Key Takeaways
- CPF accrued interest on HDB savings is charged at 2.5% per annum compounded annually, and the full principal plus interest must be refunded to your CPF when you sell.
- From 1 January to 31 March 2026 the CPF Ordinary Account rate stayed at the 2.5% floor, keeping the HDB concessionary loan rate at 2.6% per annum.
- HDB loan buyers can retain up to S$20,000 in their OA as a safety net, while bank loan buyers can retain any amount they choose.
- If you are below 55 your refund goes to your OA, but at 55 and above it first tops up your Retirement Account to the Full Retirement Sum.
- Splitting monthly instalments between cash and CPF reduces accrued interest and protects your eventual cash proceeds when upgrading.
Expert takeaway: Using your CPF Ordinary Account to buy an HDB flat is powerful, but every dollar withdrawn quietly accrues interest at 2.5% per annum that you must refund in full when you sell. Understanding this mechanism in 2026 is the difference between a healthy cash cheque on your next upgrade and a disappointing zero.
You found the perfect flat, the keys are in hand, and CPF covered most of the upfront cost. It feels almost free. But years later, when you sell to upgrade, a number you barely noticed at purchase quietly reshapes your sale proceeds. That number is CPF accrued interest, and it is the most misunderstood part of HDB financing in Singapore.
What CPF Rules for HDB Buyers Look Like in 2026
The starting point is the interest rate environment. According to HDB, CPF confirmed that the Ordinary Account interest rate remains unchanged at the floor rate of 2.5% per annum from 1 January to 31 March 2026, and the concessionary interest rate for HDB housing loans, pegged at 0.1% above the OA rate, remains at 2.6% per annum.
That 2.5% OA rate matters twice. It is what your money earns if left untouched, and it is exactly the rate at which withdrawn CPF accrues interest against you. Your OA savings can be used to buy a HDB flat, or buy or build private and residential properties in Singapore. OA savings can also be used for downpayment and the housing loan taken for the property purchase, stamp and legal fees, and Home Protection Scheme premiums for HDB flats.
| CPF Rate (1 Jan to 31 Mar 2026) | Rate |
|---|---|
| Ordinary Account (OA) | 2.5% p.a. (floor) |
| Special, MediSave, Retirement Accounts | 4.0% p.a. (floor) |
| HDB concessionary loan | 2.6% p.a. |
| CPF accrued interest on housing | 2.5% p.a. compounded annually |
How Much CPF You Can Use, and the $20,000 Safety Net
For a flat with a remaining lease that covers the youngest buyer to age 95, you can generally use your OA without restriction up to the lower of purchase price or valuation. Where the lease falls short, your usable CPF is prorated, so short-lease flats deserve careful checking. Our guide on HDB lease decay explains why this catches older-flat buyers off guard.
On loans, the limits are clear. The Loan-to-Value limit is up to 75% of the purchase price for new flats, or 75% of resale price or value of a resale flat, whichever is lower. The MAS LTV framework mirrors this for bank loans, leaving a 25% downpayment to fund through CPF and cash.
A retention rule softens the squeeze on retirement savings. CPF members who purchase an HDB flat and take an HDB loan can choose to retain up to $20,000 in their Ordinary Account, with the remainder going towards their housing loan payment, while buyers taking a bank loan can choose to retain any amount of their OA savings. These savings can provide a safety net and earn risk-free interest.
Accrued Interest: The Number That Reshapes Your Sale
This is the core of CPF rules for HDB buyers. CPF accrued interest is the interest your withdrawn OA savings would have earned had they stayed in your account, calculated at 2.5% per annum and compounded annually. When you use your CPF savings for your property, your retirement savings are reduced, so when you sell you will need to refund the amount you used plus the interest accrued on this amount, to restore your retirement savings.
Crucially, this applies to grants too. The Enhanced CPF Housing Grant and other grants are credited to your OA, which means even "free" government help accumulates interest you repay on sale. When you sell your home, the CPF used plus accrued interest must be refunded to your OA before you can withdraw any net gains.
A simple illustration: a 4-room HDB flat in Toa Payoh bought for around S$500,000 in 2021 with roughly S$150,000 of CPF used for the downpayment would see accrued interest of close to S$20,000 over five years. On a 2026 sale, that interest is added to the principal you refund into CPF, reducing the cash you walk away with by that amount. The longer you hold and the more CPF you use, the larger this figure compounds.
Where Your Refund Goes Depends on Your Age
The destination of your refund is determined by your age at the point of sale, and this is where many sellers are surprised.
| Age at sale | Where the CPF refund goes |
|---|---|
| Below 55 | Credited to your Ordinary Account (OA) |
| 55 and above | First tops up your Retirement Account (RA) to the Full Retirement Sum; balance stays in OA |
As CPF puts it, when you sell your property you will need to refund the amount you have used plus the interest accrued, to restore your retirement savings, and if you have pledged the property to make up your retirement sum you will also need to refund the pledged amount. For those eyeing a second property, second-property buyers must also set aside their Basic Retirement Sum before using excess OA. Our breakdown of using CPF for a second property and BTO and HDB decoupling covers these constraints in detail.
Opportunities and Risks of Leaning on Your CPF
CPF is not a trap, but it demands a deliberate strategy. The opportunities are real, and so are the risks.
- Opportunity: CPF preserves your cash for renovation, emergencies, and investments while still letting you secure a home. If you have no immediate plans to use the funds in your OA, you can pay partially with cash and set aside $20,000 in your OA as a safety net, continuing to earn risk-free interest of up to 3.5% per annum including extra interest.
- Opportunity: The HDB concessionary rate of 2.6% remains close to the OA rate, so the spread between borrowing cost and CPF earnings is narrow in 2026.
- Risk: Maxing out CPF means a larger refund obligation later. If your flat does not appreciate enough, accrued interest can erase your expected cash gain entirely on an upgrade.
- Risk: Holding an HDB flat as a long-term rental while CPF interest compounds for decades can leave you with negative cash on eventual sale, even after rental income.
A widely used mitigation is to pay instalments in cash to reduce the principal accruing interest. Splitting monthly repayments between cash and CPF keeps your refund obligation lower and protects your proceeds. If you are planning your next move, our walkthrough on calculating your HDB sales proceeds and the broader HDB to condo upgrade path show exactly how accrued interest flows into your final cheque. For the financing rules that frame all of this, see our explainer on how TDSR and LTV affect you and how stamp duty works.
Run your own numbers: try the CPF accrued interest calculator to see how much goes back to your CPF when you sell, and the affordability calculator to check how much you can borrow (free, no sign-up).
Already own an HDB?
New supply changes what your current home is worth.
Every launch wave shifts resale demand, rental yields and exit timing for existing owners nearby. If your flat has crossed MOP, or crosses it within 2 years, this is precisely when to review your options. Get a free, data-backed read on what your unit could fetch and what your upgrade path looks like.
WhatsApp: Free Owner ReviewUpgrade Without ABSD GuideFrequently Asked Questions
What is CPF accrued interest and how is it calculated?
It is the interest your withdrawn OA savings would have earned if left untouched, charged at 2.5% per annum and compounded annually on every dollar of CPF used for your flat, including grants, downpayment, stamp duties, legal fees, and monthly instalments.
Do I have to refund CPF grants when I sell my HDB flat?
Yes. Housing grants are credited to your OA, so the grant amount plus accrued interest must be refunded into your CPF on sale before you receive any net cash proceeds.
What happens if my sale proceeds are less than my CPF refund?
As long as you sell at or above market value, you generally do not need to top up the shortfall in cash. However, your cash proceeds may be minimal or zero because the refund takes priority after the outstanding loan is cleared.
How much CPF can I keep when taking an HDB loan in 2026?
You may retain up to S$20,000 in your OA as a safety net when taking an HDB loan. With a bank loan, you can choose to retain any amount, and CPF recommends keeping at least S$20,000.
Where does my CPF refund go if I am 55 or older?
It first tops up your Retirement Account to the Full Retirement Sum. Any balance after that remains in your OA, and pledged amounts must also be refunded if you used the property to meet your retirement sum.
CPF rules reward those who plan early and punish those who treat their OA as free money. Whether you are buying your first BTO, weighing an upgrade, or deciding how to split cash and CPF on your monthly instalments, the right structure can preserve tens of thousands of dollars over the life of your flat. If you would like a clear, independent view of how accrued interest will affect your specific numbers and your next move, reach out to the team at PropertyNet.SG for personalised, no-pressure advice tailored to your situation.