In the Budget 2017, Finance Minister Heng Hwee Kiat made the announcement to increase the CPF Housing Grants available for first-timer families buying a resale HDB. The grant amount will increase from the $30,000 currently to $50,000 (4-room or smaller resale flat) or $40,000 (5-room or larger resale flat). This new enhancement has taken effect since 20th February 2017. We are going to discuss some aspect of the CPF Housing Grant as well as the changes.
What is a CPF Housing Grant?
The CPF Housing Grant is a grant from the Government to you. It is money given to you by the Government to help you pay off part of the cost of buying your first home – a resale HDB flat. It is not given to you if the first flat you intend to buy is a new BTO. New BTOs are eligible for the Special Housing Grant, not the CPF Housing Grant.
What can the CPF Housing Grant be used to pay for?
- Reduce the price of your HDB
- Reduce the amount of mortgage loan you are taking
But it cannot be used to pay for the 5% or 10% down payment if you are taking a bank loan.
How much will I get?
| Household Type | Current Grant Amount | Previous Amount | |
| 4-room or smaller | 5-room or bigger | 2-room or bigger | |
| Family | $50,000 | $40,000 | $30,000 |
| Single | $25,000 | $20,000 | $15,000 |
- An substantial increase of $30k to $50k if your getting 4 room or smaller flat.
- Singles will entitle an increase of $10k for 4 room or smaller flat.
Is this free money from the Government?
Yes. This is free money from the Government to you if you meet the criteria.
The criteria include:
- First-time HDB buyer
- Buying resale HDB
- Gross monthly household income not more than $12,000
- At least 30 years of lease left on the flat you are buying
- Have not bought an HDB/DBSS/EC with CPF Housing Grant
- Have not inherited an HDB/ DBSS/EC
- Have not taken other housing subsidies like the En bloc Redevelopment Scheme
- Must not own any property locally or overseas or sold any of these properties in the last 30 months prior to your application
Do I have to return the money to the Government if I sell my flat?
No. You do not have to return the money to the Government if you sold your flat that was paid for partially with the grant. Instead, the grant money will be transferred to your CPF Ordinary Account (OA) if you are below the age of 55 and to your Retirement Account (RA) if you are above the age of 55.
If you are above age 55, you can apply to withdraw the money in your CPF that is more than the Full Retirement Sum (FRS).
Is there interest levied on the grant?
Yes. There is an interest of 2.5% on the grant money that you will have to return to your own CPF account if you sell your house in the future. The interest is pegged to the prevailing CPF Ordinary Account (OA) rates.
The accrued interest works just like the way the accrued interest in your normal CPF housing loan work. Interest is charged on the amount that is withdrawn from your CPF account.
Because the grant money is first transferred into your CPF account, then withdrawn out to pay down your housing loan, it is essentially the same as withdrawing money from your CPF account. Hence there is the accrued interest charge.
Can I siam (avoid) repaying the accrued interest?
Yes – technically. If you pass away, the accrued interest will cease to exist and there is no need for your beneficiary to repay the accrued interest when they sell your house. This works the same way as your other CPF accrued interest.
Conclusion
Yes, the CPF Housing Grant is still free money to you by the Government to partially pay for your home. Although there are terms and conditions attached to it, it is still a good scheme for you to use to pay for your first home.
Also read: CPF Lease Buyback Scheme