How to Afford a Home Loan
Applying for a home loan is easy and affordable with a number of lenders in the Philippines. To expedite your loan application, understanding the process and what is required should make it easy and hassle-free.
Although banks have varied requirements with some requiring more documents than others, there is a general list of requirements that has to be presented which is applicable to all lenders. The bank requires a list of borrower’s information which are as follows:
Government Issued ID
Government-issued photo-bearing Identification cards need to be presented. It can be any two–to-three of the following:
- Driver’s License
- Unified Multi-purpose ID
- SSS/ GSIS ID
- Professional Regulation Commission (PRC) License
- Tax Identification Number (TIN) ID
- Postal ID
- NBI Clearance
- Police Clearance
- Consular ID
- Home Development Mutual Fund (HDMF) ID
- Armed Forces of the Philippines (AFP) ID
- Permit to Carry Firearms
- Seaman’s Book
- Alien Certificate of Registration
- Senior Citizen’s ID Card
- Philippine Overseas Employment Association (POEA) ID
- OFW ID
Proof of Income and Tax Records
For employees or professionals:
- Minimum of 3 months original payslip and/or Latest Income Tax Return with BIR or Bank stamp (BIR Form 2316)
- Certification of employment and compensation – to ensure faster processing, the certificate should include your annual gross income and the date of employment. It should also specifically state that the reason for the request is for a home loan application.
For self-employed individuals. The above plus the below is required:
- Audited Financial Statement for the last three (3) years
- Latest Income Tax Return (BIR Form 1700 / 1701)
- DTI Business Permit or SEC Registration
For overseas workers, the Philippine Government issued I.Ds from above are required plus:
- Agency based: POEA contract or Employment contract with boarding date
Direct hire: POEA OFW Information Sheet or POEA Overseas Employment Certificate
- Work Contract
Most banks require around PhP 30,000 to PhP 50,000 monthly income to be eligible for a housing loan. Metrobank requires a minimum income of PhP 30,000 for the gross monthly income. BPI on the other hand requires a minimum gross monthly income of PhP 50,000. This applies both to employees and self-employed applicants. However, businesses should have been operating continuously for generally three or more years, before becoming eligible.
Legal Status Requirements
Married individuals should provide a copy of the marriage contract. If annulled, a copy of the court decision annulment and the certificate of finality of decision and if legally separated, a copy of the court decision on legal separation and the certificate of finality of decision.
Collateral requirements are generally required upon approval of the loan and pertain to property documents. Depending on the reason for the loan (purchase, refinancing, construction), different collateral requirements should be provided. This may differ from lender to lender, and additional documents may have to be provided.
- Lot Plan or Vicinity Map
- Endorsement letter or computation sheet or contract to sell
- Photocopies of tax documents like receipts, clearances and declarations
- Floor and Building Plan and Building Specification
- Building Permit
- Bill of Materials and Estimate of Construction and Labor Costs
- Proof of Amortization payment – the number of months may vary but is at least for 3 months
- Statement of Account from Home Loan Lender
Upon inquiry for a home loan application, you should be provided with the specific documents that you should submit to your chosen lender. It would also be good to shop around and compare the different offerings available in the market. Making an informed decision especially regarding your finances makes the process quick and easy. You can also ask for opinion from previous borrowers for referral especially if they had a good experience.