Home Loan (Mortgage) Formula Explained, With Examples
Every home loan (mortgage) result comes from one formula. Once you understand what goes into it, you can sanity-check any figure you are given, whether by an employer, a bank, a teacher or another website.
The formula
Monthly instalment = P × r ÷ (1 − (1 + r)^−n).
What each input means
- Loan amount (S$): the value you enter in the calculator.
- Interest rate (% a year): the value you enter in the calculator.
- Loan tenure (years): the value you enter in the calculator.
Example
For example, with these inputs:
- Loan amount (S$): 800,000
- Interest rate (% a year): 2.8
- Loan tenure (years): 30
the calculator returns:
- Monthly instalment: S$3,287.16
- Total interest: S$383,376.00
- Total repaid: S$1,183,376.00
How the result changes
The table keeps the other inputs at their example values and changes loan amount (s$).
| Loan amount (S$) | Monthly instalment | Total interest | Total repaid |
|---|---|---|---|
| 800,000 | S$3,287.16 | S$383,376.00 | S$1,183,376.00 |
| 400,000 | S$1,643.58 | S$191,688.00 | S$591,688.00 |
| 600,000 | S$2,465.37 | S$287,532.00 | S$887,532.00 |
| 1,000,000 | S$4,108.94 | S$479,220.00 | S$1,479,220.00 |
| 1,200,000 | S$4,930.73 | S$575,063.99 | S$1,775,063.99 |
Why it matters
Property is the largest purchase most Singaporeans make, and stamp duties, loan limits and cash requirements are front-loaded. Small mistakes in these figures can mean a shortfall at completion, so it pays to run the numbers before you commit to an option to purchase.
CPF Ordinary Account savings can pay for the downpayment, stamp duties and monthly instalments, but using CPF reduces the money compounding for retirement, and the amount withdrawn plus accrued interest must be refunded to your CPF account when you sell.
Most Singaporeans live in HDB flats, which can be financed with an HDB concessionary loan at 0.1% above the CPF Ordinary Account rate or with a bank loan. Private property must be financed with a bank loan, and banks offer fixed, floating and SORA-pegged packages.
Singapore's property market is shaped by cooling measures introduced since 2009, including Additional Buyer's Stamp Duty, loan-to-value limits and debt servicing ratios. These rules are adjusted when the market runs hot, so the numbers you see today may differ from what friends paid a few years ago.
Related calculations
- Rental Yield Calculator: Measures the return from rent before and after costs such as property tax, maintenance fees and agent fees.
- Home Loan Refinancing Calculator: Compares your current mortgage with a new rate to show the monthly saving and how long switching costs take to recover.
- Property Downpayment Calculator: Splits the downpayment into cash and CPF and shows the remaining loan.
- Buyer's Stamp Duty (BSD) Calculator: Calculates Buyer's Stamp Duty on a Singapore residential property using the tiered rates from 1% to 6%.
Use the Home Loan (Mortgage) Calculator to plug in your own numbers.
Run your own numbers: Home Loan (Mortgage) Calculator