Explaining the Basics of Pag-IBIG Housing Loan Requirements

Many Filipino families aspire to get their own place. However, achieving your dream house in the Philippines in this time and economy is not easy, mostly due to low personal income, expensive prices of land or condominium units, and the huge cost of building a house. Because of these, most resort to renting an apartment, thus setting aside any plan of buying and building their own homes.

Fortunately, there are several options for home loans in the country to aid those who want to own a house but currently have insufficient funds. Perhaps the most considered housing option is the Pag-IBIG Housing Loan. Just like any other loans, Pag-IBIG has its own set of requirements and qualifications for applicants, and we discuss them below.

If you’re planning to take up a loan with them, the first thing you should ensure is the validity of your purpose. Members must have a reasonable use for the loan. The following are descriptions of loaners with valid purposes who qualify for a loan:

Besides the purpose of the loan, members must also meet the qualifications. First, they must be a member for at least 24 months as proven by the accumulative 24 months of contribution. If the member had contributed for at least 24 months but is no longer active, he or she can still apply. New members must pay a lump sum to complete the 24 months requirement then submit the PAG-IBIG Fund Receipt (PFR) when filing the loan application.

Along with the requirement that the member must have the capacity to acquire real property, the member must also not exceed 65 years old upon filing of the loan request, and not more than 70 years old during the loan maturity. They must also be insurable. Qualifying members must also have a gross monthly income not exceeding PhP17,500, as this will serve as the cost of living allowance (COLA) and basic monthly compensation.

The member must also pass the background check conducted by the developer and the PAG-IBIG Home Development Mutual Fund (HDMF). A loan applicant should also have no ongoing PAG-IBIG house loan as either a co-borrower or a principal and they should not have any multi-purpose loan at the time of loan application. Applicant should also have no cancelled, foreclosed, or bought-back housing loan.

For family members, a maximum of three qualified Pag-IBIG members can apply for the tacked loan. However, they have to abide by several conditions. First, the applicants must be related within a second civil degree level of consanguinity. Second, the individual gross income of those who are tacked into a single loan shall be considered after determining their ability to pay. Lastly, all three members must pass the eligibility requirements.

A relative that is within the second degree of consanguinity, or the spouse, will be helpful in case the member’s income is insufficient for loans. One member is also allowed to only have one housing loan at a time that is, before applying for a new one, the member should be done with their current loan first. For those who have an outstanding multi-purpose loan, payments must be updated.

If qualified, below are other considerations to take note of.

If the member’s loan gets approved, they will be allowed to borrow up to PhP6,000,000. The exact amount varies per person and is based on the contributions, capacity to pay, the actual need of the member, loan-to-collateral-ratio, and the result of the borrower’s evaluation system.

In terms of loan entitlement based on contribution, the member’s monthly contribution affects the loan amount. Basically, the greater the monthly contribution is, the loan amount will be larger as well.

Loan contributions paid through foreign currency shall be converted into peso. Loans that reach up to PhP500,000 will be secured by a real estate mortgage or property contract bought from the developer. The contract and the mortgage are covered by a buy back guarantee.

In terms of a member’s capacity to pay, the loan entitlement of each member is only limited to an amount not exceeding 40% of the monthly amortization of the member’s disposable net income. This figure shall be supported by the latest income tax return of the year before the date of loan application or by pay slips and certificate of employment and compensation.

When taking up a housing loan, remember to keep around several important documents such as your employment contract with salary indication, pay slips, and income statements, as these will serve as the proof of income. Moreover, having a savings account for the housing down payment can help the finances stay in order.