Who Can Apply for a Loan for a House in the Philippines?

Here are the general eligibility criteria you must follow to qualify for a housing loan application:

• Between 21 to 65 years old upon loan maturity

• Philippine resident

• If an OFW: With special power of attorney and a contract or certificate of employment (COE) approved by the Philippine Overseas Employment Administration (POEA)

• If a foreigner: Must meet VISA requirements and submit Alien Certificate of Registration

How Will My Eligibility Be Evaluated?

When you apply for a loan for a house in the Philippines, your lender will evaluate your application and ability to pay off the amount you wish to borrow based on the following factors:

👉 Income

How much you earn plays a huge part in getting a home loan. Banks are more inclined to look into your credit standing and income stability before granting your loan request. Pag-IBIG, on the other hand, considers your contribution and net disposable income.

👉 Age

Is there an age limit for a housing loan? Let’s just say that your lender will base the maximum length of term for your housing loan on your age.

For example, if you’re already 45 years old, you may not be allowed to get a 30-year Pag-IBIG loan, since applicants need to completely pay off their mortgage before turning 65 years old. However, they might make an exception if you can find a company to insure you beyond the age of 65.

👉 Spouse’s Income

If you're applying for a home loan with your spouse, their income will also be evaluated. The additional source of income from your co-applicant can increase your home loan eligibility. With a higher loan amount, you can easily align your home-buying decisions with other financial plans.

👉 Dependents

Your lender can base your ability to pay off a loan on the number of dependents you have. When you have too many dependents, it can affect your capacity to pay off your housing loan. There are more financial commitments, resulting in a smaller disposable income.

👉 Stability and Continuity of Occupation

In general, you must be employed for at least two years when applying for a housing loan. You may still get approved for a housing loan if you are self-employed or own a business. You might have to submit additional information about your taxes, profits, income, business permits, and other relevant documents.

👉 Credit History

Your credit history also greatly affects your housing loan eligibility. This serves as a record of responsible repayment of debts. Your credit history is created by collating data from various sources like government agencies, banks, collection agencies, and credit cards.

If you don’t have a credit history yet, you can build yours by getting a credit card from the bank you intend to borrow from. Use the card regularly and pay your bills on time. Build a good credit history by proving that you have a stable source of income, know how to be responsible with your bills, and can pay dues on time.

What are the Loan Requirements for Buying a House?

In general, you have to provide the following bank financing requirements for a housing loan:

• Completed application form

• Two valid IDs

• Marriage contract, if applicable

• Application form for co-borrower, if applicable

• Proof of income

• Collateral documents

• Bank statements for the last three months, credit accounts, or loan statements

• Authorization to conduct a background check

How Much Can I Borrow?

How much you can borrow for a housing loan depends on your lender and the appraised value of your desired property.

Banks can provide up to 95% of the property’s assessed value, but a minimum down payment of 5% is required. On average, they allow a minimum loan amount of ₱800,000. However, this still depends on the location of your desired property. Projects outside Metro Manila may result in a lower loan amount.

For in-house funding, the loanable amount depends on the real estate developers.

Pag-IBIG grants a loan amount of ₱600,000 to ₱6 million, depending on certain conditions such as the applicant's capacity to pay and the actual need for funds.

What are the Housing Loan Rates in the Philippines?

As mentioned above, interest rates range from 4.99% to 18%, depending on the lender. You can choose from two types of interest rates—fixed rates and variable rates.

📌 Fixed Interest Rates

With a fixed interest rate, your monthly payments remain unchanged over the agreed period, even if the market rate changes. This is perfect if you want to allot an accurate mortgage payment budget easily.

Pros of Fixed Interest Rates

• Peace of mind and certainty - There will be no surprises regarding your loan repayments during your chosen fixed rate period.

• Easier to budget - Because of the fixed rate and the repayment schedule, you’ll know how much you should allot every month for the next few years for your home loan payments.

Cons of Fixed Interest Rates

• No option to make extra repayments - Since you have a fixed rate and repayment schedule, you won’t be able to make additional or top-up payments so you can pay off your home loan faster.

• Fixed rate even if the rate drops - Since you’ve availed of fixed interest rates, you’ll continue to pay higher rates for your loan term even if rates fall in the future.

📌 Variable Interest Rates

A housing loan with a variable interest rate will have varied monthly payments. The interest rate moves with the market during your loan’s entire term. Typically, the interest rate you have to pay will start below the market rate and may gradually go up.

Pros of Variable Interest Rates

• Lower monthly repayments - When interest rates drop, you can enjoy lower monthly payments.

• Lower than fixed interest rates - Variable interest rates are generally lower, usually because of the risk you take as a borrower.[2]

Con of Variable Interest Rates

Difficult to predict your monthly repayment - Rates can increase and decrease depending on market conditions, making it challenging to budget monthly. You might also have to pay more compared to a fixed interest rate.

What are the Reasons for Being Denied a Housing Loan?

Your home loan application may be rejected due to several factors, such as the following:

• Your lender isn't convinced you can pay off the amount you wish to borrow. This is usually based on your income, the number of dependents, income stability, and credit standing.

• You don’t meet the eligibility criteria.

• You failed to provide the necessary documentation.

• Other issues regarding the loan amount you applied for

Lenders typically provide the reasons why a borrower’s application was rejected. Depending on the reason, you could consider the following options:

• Apply for a different or more affordable property.

• Apply for a housing loan with a lender with less stringent terms and home loan requirements.

• Get a Pag-IBIG housing loan instead.

• Apply for a housing loan with a co-borrower.

Additional Home Loan Fees You Should Know About

Apart from saving up for a down payment, prepare to pay for fees that come with buying a house. Some of these fees include the following:

• Transfer tax of 0.5% to 1.5% of the house’s purchase cost, depending on its location

• Notary fees

• Loan arrangement fees

• Documentary stamp tax, which can be 1.5% of the purchase cost

• Registration fees

https://www.moneymax.ph/loans/articles/housing-loan-philippines