How to Qualify for a Bank Housing Loan in the Philippines?

Homeownership is doubtless a basic human necessity. But buying a house and lot in the Philippines after years of rent can be equally financially daunting. Fortunately, housing loans exist to make a home purchase less economically demanding, making homeownership more attainable than ever.

A housing loan through a bank is one of the top choices for a property purchase after Pag-IBIG housing loan and in-house financing. After all, banks are trustworthy and BSP-regulated, and you get to avail of a lower interest rate, fixed monthly payments, and shorter loan tenure to pay off your repayment obligations sooner than later.

In this article, we will answer the ultimate question: How can an applicant qualify for bank financing in the Philippines? We will also elaborate on the eligibility and documentary requirements that housing loan borrowers must submit for final approval.

Eligibility Criteria to Qualify for a Home Loan in the Philippines

Whether you're looking to fund your property from a developer or refinance an existing housing loan, here is what you need to take note of as the basic eligibility requirements to qualify for a bank housing loan:

• Applicant must meet the minimum age requirement of 21 years old, and must not be more than 65 years of age upon loan maturity

• The home loan applicant must be a bona fide resident of the Philippines, or a foreign national

• Applicant must be continuously compensated or engaged in a profitable business for a minimum of two years (locally employed) or three years (self-employed)

• Combined gross monthly income must be ₱30,000-₱50,000 depending on the bank, but ideally higher

Documentary Requirements to Submit for a Bank Loan

If you meet the criteria above, here are the documents to settle and submit to get you closer to attaining your dream home with your desired loan amount:

• A duly accomplished housing loan application form from a chosen bank

• Two valid government-issued, photo-bearing IDs (Passport, Driver's License, PRC ID, UMID Card, National ID, etc.)

• Latest income tax return (ITR)

• Proof of Income, such as a Certificate of Employment with important details such as tenure, job title, and compensation amount, or latest pay slips for the last three months

• If applying as a foreigner, the home loan applicant must submit an Alien Certificate of Registration and comply with the set VISA requirements

• If locally employed, applicant must provide proof of continuous occupation and compensation, such as latest Certificate of Employment OR latest ITR

• If self-employed, applicant must provide proof of having a legitimate and profitable business for three consecutive years, such as latest ITR, as well as income documents like bank statements and audited financial statements

• If applying as an Overseas Filipino Worker (OFW), the home loan applicant must submit a special power of attorney and a certificate of employment authenticated and approved by the Philippine Overseas Employment Administration (POEA)

Top 2 Factors that Banks Consider for Home Loan Applications

Banks are notorious for rejecting housing loan applications among borrowers who may otherwise qualify for alternative financing options. In essence, banks are strict and stringent in scrutinizing every borrower's repaying capabilities, which all boils down to the following two major factors:

Stable and sufficient source of income

You are borrowing money and your lender expects you to pay it in 10, 20, or 30 years depending on the loan terms that you will qualify for. And you can only prove your repayment capabilities through your employment history.

Ideally, you must at least be employed continuously for a minimum of two years. Security Bank, for example, requires that the combined gross monthly income of their applicants is ₱50,000 or ₱600,000 a year with up to 20 years of payment terms.

If you're applying with a spouse, his or her income will also be evaluated to increase your chances of approval. This makes having a stable and sufficient source of income extremely important, if not the most important, when applying for housing loans through banks.

Clean credit history

You may have a steady employment now, but what about your credit history during the times when you probably have less income source? That is to say, if you have the present economic capabilities to pay off a major loan but have had a past of irresponsible borrowership, your application may still end up getting denied.

Having a good credit score corroborates your trustworthiness as a loan applicant. It serves as a guarantee that, since you were proven to pay your dues responsibly even before, the bank of your choice can also trust you that you will also dutifully pay your down payment and monthly payment on time until its maturity date.

Work on increasing your credit score by resorting to debt consolidation as one good repayment strategy. Essentially, this method takes out all your outstanding loan balance into a single, larger loan. With this, interest rates may be reduced. This can help manage your debts and ensure that you will not have any payment delinquencies that will adversely impact your credit score.

Top Banks Offering Housing Loans in the Philippines

To help you decide which bank you can apply to for a home loan, we listed some of the top Philippine banks with their basic loan features to give you a quick overview of their offers for your prospective residential house and lot purchase.

BDO

Basic loan features:

• Minimum loanable amount: ₱500,000

• Maximum loanable amount: 80 percent of property's appraised value

• Loan tenure: up to 20 years

BPI

Basic loan features:

• Minimum loanable amount: ₱400,000

• Maximum loanable amount: 90 percent of property's appraised value

• Loan tenure: up to 20 years

RCBC

Basic loan features:

• Minimum loanable amount: ₱300,000

• Maximum loanable amount: 80 percent of property's appraised value

• Loan tenure: up to 20 years

Metrobank

Basic loan features:

• Minimum loanable amount: ₱500,000

• Maximum loanable amount: 80 percent of property's appraised value

• Loan tenure: up to 25 years

Philippine National Bank

Basic loan features:

• Minimum loanable amount: ₱750,000 (Metro Manila) ₱500,000 (provinces)

• Maximum loanable amount: 80 percent of property's appraised value

• Loan tenure: up to 20 years

Security Bank

Basic loan features:

• Minimum loanable amount: ₱1,000,000

• Maximum loanable amount: 80 percent of property's appraised value

• Loan tenure: up to 20 years

Union Bank

Basic loan features:

• Minimum loanable amount: ₱500,000

• Maximum loanable amount: 90 percent of property's appraised value

• Loan tenure: up to 20 years

Chinabank

Basic loan features:

• Minimum loanable amount: ₱500,000

• Maximum loanable amount: 80 percent of property's appraised value

• Loan tenure: up to 20 years

Lumina Homes, the affordable housing segment of Vista Land, has a housing loan calculator handy through our website. If you choose to invest in our brand with bank financing Philippines and pick one of our house models, you can calculate your down payment and potential housing loan rates from your chosen bank, or if you're opting for Pag-IBIG housing loans, through our loan calculator.

An affordable house and lot for sale secured through Lumina Homes is rest assured to satisfy your lifestyle and homeownership needs. Got any questions for us? Don't hesitate to send us your inquiries about your future affordable house and lot. Become a bona fide Lumina homeowner this 2023!