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Buying EC in Singapore: How Much Must You Earn to Afford an Executive Condo?

Eugenia Liew
Buying EC in Singapore: How Much Must You Earn to Afford an Executive Condo?
Executive condos (ECs) are known as the hybrid between public housing and private condos, designed for the sandwich class of Singaporeans. ECs provide an affordable middle ground between HDB flats and fully private condos, offering all the frills of a typical condos with a subsidised price tag.
Considering the income ceiling of regular HDB flats and ECs, the target market for ECs are households who earn between $14,000 and $16,000 per month. But must you earn that much? How much, at minimum, do you need to earn to actually afford an EC?
Let’s work backwards to find out.
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Buying An Executive Condo (EC) in Singapore

Before we show you how to calculate the income you need to afford an EC, here are some important facts about ECs that will affect how you afford and pay for it.

Rules and Restrictions: ECs Are ‘HDB Properties’ for the First 10 Years

ECs are called private-public properties for a reason. They’re developed and sold by private real estate developers, but at the same time, the Government subsidizes the price and allows the use of certain CPF housing grants (more on that below).
This is why they are considered HDB properties in the first 10 years, and are bound by certain HDB rules, just like HDB flats. These rules include, but are not limited to:
HDB’s five-year Minimum Occupation Period (MOP) rule
You have to wait for five years before you’re allowed to sell and/or rent out your EC. After five years, you can sell to other Singaporeans. After 10 years, you can sell to anyone, including foreigners.
The income ceiling rule
Your household cannot earn more than $16,000 a month.
The property ownership rule
You should not own or have disposed of any other property, whether in Singapore or overseas within the last 30 months, and you haven’t bought an EC, HDB and/or DBSS flat, or received a housing grant prior to applying to buy an EC

Financing and Downpayment: You Cannot Take an HDB Loan (Bank Loan Only)

It’s important to note that even if ECs are considered HDB properties in the first decade, you can only finance them through a bank loan. That means the Loan-to-Value (LTV) limit or the maximum amount you can borrow is capped at 75% of the property price. This also means that you have to prepare to pay for the remaining 25% as downpayment (5% of which must be paid in cash, the other 20% can be paid using your CPF and in cash).

Debt Servicing Ratios: Both TDSR and MSR Apply

Unlike private condos where you only have to think about your Total Debt Servicing Ratio (TDSR), or the amount you use from your gross monthly income to pay for all your debts, there is an additional restriction for ECs. The Mortgage Servicing Ratio (MSR), which caps the proportion of your monthly income used for mortgage repayments to just 30%, applies.

CPF Housing Grants: Yes, ECs Are Eligible for Some

Another thing that sets an EC apart from a private condo is that homebuyers of a new EC may be eligible for CPF housing grants such as the family grant and the half-housing grant. However, the caveat is, your monthly gross income shouldn’t exceed $12,000 to apply. Your citizenship and your income range would also affect the amount you can receive. To learn more about CPF housing grants for ECs, please read this article.
Now, onto the fun part: calculating how much salary you need to earn, based on the average price of ECs.

How Much Does an EC Cost?

ECs are affordable than private condos for two main reasons: firstly, they usually built at less accessible locations, typically further away from existing MRT stations and malls. Secondly, the land prices are subsidized by the Government. Generally, ECs are located in the Outside Central Region (OCR) and are 25% to 30% cheaper than their private counterparts at launch.
For this guide, we’ll focus on prices of 3-bedroom ECs (one of the most popular sizes for an average Singaporean household).
Depending on the floor area, a typical 3-bedder EC can cost from $800,000+ to $1.2 million. For example, for a recent EC launch–Parc Central Residences at Tampines Avenue 10—the 3-bedroom units are priced at around $956,000 to $1,069,000.

How Much Do You Need to Earn to Afford an EC?

Now that we know around how much an EC will cost, let’s work backwards to calculate how much we need to earn.
Here’s how to do it:
Disclaimer: In this example, we can only work backwards based on the rules and regulations. However, when we assess affordability, you should consider not just your debt servicing limits, but also your cash flow situation. After all, it won’t make sense even if you pass the legal hurdles but fail to consider your daily living expenses.

1. Calculate the Downpayment and Loan Quantum

Break down the price of the EC into two: the downpayment and the home loan. If you are eligible and want to borrow as much as you can from the bank, the maximum LTV is 75% (i.e. 25% downpayment).
EC price
Breakdown
$800,000
$200,000 downpayment, $600,000 loan
$1,200,000
$300,000 downpayment, $900,000 loan

2. Work Out the Monthly Mortgage Instalments

Now that you know how much you intend to borrow, you’ll need to calculate your estimated mortgage repayments based on your preferred interest rate and loan tenure. You may use our mortgage calculator to do this.
For this example, let’s plan for an interest rate of 1.6% p.a. and a 25-year tenure.
EC price
Monthly mortgage repayments (1.6% p.a., 25 years)
$800,000 (i.e. $600k loan)
$2,428 per month
$1,200,000 (i.e. $900k loan)
$3,642 per month

3. Factor in MSR

As mentioned, the MSR cap of 30% will apply to EC purchases. Also note that you can make repayments using the Normal Payment Scheme or a Deferred Payment Scheme, but for the latter, you will need to factor in an additional 2% to 3% to the purchase price before calculation.
For this example, let’s assume you intend to use 30% MSR and pay by the Normal Payment Scheme.
EC price
Minimum income needed (based on 60% TDSR)
$800,000
(i.e. $600k loan, $2,428 per month at 1.6% p.a. for 25 years)
$8,093 per month
$1,200,000
(i.e. $900k mil loan, $3,642 per month at 1.6% p.a. for 25 years)
$12,140 per month
As you can see, financing an EC may require higher earning power than affording a private condo because of the additional MSR rule. However, comparing apples to apples, if you only use 30% of your income to pay for the monthly instalments, an EC is much more affordable. Even though it is possible to devote 60% of your income to the repayments, it is not necessarily advisable.
It is possible to afford an EC while earning below $12,000 per month. If you want to further improve affordability, you can even consider the smaller units, such as the two-bedroom ones.

Second-timer? Don’t Forget About the HDB Resale Levy

If this is your first property purchase, the above pretty much sums it up.
However, many EC buyers are actually second-timers who have already bought an HDB flat once before, and are now upgrading to an affordably ‘private’ property. If you fall into this group, there is one more consideration when calculating your costs: the HDB resale levy.
The resale levy is payable when you buy a subsidised home (e.g. BTO, balance flat), then subsequently sell it and buy another subsidised flat or EC. How much you need to pay depends on your previous housing type.
2-room flat
$15,000
$7,500
3-room flat
$30,000
$15,000
4-room flat
$40,000
$20,000
5-room flat
$45,000
$22,500
Executive flat
$50,000
$25,000
Executive Condominium
$55,000
Not applicable
Say you are selling your 4-room flat to upgrade to an EC. Based on the table above, you will need to pay $40,000 (household) or $20,000 (if you bought it and are selling as an individual).

Do You Have Questions About Buying an EC?

If you’re interested in purchasing an EC, whether a 3-bedder or otherwise, but you still have a lot of questions with regards to finding the most suitable mortgage, applying for a loan and/or a housing grants, planning your monthly repayments and the like, please don’t hesitate to get in touch with PropertyGuru Finance’s Home Finance Advisors.
We can help you analyse your situation and align your property purchase with your financial goals. All the best!
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More FAQs on Executive Condos

How Much Should I Pay for an Executive Condo?

The price of ECs will vary between projects. However, they are usually 25% to 30% cheaper than private condos.

Are Executive Condos Worth Buying?

This depends on your priorities, but generally, if you’re looking for an affordable private property, executive condos are a good option. They offer the same experience for a subsidised price.

How Much Should You Earn to Buy EC?

The household income ceiling is $16,000, but if you have no other liabilities, it’s possible to comfortably afford an EC with less.

How Much Do You Pay Upfront for EC?

You will need to pay for the downpayment (min. 25%), and the various legal fees and stamp duties. There’s also the HDB resale levy (if applicable).