Housing Loans

How To Check If You Are Qualified For A Pag-IBIG Housing Loan

“Am I qualified for a Housing Loan?”

This is a recurring question which appears on this website as comments under different articles with different topics. This article is intended to address that question once and for all and also show you some useful tips.

You can actually personally determine if you are eligible for a housing loan based on the following:

Your Pag-IBIG Membership
Your Age
Your Capacity To Pay
Other Pag-IBIG Loans

We’ll try to elaborate each one on the succeeding paragraphs.

Your Pag-IBIG Membership Status

You need to remember the following basic requirements for Pag-IBIG Fund Members.

You must be an active Pag-IBIG member for at least 2 years and has contributed a minimum of 24 monthly contributions.
Both the principal borrowers are subject to the above mentioned requirement.
Up to three Pag-IBIG Members may avail of a single housing loan (same collateral) provided they are related within the second civil degree of consanguinity.

Question: Can I pay 24 months one-time and then avail of the Pag-IBIG Home loan immediately?

Answer: Not anymore, the new Pag-IBIG Law of 2009 has changed the rule. But, you may still pay 24-months one time (Pag-IBIG will be more than happy to accept it) and wait for another 24 months to apply. (Other branches will allow you to wait for just 12 months.)

Pag-IBIG Financing Tips on Membership:

To re-activate your Pag-IBIG Membership is very simple: just pay for the monthly contribution.
If you have been moving from one company to another, always make sure that you consolidate your Pag-IBIG contributions past and present. You can do this by requesting it from the Pag-IBIG Office.
Don’t be in a hurry to get a housing loan. You need to establish a good record so that your application will be easier by the time you do it.
Read the article entitled “Why This Question Is Wrong: ‘Can I Pay The Whole 24 Months Contribution One-Time So That I Can Avail of the Housing Loan?’“

For the complete list of document requirements, please check this article.

Your Age

You must not be more than 65 years old at the time of loan application.
You must not be more than 70 years old at the date of maturity.
You must be insurable.

Advanced age really is a hindrance to getting a housing loan. And take note that this is true whether you are using Pag-IBIG or any Bank.

Pag-IBIG Financing Tip: If you can afford it, apply for a housing at a young age.

Your Capacity To Pay

As a general rule, your monthly amortization should not exceed one-third of your gross income. This is the rule used by many financial institutions when qualifying a loan applicant.

But when it comes to Pag-IBIG Financing, your monthly amortization (principal + interest) should not be more than 40% of your Net Disposable Income.

Actually, there is a table that you can use to determine much loan amount you can get given your income, contributions and loan term. To see the Table, please refer to the article on “How Your Income And Contributions Affect Your Housing Loan Entitlement”.

Pag-IBIG Financing Tips:

Have your finances in order by saving enough for the Down Payment (or Equity).
You need to show some proof of income. Prepare the following documents: Pay Slips, Income Statements, Employment Contract (with indicated salary).
Learn about the 5’s of Credit
If your income is insufficient, you may take on a relative (within the second civil degree of consanguinity) or your spouse and tack-in your contributions then apply for a housing loan.

Other Pag-IBIG Loans

You are only allowed one Housing Loan at a time. If you want to take another one, you have to pay your existing loan.
If you have previously availed of the housing loan, make sure that it was not foreclosed, cancelled, bought back, or subjected to dacion en pago.
If you have an outstanding Multi-Purpose Loan, your payments must be updated and it must not be in arrears at the time of application.

It is important that you take note of the information presented here before you apply for a housing loan from Pag-IBIG.

And if you are disqualified for some reasons, please remember that Pag-IBIG is not the only Home Financing option available. Or, you may want to try applying again in the future. Your loan application may be approved by that time.

“How To Check If You Are Qualified For A Pag-IBIG Housing Loan” is written by Carlos Velasco.

Equity, Appraisal And Loan Amount – What You Should Know About These

by Pag-IBIG Financing Admin

Allow me to start off this article by quoting the question recently posted by a visitor of Pag-IBIG Financing Website:

“My husband and I are planning to buy a condo or a townhouse that’s worth P1.5M. We understand that the loanable amount is 3M. But the loan pag ibig can give is based on the monthly income of both husband and wife, is that right? The usual problem that we have is that how to pay for equity…. My question is, can we loan a full amount of 1.5M to Pag ibig so that we don’t have to pay for equity?”

That question is very important because it raises a lot of topics every Pag-IBIG Member should be aware of. Let’s tackle the following as it relates to the article:

Equity
Appraisal
Maximum Loan Amount

Your knowledge on these topics may save you from facing a possible foreclosure – something that you don’t want to happen with your property.

Now, before discussing the above terms, a general introduction on home loan is worth mentioning.

In general, when you apply for a real estate loan, you will be asked to pay for a down payment; say 20% of the appraised value of the property, that’s the standard down payment. The loan amount will actually be based on the appraised amount less the down payment.

To illustrate, assume for a moment that the appraised value is P 1,000,000 and you are asked for a 20% down payment. That means you are to personally raise P 200,000 before you are granted the P 800,000 loan. And if you are qualified for the P 800,000 loan, your monthly amortizations will be used to cover the interest and principal payment against the borrowed amount of P 800,000.

(See also: Mortgage Loan Fundamentals)

Now, back on track…

Equity

pag-ibig housing loan This is another word for Down Payment, a term mostly used by Banks; Pag-IBIG uses the term equity to mean the same thing.

The equity refers to your stake (or interest) on the property. This concept is very important because, in the eyes of the money lender (Bank or Pag-IBIG Fund), the more equity you have on the property, the more serious you are in paying the loan.

If you initially put down an equity of 20% of the appraised value the property, it means that you own 20% of the property; the other 80% is owned by the money lender. As you pay off your loan, your equity also grows over time.

Appraisal

Pag-IBIG Fund, or any lending institution for that matter, can’t just loan you any amount. They base it, first and foremost, on appraised value of the property and then on your capacity to pay.

Appraisal is simply the process if estimating the value of the property. Take note of the word “estimate,” … however advanced the tools being employed, appraisal is really just an estimate. That’s why it is not uncommon to see that the selling price of the property is very different from the appraised value of the property by a big factor. It would appear that the Seller has a different appraised value of the property he is selling compared to the Lender.

If you are getting a loan, its always the Lender’s Appraisal that determines the price and therefore your loan amount. After all, the flow of money is from them to you.

In the example above, just because the selling price of the condo unit is P 1.5M doesn’t mean that Pag-IBIG will also base it on the P 1.5M. This may be the case for Pag-IBIG accredited projects with their partner developers; otherwise, Pag-IBIG will conduct an appraisal on the property.

Maximum Loan Amount

Okay, you should know by now that Pag-IBIG Fund grants a maximum of P 3M only. That doesn’t mean you are also eligible for a 3-million loan. There are other factors that come into play.

Actually there are two maximum loan amounts that you must be aware of.

#1. Amount based on the appraised value minus your equity. If you are lucky, you will be granted with this amount.

#2 Amount based on your income, in other words, based on your capacity to pay. It goes to say that the bigger your income, the more advantageous on your part, because you are eligible to get a bigger loan amount also.

Don’t miss: Your Income, Contributions and Loan Entitlement.

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“Equity, Appraisal And Loan Amount – What You Should Know About These“ is written by Carlos Velasco.

Pag-IBIG Housing Loan Alternatives

by Pag-IBIG Financing Admin

Real Estate Loan is indeed the most popular service available to the Pag-IBIG Fund Members. In terms of the interest rate, it is very competitive (in many cases even lower) compared to the other mortgage loan financing alternatives in the Philippines. (The other Real Estate Financing alternatives will be discussed in the succeeding paragraphs) Another great advantage is the longer payment term of up to 30 years.

Some Uses of the Pag-IBIG Housing Loan

If you have not yet stumbled on it from the other articles, here are some uses of the Pag-IBIG Housing Loan.

Lot-Only Property Purchase
House-And-Lot Purchase
Construction of A Residential Unit
Home Improvement
Refinancing of Existing Mortgage Loan

Looking at that, it’s hard to imagine how an eligible Pag-IBIG Member should not take advantage of this benefit. Go for it if you have the chance.

Housing Loan Eligibility

But then again, to even qualify for the loan, a member should at least meet the minimum requirements listed below.

Must be a member for at least 2 years and has contributed at least 24 months. Take note: no more one-time payment of the 24 months contribution this time.
Must not be more than 65 years old at the time of loan application.
Must not be more than 70 years old at the date of loan maturity.
Must have NO outstanding Pag-IBIG Housing Loan either as principal or as co-borrower.
Must have NO outstanding Pag-IBIG Multiple-Purpose Loan in arrears at the time of application.
And most importantly, must not have a previous Housing Loan that was foreclosed, cancelled, bought back or subjected to dacion en pago.

For some becoming a member of the Pag-IBIG Fund is already too much of a hassle. There are membership dues to remember; seminars to attend to when applying for a housing loan; the difficulty in sending the monthly dues, etc. Some members have been inactive for a number of years already. Still others are not even eligible for Pag-IBIG Housing Loan.

If this is your case, there are still home financing alternatives for you. Consider the following…

Bank Financing

The first big daddy of Real Estate Financing in the Philippines is, of course, The Bank. They offer a variety of Home Financing Products that you can choose from.

The good thing about Bank Financing is that there are a lot of competitions going on. You should shop around and decide for yourself the best one based on the following factors:

Professional Service – How cool is it if your banker treats you like a King? I can tell you don’t get that kind of professional attention in Pag-IBIG.
Interest Rate – The lower, the better for you.
Payment Method – As painless as possible especially if you are working overseas. Check for the Internet Banking feature.

Tip: When you approach a loan officer, you may want to do away with that expensive Clive Christian Perfume. It will be to your advantage if you wear something that smells like money instead. I hope you know what I mean by that.

Other Similar Financial Institutions to Consider:

Credit Cooperatives
Money Lenders

In-House Financing

This one is very simple. There are only two parties involved: you, the buyer and the seller, which is usually the Real Estate Developer.

If you are constructing a house, the developer acts as if it were The Bank. It finances the home construction and you, in turn, pay directly to the developer.

Like the Bank Financing, In-House Financing almost always requires that you put a down payment (20% of the selling price or so) and amortize the balance for a given term. This Financing Scheme also bears an interest. The series of monthly amortizations will reflect your payment for the principal amount borrowed plus the interests.

The primary advantage of In-House Financing is its simplicity.

Bank Financing vs In-House Financing

The primary downside, however, is the stiff interest rate that goes with it. At the time of this writing, the going interest rate of many In-House Financing Schemes is in the range of 18% to 21% per annum. Compare that with the going interest rate the banks are charging, which is in the range of 8% to 12%, and you will be in for the shock of your life.

When it comes to Home Financing, simplicity can be very expensive.

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“Pag-IBIG Housing Loan Alternatives” is written by Carlos Velasco.

How Your Income And Contributions Affect Your Housing Loan Entitlement

by Pag-IBIG Financing Admin

In case you are wondering how much loan amount you are entitled, this article intends to address that.

By now, you should already know that the maximum housing loan amount Pag-IBIG can possibly grant to a member is P 3,000,000 while the smallest amount is only P 100,000. And the corresponding interest rate is actually shown at the Right Panel of this website.

Basically, there are two very important factors that affect the loan amount you will be entitled to:

The amount of your contribution
Your Net Disposable Income

Naturally, if you want to avail of a bigger loan amount, you need to increase your contribution and demonstrate that your Net Income is also large enough to cover the monthly amortizations.

These things are easier to understand with the following Tables.

Loan Entitlement Based On Pag-IBIG Contribution

So looking at the table, if you need, for example, to get a loan amounting to P 2,000,000 your contribution should be P 950 / month. Now PhP 950 /month is easier for most Pag-IBIG Members. Quite frankly, there is no problem in that area.

Special Note to OFWs / POP Members: Since you are contributing in US Dollars, the table essentially means to need to contribute the US Dollar equivalent of that amount in Philippine Peso. As you know, there is a constant swinging of values between these two different currencies so there is also a corresponding adjustment.

Loan Entitlement Based On The Capacity To Pay

Take note of this part and this is very important.

According to the Pag-IBIG Fund Primer on Housing Loan, “A member’s loan entitlement shall be limited to an amount for which the monthly repayment on principal and interest shall not exceed 40% of the member’s net disposable income…”

In other words, the monthly amortization should be less than 40% of your net disposable income.

The following Table should guide you.

For example, if you are looking to get a PhP 1,000,000 loan and plan to pay it in 10 years (monthly amortization is P 12, 398.57 at 8.5% interest per annum), your net disposable income should be PhP 30,996.43 or higher (the higher the better).

So to avoid having problems paying for the property, that means you have to work backwards: Determine your net disposable income first, then buy a property based on the amount of loan that you can comfortably pay.

Let’s see if you really understand the Table shown above.

Question: You are planning to get a Pag-IBIG Housing Loan amounting to P 2,000,000 and pay it in 10 years. How much should your monthly income be?

Answer: Your monthly income should be P 67,467.50 or higher. And your monthly contribution should be P 950.

Additional Notes on Borrower’s Eligibility For Housing Loan

To be eligible for the housing loan, a member should:

Be a member for at least 24 months and has remitted at least 24 monthly contributions.
Be 65 years old or younger at the time of loan application.
Not be more than 70 years old at the maturity date of the loan.
Have no outstanding housing loan from Pag-IBIG.
Have no Multi-Purpose Loan in arrears at the time of housing loan application.
Have no Pag-IBIG Housing Loan that was foreclosed, cancelled, bough back or subjected to dacion en pago.

Related Articles To Check:

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This article on Income, Contributions and Loan Entitlement is written by Carlos Velasco.

Online Concerns: Housing Loan Applications, Membership Status And Contributions Inquiry, Etc.

by Pag-IBIG Financing Admin

Most visitors coming to this website are Overseas Filipino Workers based from different places abroad. And many of them are asking about the online facilities of the Pag-IBIG Fund (the official website is at http://www.pagibigfund.gov.ph) so they can do some transactions anywhere they are comfortable. Some of the most common questions we encounter are listed below.

I want to become a member of the Pag-IBIG Fund. Can I do it online? Do you have an online form that I can fill up and send back to you?
Can I apply for A Housing Loan Online?
May I request for my Pag-IBIG ID Number? Please send it through email.
How will I know about my past contributions?
Can I send my payments (contributions/amortizations) online?

Of course these are valid concerns as legitimate members of the Pag-IBIG Fund.

In this article, we’ll address each of these questions.

#1. Membership Application: I want to become a member of the Pag-IBIG Fund. Can I do it online? Do you have an online form that I can fill up and send back to you?

Yes, this is possible. Simply download Member’s Data Form. Print two copies and send back to the Pag-IBIG Fund.

While doing that is very convenient, the good ole way of actually handing it to the office is still best way to do it. That way, you get someone to give you an acknowledgment that your form has been received.

The most ideal way of doing it should be to just fill-up and online form — as opposed to downloading it — and waiting for a verification via email. Unfortunately, this one doesn’t exist yet. So, let’s make the best use of this one.

Learn The 5Cs of Credit To Improve Your Chances Of Getting A Loan

by Pag-IBIG Financing Admin

One of the funniest definitions of a bank comes from Bob Hope. According to him, “A bank is a place that will lend you money if you can prove that you don’t need it.”

How true! It simply means that as a lending institution, the bank will consider a number of factors before granting you a loan. Just because you need a loan doesn’t mean you will get it.

Well, more or less, the same can be said of Pag-IBIG Fund. Just because you are a member of Pag-IBIG doesn’t automatically mean that you will get a loan anytime you want to.

However, your chances of success will be greater once you are aware of the most important factors they are considering when you apply for a loan, whether personal loan or housing loan.

Remember these so called 5 Cs of Credit and see how you can apply it in your respective situations.

1. Character

What sort of person are you from the point of view of the Loan Officer? Are you someone who can be trusted with the loan? Are you most likely to pay it on time or are you the one who will most likely be a candidate of loan defaults?

How long have you been a member of the Pag-IBIG Fund? How long have you been in your work or profession? Your employment record is one of the factors they consider in the evaluation process.

2. Capacity

How much is your salary or income? This will determine how much you can set aside to pay for the monthly amortization.

In general, the bigger the income, the better your chances of being approved. But don’t fool yourself. A lot of high-income professionals also maintain a high-maintenance lifestyle. But it all really boils down to how much is left before the next payroll takes it toll.

How much can you safely borrow? Pag-IBIG has a maximum limit of PhP 3M for the housing loan. Unfortunately, the maximum limit is not for everyone to enjoy. Your loan amount will most likely depend on your capacity to pay for it.