EPF Account 2 Housing Withdrawal: What You Can (and Cannot) Use It For
Edited by Teh Kim Guan, ACMA, CGMA · Updated 2026-06-24
EPF Account 2, now officially called Akaun Sejahtera, can be used for six distinct housing purposes, including buying, building, paying monthly instalments, and reducing your outstanding loan. Renovation, however, is not one of them.
Many Malaysians know that EPF savings can help with a property purchase, but fewer realise how many different stages of homeownership are actually covered. This guide maps out every approved use, the withdrawal formula for each, and the common disqualifying conditions you need to avoid.
Which EPF account does housing withdrawal come from?
Since the May 2024 restructuring, EPF contributions are split across three accounts. Only one account covers housing:
| Account | Malay Name | Contribution Share | Housing Eligible |
|---|---|---|---|
| Account 1 | Akaun Persaraan | 75% | No |
| Account 2 | Akaun Sejahtera | 15% | Yes, all six schemes |
| Account 3 | Akaun Fleksibel | 10% | No |
All six EPF housing withdrawal schemes draw exclusively from Akaun Sejahtera. If you are calculating how much you can withdraw, the ceiling is your Akaun Sejahtera balance, not your total EPF balance.
Source: KWSP (2024)
The six approved EPF Account 2 housing withdrawal uses
1. Buy House Withdrawal
The most widely used scheme. You withdraw a lump sum when signing a Sale and Purchase Agreement (SPA) to purchase a residential property in Malaysia.
Eligible property types: bungalows, terraces, semi-detached, apartments, condominiums, studio apartments, service apartments, townhouses, SOHO units, and shop lots with a residential component. The property must be from a developer in Malaysia.
How much can you withdraw?
The formula is the lower of:
- (Property price minus loan amount) + 10% of property price, OR
- Your full Akaun Sejahtera balance
The 10% element is designed to help cover stamp duty, legal fees, and the 10% booking deposit. For a cash purchase with no loan, the formula is the full property price plus 10%.
Example: Property price RM 450,000, loan 90% (RM 405,000). Difference = RM 45,000, plus 10% of RM 450,000 (RM 45,000) = maximum withdrawal of RM 90,000, or your Akaun Sejahtera balance, whichever is lower.
Key condition: The SPA must be dated no more than three years before your application.
2. Build House Withdrawal
You can withdraw to fund the construction of a residential property on land you own in Malaysia. Applications are typically made in stages as construction progresses, not as a single upfront lump sum.
How much can you withdraw?
The same formula applies: the lower of (construction cost plus 10%) or your Akaun Sejahtera balance. You will need a certified building plan and a building contract as supporting documents.
3. Reduce or Redeem Housing Loan Withdrawal
Once you already have an active housing loan, you can make a lump-sum withdrawal from Akaun Sejahtera to reduce the outstanding principal or to fully redeem (pay off) the loan.
Reducing your principal shortens your remaining loan tenure or lowers future monthly instalments, which means you pay less total interest over the life of the loan.
How much can you withdraw?
You can withdraw up to the amount of your outstanding loan balance, or your Akaun Sejahtera balance, whichever is lower.
Lifetime limit: EPF allows this withdrawal for a maximum of two residential properties in your lifetime. If you sold your first home or fully settled that loan, you may apply for your second property.
4. Housing Loan Monthly Instalment Withdrawal
This scheme is specifically for members who are facing financial difficulty and need help covering their monthly mortgage payments. You withdraw from Akaun Sejahtera in monthly tranches, and the funds go directly toward servicing your housing loan.
Key conditions:
- Minimum payout of RM 100 per month per member
- Monthly payment cannot exceed the total monthly instalment amount
- Minimum approved period is six months
- Members with a Non-Performing Loan (NPL) status are eligible, but payments go via banker’s cheque directly to the lender
- Limited to one property per member; selling or fully settling the loan ends eligibility for another property under this scheme
This is a hardship bridge, not a routine cashflow top-up.
5. Flexible Housing Withdrawal
This scheme does not give you cash directly. Instead, you ring-fence a portion of your Akaun Sejahtera balance into a dedicated Flexible Housing Withdrawal account. The bank then treats those ring-fenced savings as supplementary income when assessing your loan eligibility, which can help you qualify for a larger loan than your salary alone would support.
Key conditions:
- Minimum ring-fencing period is one year
- You can only ring-fence for one property at a time
- The maximum period runs until you turn 55, or until the housing loan tenure ends, whichever comes earlier
- If your loan application is rejected or you do not proceed, you can release the ring-fenced amount back to Akaun Sejahtera
This is particularly useful for first-time buyers whose declared income falls just below the bank’s threshold.
6. PR1MA Housing Withdrawal
A dedicated scheme for Malaysians purchasing a first home under the Perbadanan PR1MA Malaysia programme. The withdrawal terms mirror the Buy House scheme but are restricted to PR1MA-designated projects and first-time buyers only.
What EPF Account 2 housing withdrawal CANNOT be used for
| Purpose | Eligible? |
|---|---|
| Buying a residential property | Yes |
| Building a residential property | Yes |
| Reducing or paying off a housing loan | Yes |
| Covering monthly mortgage instalments | Yes (hardship scheme) |
| Increasing home loan eligibility | Yes (Flexible scheme) |
| House renovation or refurbishment | No |
| Purchasing commercial property | No |
| Purchasing land only (no construction) | No |
| Renting a property | No |
| Overseas property | No |
| Second property while first is still owned | No |
The most common misconception is renovation. EPF explicitly excludes it from all housing schemes. For renovation financing, a personal loan or home equity term loan are the typical alternatives.
Universal eligibility conditions across all housing schemes
Regardless of which scheme you apply under, these baseline conditions apply (KWSP, 2025):
- Under 55 years of age when KWSP receives your application
- Minimum RM 500 balance in Akaun Sejahtera after the withdrawal
- Property located in Malaysia
- Active EPF membership
Applications are made through i-Akaun or at any KWSP branch.
How the two-property lifetime limit works
EPF housing withdrawals are capped at two residential properties per member over your lifetime. The rules:
- Only one active housing withdrawal scheme can run at a time
- To apply for a second property, you must first sell the first property or fully settle and close its housing loan scheme
- Once both allowances are used, no further housing withdrawals are available
This cap means strategy matters: using the Reduce/Redeem scheme on your first property consumes one of your two lifetime slots.
Key takeaways
- EPF Account 2 (Akaun Sejahtera) covers six approved housing withdrawal uses: buying, building, reducing/redeeming a loan, monthly instalment support, flexible loan eligibility boosting, and PR1MA purchases
- Renovation is not covered under any scheme
- The withdrawal ceiling is always the lower of the formula amount or your Akaun Sejahtera balance, not your total EPF balance
- You are allowed withdrawals for a maximum of two residential properties in your lifetime
- The Flexible Housing Withdrawal does not give you cash; it ring-fences savings to increase your borrowing capacity
- Monthly instalment withdrawal is a hardship scheme with a minimum six-month commitment, not a general cashflow tool
- Applications must be made before age 55
Frequently asked questions
Can I use EPF Account 2 to renovate my house?
No. Renovation is not an approved use under any of the six EPF housing withdrawal schemes. This restriction applies regardless of whether the renovation is cosmetic or structural. To fund a renovation, consider a personal loan or a home equity term loan from your bank.
Can I withdraw EPF for a second property while I still own my first?
No. You must have sold or disposed of the first property, or fully settled and closed the housing loan on the first property, before EPF will process a withdrawal application for a second home.
What is the difference between the Reduce/Redeem scheme and the Monthly Instalment scheme?
The Reduce/Redeem scheme is a one-time lump-sum withdrawal applied directly to your outstanding loan principal, reducing how much you owe. The Monthly Instalment scheme is a recurring monthly withdrawal that covers your scheduled repayments during a period of financial difficulty. They serve different purposes: one is a strategic paydown tool, the other is a cashflow relief mechanism.
If I use the Flexible Housing Withdrawal and my loan application is rejected, do I lose that money?
No. If your loan application is rejected or you decide not to proceed with the purchase, the ring-fenced amount is released back to your Akaun Sejahtera. The funds are not forfeited.
Does withdrawing EPF for housing affect retirement savings?
Yes. Every ringgit withdrawn from Akaun Sejahtera stops compounding toward retirement. If your home loan rate is lower than EPF’s historical dividend (typically 5% to 6% per annum), servicing the loan from salary while leaving EPF intact can produce a better long-term outcome. Run the numbers for your specific loan rate and balance before deciding.
Further reading
Malaysia-based chartered management accountant (ACMA, CGMA) and embedded executive who has worked across finance, operations, and product roles with Malaysian companies. Every WangWise guide is checked against official Malaysian sources. How we review · About the editor
Educational content only, not financial advice. Verify current figures with official sources.