Housing

Deferred Income Assessment Explained Simply

Deferred Income Assessment Explained

Last updated on June 6th, 2021

You’ve decided to apply for a BTO with your partner when both of you have not started work yet.

You may think that it’s a smart move since you both don’t earn any income. So this means that you’ll receive the highest amount of CPF Housing Grants, right?

However to qualify for the Housing Grant, either one of you needs to be working for the past 12 months!

So how can you qualify for the housing grant?

This is where the Deferred Income Assessment comes to play:

What is the Deferred Income Assessment?

The Deferred Income Assessment allows young couples to apply for a flat first, and defer their income assessment until 3 months before completion. This allows couples to be eligible for CPF Housing Grants and take up a HDB housing loan.

Here are some eligibility criteria for the CPF Housing Grants and the housing loan:

LoanCriteria
CPF Housing GrantYou or your spouse/ fiancé(e) must have
worked continuously for 12 months
before applying for the flat
HDB LoanBe in continuous employment
between 3-6 months
(depending on the type of
income you’ve earned)

If both you and your partner are still studying, how can you be eligible for either the housing grant or the loan?

This is where the Deferred Income Assessment comes in!

You are able to apply for your flat first when you are younger. This is because your income will only be assessed around 3 months before your flat is completed.

This helps to ensure that you do not delay your flat application, just because you can’t meet the employment criteria!

However, this only applies for uncompleted flats! If you are applying for a completed flat, your income will still be assessed during the flat booking appointment.

Deferring your income assessment helps you to meet the criteria

One of the major milestones in a flat application is the booking of your flat. During this appointment, you’ll need to produce your income documents to calculate your income ceiling.

This is approximately 1 month after the end of the BTO application period.

By this time, neither you nor your partner may have worked for 12 months straight. As such, you technically would not qualify for the CPF Housing Grant.

However, your income assessment will only be done 3 months before your flat has been completed.

Since a flat takes around 3 years to complete, you should be able to work continuously for 12 months. As such, you’ll be able to fulfil the criteria for the housing grant!

Does the Deferred Income Assessment affect my downpayment?

The Deferred Income Assessment does not affect your downpayment in any way. You will still need to pay your downpayment when you sign your Agreement for Lease.

When you apply for a HDB flat, you will still need to produce your income documents when you book your flat.

This is because your household needs to be below the income ceiling to purchase a HDB flat.

As such, the Deferred Income Assessment does not affect your downpayment at all.

So long as you are eligible for a HDB flat, you will need to pay your downpayment when you sign the Agreement for Lease.

However, it is still possible for you to split your downpayment across 2 periods:

  1. When you sign your Agreement for Lease
  2. When you collect your keys

This will help to reduce the burden of the downpayment on your finances!

How can I be eligible for the Deferred Income Assessment?

Here are 4 criteria that you’ll need to meet to be eligible for the Deferred Income Assessment:

#1 Student / NSF status

To fulfil this criteria, both you and your partner must either:

  1. Be full-time students or National Servicemen (NSF) or
  2. Have completed your full-time studies or NS within the past 12 months before you apply for your flat

As such, here are some possible scenarios where you can be eligible for the deferred assessment:

BoyGirl
Serving NSStudying in University
Studying in UniversityStudying in University
Studying in UniversityGraduated from University 6 months ago
Graduated from University 6 months agoGraduated from University 6 months ago

The most important thing is that you’ll need to apply for your BTO within 12 months after completing your full-time studies. Otherwise, you won’t be eligible for the grant and loan!

If not, your income will be assessed when you book your flat. It is still possible to meet the 12 month criteria, if you started working immediately after your studies.

#2 Age limit

Here is the age limit for the Deferred Income Assessment set by HDB:

At the point of the flat application, applicants must be at least 21 years old and at least one applicant must be aged 30 years old or below. 

If both you and your partner are above 30 years old, you will not qualify for the Deferred Income Assessment.

#3 Marital status

When you are applying for the flat, you and your partner must either:

  1. Be married or
  2. Are applying for the flat under the Fiancé / Fiancée Scheme

The Fiancé / Fiancée Scheme is one scheme that allows you to be eligible to apply for a HDB flat.

Only you and your partner can apply for the flat together. If you break up before your flat is completed, you may lose quite a significant sum of money!

If you are already married, you will already be eligible to apply for a HDB flat under the Public Scheme.

#4 Household status

To be eligible for the Deferred Income Assessment, at least one applicant must be a first-timer.

HDB defines a ‘first-timer applicant‘ means that you have not purchased a subsidised HDB flat before.

HDB First Timer Applicant Definition

Implications of the Deferred Income Assessment

The Deferred Income Assessment delays your income assessment until 3 months before your flat is completed.

This will help you to meet the employment criteria for both:

  1. CPF Housing Grant (12 months) and
  2. HDB Loan (3-6 months)

However, your household’s income will still need to be below the income ceiling:

TypeAverage Monthly
Household Income
CPF Housing Grant$9,000
HDB Loan$14,000

For the CPF Housing Grant, the lower your income, the higher the grant you’ll receive. However, you may also receive a lower HLE amount that HDB is willing to disburse to you.

As such, you may want to take note of the $9,000 income ceiling for the CPF Housing Grant.

Both you and your partner may been earning a combined income of greater than $9k for the past 12 months. In this case, you will not be eligible for any Housing Grants!

Applying too early may still make you ineligible for the Housing Grants and HDB loan

Even if you are certain that you want to spend your life forever with someone you’ve met in Year 1, this doesn’t mean that you should rush to apply for a BTO!

This is because you may still be ineligible for the Housing Grant and HDB loan.

Let’s say both you and your partner are in your 1st year of university, and you apply for a BTO.

Your income assessment will be delayed to roughly around 3 years later. Even by that time, both of you would have just graduated.

As such, you will still be unable to meet the employment criteria for both the Housing Grant and HDB loan!

It is very important that you plan out with your partner when you should apply for your BTO flat.

One way is to make sure that at least one of you will have worked continuously for 1 year when your income is being assessed.

This ensures that you’ll be eligible for both the Housing Grant and the HDB loan!

Conclusion

The Deferred Income Assessment allows you to buy your flat first, then have your income assessed 3 months before your flat completion.

In this way, you are still able to receive your grants, even though you have not been employed for the past 12 months!

Buying a BTO is a huge financial milestone in your life.

It is very important that you plan ahead with your partner on when you should apply for the flat.

By understanding when your income will be assessed, this will help you to choose the best period to apply!


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