apply to borrowers with existing housing loans or loans with longer tenures.

For buyers with one outstanding housing loan, the standard LTV limit is generally 45%, with a minimum cash down payment of 25%. For borrowers with two or more outstanding housing loans, the standard LTV limit is generally 35%, also with a minimum cash down payment of 25%. Other conditions can result in lower limits.

These requirements mean that buyers cannot always solve an affordability problem simply by borrowing more.

They need sufficient eligible funds to cover the required upfront contribution, transaction costs, and any amount that cannot be financed by the loan.

Buyers should also remember that the purchase price and the property’s valuation may differ. If a property is purchased above its assessed market value, the excess generally needs to be funded in cash rather than through CPF savings or the housing loan.

The practical lesson is that mortgage approval and the ability to fund a down payment are two separate financial considerations.

5. Buyers May Be Adjusting Their Strategy After Interest Rate Changes

Mortgage interest rates can significantly influence property-buying decisions.

During the period of very low interest rates in 2020 and 2021, some buyers could obtain comparatively inexpensive housing loans. Interest rates subsequently rose sharply as global monetary conditions tightened.

This change reminded homeowners that mortgage affordability depends not only on the purchase price but also on the cost of financing.

When borrowing becomes more expensive, buyers may reconsider how much they want to borrow, whether they should purchase a less expensive property, or whether they can contribute more money upfront.

A larger down payment may help reduce interest costs and provide a greater buffer against future financial pressure.

However, it would be inaccurate to assume that all buyers are increasing their contributions solely because they fear higher interest rates. Individual decisions depend on income, existing savings, loan packages, expectations about interest rates, and personal financial priorities.

The important point is that buyers have reasons to assess the full cost of borrowing rather than focusing exclusively on the maximum loan they can obtain.

Before committing to a property, prospective homeowners should compare fixed-rate and floating-rate mortgage packages, understand when promotional rates expire, and calculate whether they could still manage repayments if interest rates increased.

6. A Larger Down Payment Is Not Always the Better Choice

Although contributing more cash and CPF can reduce borrowing, putting too much money into a property can create a different financial problem: insufficient liquidity.

Cash is flexible. It can be used to cover emergencies, temporary unemployment, medical expenses, home repairs, and other unexpected costs.

Money committed to a property is generally less accessible. Selling a home to recover equity takes time and involves costs, while withdrawing CPF savings used for housing is subject to CPF rules.

Imagine two buyers purchasing the same property.

Buyer A contributes a larger down payment and has a smaller mortgage but retains only a limited emergency fund.

Buyer B contributes a smaller eligible down payment, takes on a larger mortgage, and keeps sufficient accessible savings to cover unexpected expenses.

Buyer A may pay less interest, but Buyer B could be in a stronger position to handle a sudden loss of income.

Neither strategy is automatically superior. The appropriate balance depends on the household’s income stability, existing obligations, risk tolerance, and financial goals.

A sensible home-buying plan should account for more than the minimum required down payment. It should also include legal fees, stamp duties, moving costs, renovation expenses, maintenance charges where applicable, and a reserve for emergencies.

For CPF members, it is equally important to consider retirement planning. Using OA savings for a property reduces the balance available to earn CPF interest, and the eventual CPF refund when a property is sold may include accrued interest under the applicable rules.

The goal should not simply be to minimise the mortgage. It should be to purchase a home without undermining the household’s wider financial security.

7. What Does This Trend Mean for Singapore’s Housing Market?

The increase in mortgage sizes alongside larger upfront contributions points to a more nuanced picture of Singapore’s property market.

On one hand, rising property prices mean that buyers often need larger absolute sums to purchase homes. A $1 million mortgage may represent a manageable commitment for one household but a substantial burden for another.

On the other hand, the reported growth in property prices outpacing mortgage growth in certain segments suggests that some buyers are contributing a larger share of the purchase price themselves.

Banks have also reported broadly stable debt-servicing levels among their borrowers, according to the same Straits Times report. OCBC observed that fewer buyers were maximising their available LTV limits for some private residential purchases compared with 2021.

These indicators suggest that at least some buyers are choosing more conservative borrowing arrangements.

Nevertheless, aggregate lending figures cannot tell us whether every household is financially comfortable. They may conceal differences between higher-income buyers, first-time homeowners, investors, and families stretching their budgets to enter the market.

The broader household picture also deserves attention. Singapore’s Department of Statistics reported that household mortgage loans remained a substantial component of household liabilities in its fourth-quarter 2025 balance-sheet data.

Therefore, even if some buyers are borrowing a smaller proportion of their property’s value, the overall amount of mortgage debt can continue to rise as property prices and loan sizes increase.

For policymakers, banks, and homebuyers, the challenge is to balance access to housing with responsible borrowing and long-term financial resilience.

8. Practical Tips Before Buying a Home

If you are planning to purchase a property in Singapore, consider these steps before committing to a mortgage.

First, calculate your total upfront costs. Include the required cash down payment, eligible CPF contributions, stamp duties, legal fees, and any amount above the property’s valuation that must be paid in cash.

Second, work out a comfortable mortgage amount. Do not automatically borrow the maximum available. Calculate repayments using realistic interest-rate assumptions and account for other household expenses.

Third, protect your emergency savings. Avoid using every available dollar of cash to reduce your down payment. Keep an appropriate reserve for emergencies and unexpected expenses.

Fourth, review your CPF strategy. Estimate how using OA savings for housing could affect your retirement savings and future financial flexibility. CPF’s Home Purchase Planner can help you assess your options.

Fifth, consider the long-term cost of ownership. Beyond monthly repayments, account for property taxes, maintenance, insurance, repairs, and the possibility of changes in household income.

Finally, review your financial plan regularly. Your housing needs may change as you get married, have children, change jobs, or approach retirement. A mortgage that is manageable today should not prevent you from meeting other important financial goals.