For Your Real Estate Dreams: Financing Options for Future Homeowners

February 15, 2023

Becoming a homeowner is arguably every Flipino’s dream. It’s a significant milestone that signals success, pride, and joy. But homes can be expensive. Very few can afford to purchase homes outright in a volatile real estate market.

Thankfully, you don’t have to spend years saving up. Home loans are readily available for you. The right one can help you achieve your dream home faster, but it’s essential to consider the basics before jumping in.

We hear you, so we’ve developed this quick guide to help you get started. From home loan types to things to consider, here’s everything to know:

What is a Home Loan in the Philippines?

A home loan, also known as a housing loan, is a financing option for to-be homeowners. Using this, you can:

  • Purchase a house and lot
  • Purchase a condominium unit
  • Purchase a townhouse
  • Purchase a land lot
  • Renovate a property you already own
  • Refinance an existing mortgage
Photo by Sandy Millar via Unsplash

Home Loan Options in the Philippines

There are several home loan types you can choose from in the Philippines. You can apply for any of the following, but it will still depend on your eligibility and the amount you need. 

Bank Financing 

Pros: Lower interest rates

Cons: Strict requirements 

Bank financing is one of the most popular ways to purchase homes. Interest rates can be low and flexible depending on the bank in question. On average, commercial banks offer anywhere between 4% and 8% in interest, and the total amount can be paid off depending on the agreed term—be it 1 to 25 years. 

The only downside is that it can be challenging to get approved. You must be qualified to borrow at least 60% of the home’s value. This means having a strong credit history and proof that you have a stable income, whether from a job or a business. 

The top banks known for housing loans in the Philippines are as follows:

  • RCBC
  • BPI
  • BDO
  • UnionBank
  • Security Bank
  • PNB

In-house Financing 

Pros: Lenient requirements 

Cons: Higher interest rates

In-house financing pertains to a financing option offered by the property developer of your future home. The terms and rates will vary, so you need to contact your developer to learn more. Do take note that they’re usually higher than average.

However, most developers offer you the chance to pay in installments and a flexible term that best fits your current financial standing. Requirements are also lenient, and you will likely get approval without the hassles of credit checks. 

Pag-IBIG Fund 

Pros: Better chances of approval for employees and active members of Pag-IBIG, payment terms can be up to 30 years

Cons: Higher than bank interest rates

If you actively contribute to Pag-IBIG and are currently employed, this government-funded program is also an excellent choice. You can purchase a condo unit, a new house, or even pre-owned properties. 

According to its website, the maximum amount Pag-IBIG members can loan is PHP 6 million, which is heavily subject to terms and conditions. Certain factors will come into play, including how much you need, your monthly contribution, and of course, your current financial capacity. 

Interest rates can be higher depending on the market but can fall anywhere between 5.5% and 10%. On the other hand, payment terms can be up to 30 years. 


Pros: Better chances of approval for employees and active members of GSIS/SSS

Cons: Higher than bank interest rates

The Social Security System (SSS) and the Government Service Insurance System (GSIS) are both government-owned insurance programs that offer various benefits for employed Filipinos working in private companies and government agencies.

Both these providers offer home loans, which are also available for overseas Filipino workers. Interest rates are almost the same with Pag-IBIG, but the maximum loanable amount can only be up to PHP 2 million.

Qualifying for a Home Loan in the Philippines

Qualifying for a home loan will depend on various factors, including income, pay capacity, and financial stability. All these factors will always be a top priority for most loan providers, but it’s also paramount to ensure you meet the following qualifications:

  • At least 21 years of age but not older than 65 years when the loan matures
  • A regular employee of a company for at  least two years
  • Must be Filipino Citizen or Foreign National with an international document
  • Must have a minimum monthly gross income of PHP 30,000 to PHP 50,000) 

Apart from these, you also need to have the following documents ready:

  • Home Loan Application Form (To be filled by both spouses if married)
  • 2 Valid IDs (Acceptable ones depend on the loan provider)
  • Certificate of Employment (COE) with salary, position, and length of service
  • Latest Income Tax Return (ITR) 

If you’re self-employed, you need to have the following documents ready:

  • Financial Statements for the last two years (Audited)
  • DTI Registration (for Single Proprietorship and Partnership)
  • Bank Statements for the past six months
  • Tax declaration
  • Other documents asked 

For government loans, it’s best to visit their respective websites for home loan requirements. 

Get Closer to Your Dream Home with the Right Home Loan

Choosing to purchase a home can be intimidating. Given the amount of money required from you, it can be disheartening—but the right home loan can help make your dreams a reality. The right loan provider will help point you in the right direction, especially if you’re working within constraints. 

As you prepare for your homeowner journey, keeping this guide in mind is vital. You must remember the home loan types available at your fingertips and how each offers specific pros and cons. Compare and contrast each option, and find what can work with your current financial means.

At the end of the day, you want the home loan to work for you—and not against you! Your dream home is entirely achievable, so long as you prepare well.

Housify is a real estate marketplace that connects you to your dream properties. Browse through our listings to discover the best options for yo and your budget!