By The Address desk · Last verified 11 October 2026
When you buy a private home with a bank loan, the bank lends on the lower of the purchase price or its valuation. Under MAS rules, a first housing loan can be up to 75% of that lower figure, falling to 45% for a second loan and 35% for a third. If the bank’s valuer puts the home below the price you agreed, your loan shrinks and the difference, the valuation shortfall, must come from your own pocket, generally in cash. Valuations are carried out by licensed valuers who compare recent sales of similar homes. The safest habit: get valuations from more than one bank before you exercise the option to purchase.
A valuation can feel like a verdict on your dream home. It is really just the bank’s estimate of what it could sell for, and you can plan around it. Here is how.
Quick facts
- Bank loans are based on the lower of purchase price or valuation.
- MAS loan-to-value limits: 75% (no outstanding housing loan), 45% (one), 35% (two or more).
- Valuers mainly use recent transactions of comparable homes, adjusted for floor, facing, condition and timing.
- Valuers hold an appraiser’s licence under the Appraisers Act, administered by IRAS.
- Different banks’ valuers can return different figures for the same home.
- For new launches bought from a developer, the developer’s price typically becomes the valuation.
How a bank valuation works
The bank appoints a valuer, who looks at recent sale prices in the same development or nearby, then adjusts for differences: a higher floor, a better view, a tired kitchen, or prices that have moved since those sales. The result is a single figure the bank will lend against. Online tools and ballpark figures can be useful for a first look, but they can differ widely from the number the bank’s valuer arrives at.
| Your loan | Maximum loan-to-value (MAS) | Based on |
|---|---|---|
| No outstanding housing loan | 75% | Lower of price or valuation |
| One outstanding housing loan | 45% | Lower of price or valuation |
| Two or more outstanding housing loans | 35% | Lower of price or valuation |
These are the maximums. Your actual loan can be lower because of your age, the loan tenure, the remaining lease and the Total Debt Servicing Ratio cap of 55% of monthly income.
A worked example: when the valuation comes in low
You agree to buy a condo for $1,500,000, your first housing loan. The bank values it at $1,450,000.
- Maximum loan: 75% × $1,450,000 = $1,087,500.
- Down payment on the valued amount: 25% × $1,450,000 = $362,500, of which at least 5% of $1,450,000, or $72,500, must be cash.
- Valuation shortfall: $1,500,000 − $1,450,000 = $50,000.
- Total you fund yourself: $362,500 + $50,000 = $412,500, which matches $1,500,000 − $1,087,500.
Had the valuation matched the price, you would have needed $375,000 (25% of $1,500,000). The low valuation adds $37,500 to what you put in yourself. Stamp duties and legal fees come on top.
Can CPF cover a shortfall?
CPF uses a Valuation Limit: the lower of the purchase price or the value at purchase. You can normally use CPF up to that limit. Using CPF beyond it, up to a Withdrawal Limit of 120% of the Valuation Limit, has historically required you to set aside the Basic Retirement Sum first. Many buyers therefore pay a shortfall in cash. Check your own position on the CPF Board’s website before you sign.
Steps to protect yourself
- Ask a mortgage broker or banks for valuations as soon as you are serious about a unit.
- Compare the figures; banks may value the same home differently.
- Work out the shortfall, if any, and check you have the cash.
- Secure your loan approval before exercising the option to purchase, since the exercise usually commits you to the deal.
- Weigh the trade-off if one bank values higher but charges a higher rate.
The WahLiao Verdict
Never exercise an option until you know the valuation and your loan amount. Get figures from at least two banks, keep a cash buffer for a shortfall, and if the valuation is well below the asking price, treat it as useful information: either negotiate the price down or be sure you are happy to pay the premium in cash. Do not chase the highest valuation at any cost; a dearer interest rate can wipe out the benefit over the years.
Questions people ask
Is a bank valuation the same as the market price?
No. It is the valuer’s professional estimate for lending, based on comparable sales. Buyers and sellers can agree a higher or lower price.
Why do two banks give different valuations?
Valuers choose and interpret comparable sales differently, so some variance between figures is normal.
Does this apply to new launch condos?
Less often. For units bought from a developer, the developer’s price typically becomes the valuation, so shortfalls are mainly a resale-market issue.
Is a valuation shortfall the same as HDB’s cash over valuation?
The idea is similar: the amount paid above the valuation is not covered by the loan. HDB resale flats have their own valuation process through HDB.
Sources: Monetary Authority of Singapore, loan-to-value limits and TDSR; Stacked Homes, how property valuations work; EdgeProp, CPF Valuation and Withdrawal Limits. The Address explains; it does not advise.
Read next: Buying a Private Condo: The 1% Option · HDB Valuation and Cash Over Valuation · Back to The Address
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