The Truth about Paying for your Home with CPF (It's NOT Unlimited)

Summary

The presenter explains that CPF Ordinary Account (OA) funds are subject to limits when used for housing. The amount available depends on the property, loan type, remaining lease, and retirement savings set aside.

CPF use for housing

CPF OA funds may be used for a property’s down payment, mortgage repayments, legal fees, and stamp duties. The presenter identifies these factors as affecting how much CPF can be used:

• Whether the property is bought directly from HDB or on the resale market
• Whether the buyer takes an HDB loan or a bank loan
• The property’s remaining lease
• Whether the Basic Retirement Sum (BRS) has been set aside

For a first home with a sufficiently long lease, CPF use is generally more generous. The presenter says buyers using an HDB loan can use CPF for the down payment and monthly repayments while retaining $20,000 in the OA under current rules. Keeping this amount is optional and may provide a buffer or earn interest.

Loan and property rules described

• HDB loan: CPF can be used for the down payment and repayments, with the option to retain $20,000 in the OA.
• Bank loan: CPF use is limited to the valuation limit, which is the lower of the purchase price or market valuation. In the presenter’s example, a home costs $520,000 but is valued at $500,000; the $20,000 cash-over-valuation shortfall must be paid in cash.
• BRS and the valuation limit: The presenter says setting aside the BRS may allow CPF use of up to 120% of the valuation limit.
• Second property: Buyers generally need to set aside at least the BRS before using CPF. If the first property’s remaining lease does not cover the buyer to age 95, the Full Retirement Sum (FRS) may be required instead. The same valuation-limit and other usage rules still apply.
• Lease restrictions: CPF cannot be used if the remaining lease is under 20 years. For leases of 20 to 94 years, usage is prorated based on whether the lease can cover the youngest buyer to age 95. For example, a youngest buyer aged 35 purchasing a flat with 50 years left would be covered to age 85. The presenter says this permits 75% of CPF savings under the referenced table.

CPF interest and sale proceeds

CPF used for a property—including grants, stamp duties, and monthly instalments—must be returned to the OA with accrued interest when the property is sold. The presenter illustrates this with $200,000 used over 10 years, which must be refunded along with accrued interest. This can reduce the cash proceeds available after a sale.

The presenter describes CPF housing use as borrowing from one’s future self and says refunded amounts can be used toward a subsequent property purchase. Buyers are advised to check the CPF housing calculator using their own details before purchasing.

Interest and CPF investing

The presenter cites 2.5% interest for CPF OA balances, plus an additional 1% on the first $60,000 of combined CPF balances, subject to the stated OA limit.

The presenter also says retaining $20,000 in the OA may be relevant when investing CPF OA funds in instruments such as ETFs, stocks, and unit trusts.

POEMS Cash Plus promotion

The video includes a POEMS Cash Plus promotion for new customers. The presenter advertises 30 days of zero US commission, 0% unit-trust sales charges, and free real-time market data.

The advertised funding tiers are:

Amount funded within 14 days and held for 30 days Stock coupons S$1,000 S$10 S$5,000 S$100 S$20,000 S$250

The presenter also mentions weekly Tuesday gift drops for the first 50 new customers, offering a US$50 stock coupon for a featured US stock such as Microsoft, Nvidia, or Google. Coupons are described as one-time use, expiring after 30 days, and applicable to an eligible first trade. Trades must be online cash trades on SG or US markets, with a minimum trade of S$100 or US$100 per coupon.

A further “Fun and Prosper” offer is said to begin 23 March, with up to S$100 in stock coupons for fresh funds. Terms and conditions apply.

Assets, instruments, and entities mentioned

• CPF OA, BRS, and FRS
• HDB loans and bank loans
• ETFs, stocks, and unit trusts
• POEMS Cash Plus
• Microsoft, Nvidia, and Google
• HDB resale properties and BTO flats

Cautions and disclosures

• CPF is not an unlimited source of housing funds; buyers may need cash for shortfalls.
• The presenter cautions against buying properties with very short remaining leases and stresses checking CPF eligibility before purchase.
• The POEMS section is promotional; terms and conditions apply.
• No explicit “not financial advice” disclaimer appears in the subtitles.

Presenters and sources

• Presenter: Chris, HoneyMoneySG
• Source referenced: CPF Board’s housing-usage rules and lease table
• Other source referenced: The presenter’s previous video about the CPF Basic Retirement Sum