Buying a home in Singapore is a major milestone, but also one of the biggest financial commitments most people will ever make. For younger buyers who may not yet earn enough to secure their desired loan amount, one common strategy is to add their parents as co-borrowers.

It sounds like a simple solution, combine incomes, qualify for a bigger mortgage, and purchase the ideal property sooner. However, this arrangement comes with several important considerations involving HDB rules, CPF usage, loan structure, and the Additional Buyer’s Stamp Duty (ABSD).

At Fairloan Mortgage Advisory, we often encounter families exploring this path. While it can certainly be helpful, it’s not always straightforward. Below, we break down how this arrangement works in Singapore, what restrictions apply, and how to structure it smartly to protect your long-term financial goals.

Why Do Buyers Add Their Parents as Co-Borrowers?

For many first-time homebuyers, especially younger professionals, the primary challenge in getting a home loan is meeting the income requirements set by banks or HDB. Loan approvals are based on two affordability frameworks: the Total Debt Servicing Ratio (TDSR) for private properties and the Mortgage Servicing Ratio (MSR) for HDB flats. Both ratios limit how much of your monthly income can go toward debt repayments.

Read more on TDSR and MSR here

If your income alone isn’t sufficient to meet these calculations, adding your parents as co-borrowers can raise the combined income pool and thereby increase your approved loan amount. For example, a borrower earning $5,000 per month may only qualify for a $600,000 mortgage. But if their parent earns an additional $6,000, the combined monthly income of $11,000 raises the total loan capacity, potentially to over $1.1 million, depending on tenure and age.

This strategy often helps younger buyers afford larger resale flats or private condominiums without delaying their purchase. However, co-borrowing is not merely an income calculation, it also affects ownership, tax liability, and CPF eligibility.

HDB’s Position on Co-Borrowing with Parents

Under HDB regulations, a parent can be a co-borrower only if they are also a co-owner of the flat. In other words, for HDB flats, ownership and loan responsibility must align. If the parent joins the mortgage, their name must also appear on the property title.

This requirement allows parents to use their CPF Ordinary Account (OA) funds to pay for the downpayment or monthly instalments, as CPF can only be used by legal owners of the property. The catch, however, is that this ownership link may trigger other implications, especially related to the Additional Buyer’s Stamp Duty (ABSD).

If the parent already owns another property (their existing family home), becoming a co-owner of their child’s new HDB flat is not possible. 

If the parents are not co-owners, then HDB does not allow them to be part of the mortgage, meaning their income cannot be included for affordability calculations. This makes the structure challenging for families who want to boost loan eligibility.

Private Property Rules: More Flexibility

When it comes to private property, banks and private lenders provide greater flexibility in structuring the mortgage. Parents can be included as co-borrowers without necessarily being co-owners.

This distinction is crucial because it allows families to increase the total loan approval amount by adding parents’ income, while still keeping ownership entirely under the child’s name. Since the parents do not legally own the property, no ABSD applies, even if they already have an existing home.

This structure is particularly beneficial for families where parents wish to support their children’s first home purchase without giving up their own property or incurring unnecessary taxes. However, there are two important caveats.

First, CPF usage is still restricted to legal owners only. If the parents are only co-borrowers and not co-owners, they cannot use their CPF savings for this property. Second, the bank will still consider the age of the oldest borrower when determining the maximum loan tenure. If the parent is in their 50s or 60s, the combined loan tenure may shorten, potentially offsetting some of the borrowing advantage gained from the higher combined income.

In practice, this means that while adding parents as co-borrowers can increase the loan size, it can also reduce the tenure due to IWAA (Income-weighted average age), leading to higher monthly instalments. Each case must therefore be carefully assessed to ensure the arrangement makes financial sense over the long term.

How CPF Usage Works Under Co-Borrowing

The Central Provident Fund (CPF) is a powerful tool in Singapore home ownership, but its use comes with strict conditions. CPF funds can be used only by individuals listed as legal owners of the property.

Therefore, if the parents are co-owners, their CPF OA balances can be used for downpayment and monthly instalments. If they are only co-borrowers (as permitted under private property arrangements), their CPF cannot be used at all, only their cash income is considered.

The key takeaway is simple: CPF usage follows ownership, not loan contribution.

ABSD: The Tax Trap Many Families Miss

One of the biggest pitfalls of co-borrowing arrangements is the Additional Buyer’s Stamp Duty (ABSD), a tax levied on property buyers who already own another home.

For parents assisting their children, the ABSD rules can have far-reaching effects. If parents who already own a home are added as co-owners of the new property(private property), the purchase is treated as a second property, and ABSD becomes payable on the full purchase price.

To illustrate:

• A Singapore Citizen buying their first property pays no ABSD.
  
  
• A Singapore Citizen buying their second property pays 20% ABSD.
  
  
• A Singapore Permanent Resident buying their first property pays 5% ABSD, and 25% for the second.
  
  

On a $1 million property, this could mean an extra $200,000–$250,000 in tax.

However, if parents join as co-borrowers only, without being added as owners, ABSD does not apply because they do not hold any ownership interest in the new home. This “non-owner co-borrower” structure is available only for private properties, not for HDB flats.

This is why it’s essential to consult a professional mortgage advisor before finalising the ownership structure; the wrong configuration could cost a family hundreds of thousands in unnecessary taxes.

The Impact of Age and Loan Tenure

Another often-overlooked factor when adding parents as co-borrowers is loan tenure. Banks in Singapore typically cap the maximum loan period based on the age of the oldest borrower.

For example, if the child is 30 and the parent is 60, most banks will calculate the loan tenure to end by the time the parent reaches 75 years old. That means the maximum tenure would be 15 years, not the typical 25 or 30 years that a younger borrower might qualify for alone.

This shorter tenure can substantially increase monthly repayments. Using a 15-year loan instead of a 25-year one raises monthly instalments by up to 40%, even at the same interest rate.

At Fairloan, we frequently see families who qualify for a higher total loan amount through co-borrowing, only to realise later that the shorter tenure makes monthly payments more expensive than anticipated. It’s crucial to balance loan quantum against repayment comfort and long-term sustainability.

Interest Rates and Bank Offers (as of November 2025)

In today’s market, bank interest rates remain lower than HDB’s fixed 2.6%.

For example:

• DBS currently offers a 1.50% fixed rate for 3 years (exclusive to HDB property owners).
  
  
• OCBC offers a 1.78% 5-year fixed rate, ideal for borrowers who prefer longer-term stability.
  
  
• Other local banks have floating-rate packages pegged to the Singapore Overnight Rate Average (SORA), with effective rates between 1.55% and 1.65%.
  
  

For private property owners or PRs ineligible for HDB loans, these fixed and floating options offer substantial savings, especially with the US Federal Reserve’s rate cuts in late 2025 expected to keep SORA low well into 2026.

However, it’s important to remember that bank rates fluctuate, while HDB’s 2.6% is stable because it’s pegged at 0.1% above the CPF Ordinary Account rate. Families who prioritise long-term certainty may still prefer HDB’s consistency despite the higher rate.

Practical Scenarios and Planning Tips

Let’s consider two common examples that Fairloan encounters.

Case 1: HDB Resale Flat
A 30-year-old buyer earning $5,000 wishes to purchase a $700,000 HDB resale flat. Their maximum loan under HDB’s current stress test allows about $420,000, leaving a gap. Adding their father (age 58) as co-owner and co-borrower raises the total loan approval to around $525,000. (Noting that father is not owning any property) 

Case 2: Private Condo Purchase
A 32-year-old buyer plans to buy a $1.1 million condo but can only qualify for $700,000. Adding their mother (age 60) as a co-borrower only, not co-owner, boosts the approved loan to $1 million. Because she doesn’t own the property, no ABSD applies. The trade-off: her CPF cannot be used, and the tenure is reduced to about 15 years based on her age.

Both cases show that loan structure, ownership, and ABSD risk must be balanced carefully. What helps on paper (higher income) may not always work financially or legally once other factors are considered.

Fairloan’s Expert View

At Fairloan, we advise clients that adding parents as co-borrowers can be a smart tool, but only when structured properly. It can expand borrowing power and open doors to better housing options, yet it must be handled with precision.

Every family situation is unique. We analyse multiple layers:

• The ages of all borrowers
  
  
• Existing property ownership and ABSD risk
  
  
• CPF balances and intended usage
  
  
• Loan tenure and monthly affordability
  
  
• Long-term estate and inheritance considerations
  
  

By taking these into account, we tailor each mortgage plan not just for approval, but for sustainability and compliance.

As a guiding principle, we remind clients that loan size should never outweigh future stability. If your finances rely heavily on your parents’ income or CPF, it’s important to have a long-term plan, such as refinancing or transferring ownership later when your income grows.

Conclusion: Structuring It Right Matters

So, does adding your parents as co-borrowers help you secure a higher loan? Yes, in most cases it does. But it also reshapes your property ownership, CPF eligibility, and potential tax liabilities.

At Fairloan, our role is to help you make these choices with full clarity. We don’t just find the lowest rate; we study your family structure, CPF capacity, and long-term goals before recommending whether a joint loan makes sense.

With Singapore’s property market evolving and rates stabilising into 2026, making informed decisions about co-borrowing today can protect your family’s finances for years to come.