Whether you’re buying a Built-To-Order (BTO) flat or a resale flat from HDB, there’s one slightly leh chey thing you’re gonna need to prepare. It’s not a four letter word like ABSD (shudders!), but a three letter one: HFE.
HFE stands for HDB Flat Eligibility, and is the most important letter you need to purchase a new BTO flat, new Sale of Balance flat, new flat under open booking, or resale flat. If the acronym HFE sounds a little unfamiliar to you, it’s probably because the HFE letter is new — it replaced the HDB Loan Eligibility (HLE) letter on May 9, 2023.
Why did HDB replace the HLE letter with the HFE one, and is it beneficial to you as a flat buyer? And as far as loans go, what’s this about the new HFE process being integrated with bank loan applications now? Here’s all you need to know about the new HDB HFE letter — what it is, who needs it, when you need it, and how to apply for one.
1. What is the HFE letter?
The HFE letter is an all-in-one document that summarises everything you need to know about your eligibility to buy a new/resale flat, get housing grants, and take a HDB housing loan. You apply for it at the very start of your house hunting journey, and can then make use of the letter's grants, loan, and housing information when you're choosing a flat.
The HFE letter is the new and improved version of the HLE letter, which it officially replaced on May 9, 2023. While the HLE only assessed your eligibility for a HDB housing loan, the HFE looks at your eligibility for flats, grants and loans. Take a look at this sample HFE letter to see what it covers:
Aside from the important information it contains on your grants and loan eligibility, the HFE letter is also essential for you to apply for BTO flats during a sales exercise or to get an Option To Purchase (OTP) for a resale flat.
2. What’s the difference between the new HFE letter and old HLE letter?
Here's a quick look at the similarities and differences between the new HFE and its predecessor, the HLE:
|New HDB Flat Eligibility (HFE) letter||HDB Loan Eligibility (HLE) letter|
|What information does it contain?||
|When do you apply for it?||At the start of your flat buying journey, before you apply to buy a flat.
|What do you need it for?||
|Is it integrated with the process of securing an In-Principle Approval for a bank loan?||You can apply for an IPA on the HDB Flat Portal itself when you’re applying for an HFE letter. After you secure your flat and get an IPA, you’ll also be able to view the loan offer on the HDB Flat Portal.||Applying for bank loans is a completely separate process from the HLE letter application. You’d need to liaise with the bank directly.|
|How long is the letter valid for?||6 months from date of issue|
|What is the period of income assessment?||12 months, ending 2 months before the month of your HFE letter application. So if you applied for the HFE letter in May 2023, the assessment period is Apr 2022 to Mar 2023.||
If you have monthly CPF contributions and a fixed salary: Latest 3 months’ payslips + 15-month CPF contribution history. If you don’t have monthly CPF contributions: Latest 6 months’ payslips + latest 6 months’ bank statements
3. Is the HFE letter better?
Definitely. The best thing about the new HFE letter is that it streamlines the entire assessment process for buying a flat. In so doing, it tells you what flats, loans and grants you're eligible for even before you begin looking for a flat. Finally, it's about time we sped things up!
We know the HFE replaces the HLE, but to say that that's all it does is a huge understatement. The new HFE affects more than just an old letter — it benefits the entire process of applying for a flat and getting assessed for housing grants and housing loans. Here's what the old process used to look like:
|Old HLE process—When you get assessed for your eligibility for:|
|Flat purchase||Housing grants||HDB housing loan|
|BTO flat buyers||At flat application||At flat booking||At HLE letter application (before booking a flat)|
|Resale flat buyers||At flat application||At flat application||At HLE letter application (before obtaining an Option to Purchase)|
Previously, HDB would assess your eligibility to buy a BTO flat at the application stage, but only assess you for housing grants and an HDB housing loan after you get a queue number. And mind you, these assessments were all done via separate applications, each of which you need to dig out a bunch of documents for.
For resale flats, HDB would assess you for flat purchase and housing grants at the flat application stage, then have you submit more documents to assess your loan eligibility before you can get your OTP.
This all means a clunky process that carries some uncertainty for the home buyer in terms of how much grant/loan you can get, especially if you're looking to buy a BTO flat. For the BTO flat buyer, when you're applying for your flat under the old process, you wouldn't know the amount of housing grant you can get. You wouldn't know the amount of HDB housing loan you'd be allowed to take. How is one supposed to choose a flat without really knowing their housing budget?
Enter the HFE letter, which tells you upfront which flats you can buy, how much housing grant you can get, and how large a home loan you can take. Here's what the new process looks like:
|New HFE process—When you get assessed for your eligibility for:|
|Flat purchase||Housing grants||HDB housing loan|
|BTO flat buyers||At HFE letter application, which you must do before you can apply for any BTO during a sales exercise|
|Resale flat buyers||At HFE letter application, which you can do before you start looking for a resale flat, and must do before you can get an OTP for the flat you want.|
The HFE letter is far more streamlined and comprehensive than the HLE letter. It asks for all the information needed to assess you upfront, and also gives you your flat purchase, grants and loan eligibility information upfront. No joke, this is pretty revolutionary. The new system prepares you for your housing and home financing decisions right from the get go — a vast improvement from the previous system that had flat buyers asking "now what?" at each stage.
4. How do I apply for an HFE letter?
Applying for an HFE letter is a two-step process.
Step 1: Preliminary HFE check
The first step is a preliminary HFE check, which tells you your eligibility to buy a flat, receive housing grants, and take up a loan from HDB. All you need to do is to log in to the HDB Flat Portal using Singpass, then follow the instructions to submit your household particulars and income details, declare any private property ownership, and state whether you intend to take up a housing loan.
Once you hit submit, it's an instant process-you'll immediately get a preliminary overview of your flat purchase, housing grants, and housing loan eligibility. HDB's goal here is to quickly share information that can help you roughly map out your housing budget and see what's feasible for you. However, this preliminary check does not churn out any official HFE letter.
Step 2: Apply for an HFE letter
If you think you can work with what you see in the preliminary HFE check, the second step is to apply for an HFE letter. This is the step that gets you the actual HFE letter that you need for booking a BTO or resale flat. It should be done within 30 days of starting the preliminary HFE check-if you're late, you have to head back to the start line and do the preliminary HFE check again.
To apply for the actual HFE letter, you should once again log in to the HDB Flat Portal via Singpass. Fill in and declare the information they ask for, such as your 15-month CPF contribution history and latest Notice of Assessment from IRAS. Don't worry about logging in to your CPF and all though-this is probably going to be a hassle-free process for you with the help of Myinfo via Singpass.
At this stage, you'll also be able to compare housing loans from HDB and banks-and even apply for bank loans via the HDB Flat Portal!
5. Wait… I can now apply for bank loans on the HDB Flat Portal?
One hugely beneficial new feature of the new flat application process is that you can now see and compare bank loans on the HDB Flat Portal, all on one page. Here's what it looks like:
If you see a bank loan you want to go for, HDB will help you with that. At this stage, you can indicate for HDB to pass your information and documents to the bank to request for an In-Principle Approval (IPA) for a housing loan from them. The IPA is a document from a bank saying that they will lend you money for your house. You can also think of it as the bank loan version of the old HLE letter that lets you take an HDB loan.
After you submit the IPA request via HDB, the bank will liaise with you directly to let you know if your request is approved or not. Then, after booking a flat, you can go back to the HDB Flat Portal to confirm the bank loan offer.
6. When will I receive my HFE letter?
If all goes well, HDB won't bother you with any additional information they require, and will send you the HFE letter within 21 working days of receiving your application. This may take a little longer during peak periods, such as during and before a sales launch.
Once HDB has processed your HFE letter, you'll get an SMS notification stating it's ready. You can then log in to HDB Flat Portal to view and download it.
7. Do I need to apply for an HFE letter? When do I need to do it?
As long as you're looking to buy a flat, you need an HFE letter. This applies to:
- New BTO flats
- New Sale of Balance flats
- New flats under open booking
- Resale flats
If you've got your heart set on a swanky new flat, apply for the HFE letter before the sales exercise or before you want to book a flat under open booking any time of the year.
Technically, you only need the preliminary HFE assessment to apply for a flat. However, should you ballot successfully, you'll then need the HFE letter itself to book a flat.
We suggest you apply for the HFE letter as soon as possible after the preliminary HFE check to give plenty of time for HDB to process your HFE letter — in case you're lucky enough to get to book a flat.
There's no real harm in applying early for the HFE letter, but do note that it expires after six months from the date of issue.
If you want to buy a resale flat, you only need the HFE letter when you decide on a flat and want to get an OTP. However, getting your HFE preliminary assessment ahead of looking at flats is a good way for you to gauge what kind of housing is best for your financial situation. And if you do see a flat you really like but haven't submitted your HFE application, you'll have to wait up to 21 days or so to receive your HFE letter (longer if it's a peak period!).
So in this sense, it might be prudent to apply for the HFE early — even before you start looking at resale flats for purchase. The only possible downside is that the HFE expires after six months. So if you're unlucky enough to be looking for a flat for over six months, you'll need to apply for a new HFE letter.
8. Do I need an HFE letter for the May 2023 BTO exercise?
You need to get a preliminary HFE assessment in order to book a flat during the May 2023 BTO sales exercise. To obtain this, complete Step 1: Preliminary HFE check. You don't need to apply for the actual HFE letter… yet.
If you get a queue number and are going to head down to HDB to book a flat, you must have the proper HFE letter. To obtain the letter, complete Step 2: Apply for an HFE letter on the HDB Flat Portal within 30 calendar days of initiating Step 1.
9. I already submitted a flat application before the HFE letter was introduced. Must I apply for an HFE letter now?
There's a bunch of you who may have already applied for a flat via Sale of Balance or open booking before the HFE letter replaced the HLE letter on May 9, 2023. If that's you, don't sweat it. You can chill and wait to see if you got shortlisted to book a flat and take an HDB housing loan.
If you did get shortlisted, congratulations! Before your appointment to book a flat, HDB will ask you to apply for an HLE letter the old way. This is just a temporary measure HDB is using to accommodate the transition to the HFE letter.
If you didn't get shortlisted, shucks! Better luck next time. Speaking of next time, apply for an HFE letter before you want to book a flat, be it a new flat or resale.
ALSO READ: Are the changes in distribution and use of HDB grants a form of cooling measure?
This article was first published in MoneySmart.