Written answer by Ministry of National Development on classification of self-employed persons' earnings in computation for HDB home loans

Nov 7, 2023

Question No: 5312

Question by: Ms See Jinli Jean

To ask the Minister for National Development (a) whether the Ministry classifies the self-employed person’s income as variable income in the computation of HDB home loan; and (b) whether the Ministry will consider reviewing this classification for self-employed persons with demonstrated track record of continual and recurring work for more than three continuous years in sectors that are freelance-work dominated such as coaching.

Answer:

In assessing applications for an HDB housing loan, HDB considers various factors such as job stability, CPF contributions and monthly cash savings. HDB then applies a set of mortgage financing guidelines, such as a maximum loan tenure of 25 years, loan-to-value limit of 80%, maximum mortgage servicing ratio of 30%, and interest rate floor of 3.0% per annum to ensure prudent borrowing.

2        In computing the eligible HDB housing loan amount, HDB considers all income derived from employment or trade, excluding bonuses, over a 12-month assessment period. This assessment approach is consistently applied across all applicants, regardless of whether they are self-employed or not, including those whose incomes fluctuate from month to month.