Photo courtesy of RDNE Stock project via Pexels
Looking to buy the condo of your dreams in the Philippines? Depending on your savings, you might need to take out a loan for your desired property purchase. Your loan eligibility can make or break this buying process, so you have to find out if you qualify for a condo loan that can wholly support your real estate needs.
Condo Arena is here to help. Discover what you need to know about condo loan requirements, financing trends, and self-assessment tips to prepare early and increase your investing confidence. Check out this comprehensive guide and be on your way to a successful property purchase today.
Condo loans in the Philippines
As you prepare to purchase property in the Philippines, you may need to take out a loan for it first. Explore this section to find financing options for your investment and learn about trends that might affect your eligibility and requirements.
Your financing options
Here are the different options available to investors in the Philippines right now:
- Pag-IBIG Fund — The Pag-IBIG Fund is the state-backed national savings and mutual fund program that offers lower-interest home loans and financing to its members. It’s often used by lower-income buyers because it’s more flexible than alternatives like commercial banks and in-house home financing schemes.
- Commercial banks — Commercial banks also have loans for real estate, with companies like BDO, BPI, RCBC, UnionBank, PNB, and more offering wider product ranges for all kinds of investors. Of course, all these banks have their own sets of qualifications with even stricter underwriting, so you need to do a lot of research to find the best one for your needs.
- Developer financing and in-house schemes — One of the simplest financing options you can explore is to take out a loan directly from your developer. Many developers in the Philippines offer in-house financing for buyers, so make sure to read up on your property’s policies to make the most of this option.
Trends affecting condo loan requirements
Recent trends may also impact your timing alongside your eligibility. Keep an eye out for these trends to ensure the viability of your application:
- Bangko Sentral ng Pilipinas (BSP) “RRR” cuts — In recent financial news, the BSP cut the reserve requirement ratio (RRR) for Philippine banks, increasing their lending capacities and easing credit conditions for more productive lending and investing. Though cuts are being implemented at a gradual rate, this increased liquidity makes it easier for investors to borrow from banks.
- Macro conditions affecting lender decisions — Of course, lenders still have the prerogative to tweak requirements based on macroeconomic conditions. They might change their minimum income thresholds or loan-to-value (LTV) ratios very suddenly, so make sure to check with your lender for their up-to-date information on their options.
With these options and trends in mind, you can begin considering your eligibility for a future property purchase. Check out the next section of this guide for a comprehensive list of requirements and considerations when consulting for a potential condo loan.
What do lenders check for condo loan eligibility?
Want to prepare for a condo loan eligibility consultation? Here’s your complete guide to the requirements and considerations necessary for your upcoming assessment.
Checklist of requirements
Lenders tend to look for specific documents when considering potential housing loan eligibility. Here’s a general checklist of requirements to prepare for your consultation, based on your work or income:
- Duly accomplished application form/s
- Proof of identity and civil status
- Birth Certificate and/or Marriage Certificate/Certificate of No Marriage
- Valid ID/s with signature (ex. passport for OFWs, PRC ID for licensed professionals, senior citizen card for retirees, etc.)
- Proof of income
- For local employees
- Certificate of Employment and Compensation (CEC) indicating gross monthly income and allowances or monthly monetary benefits received by employee, duly signed by employer’s authorized signatory
- Latest Income Tax Return (ITR) for the year immediately preceding the date of loan application, with attached BIR Form No. 2316 acknowledged by BIR or authorized representative of employer
- One month payslip within last three months prior to date of application, with name/signature of employer’s authorized signatory
- For self-employed individuals
- ITR certified by BIR and Certificate of Registration issued by BIR, Audited Financial Statements (FS), and Official Receipt of Tax Payment from bank, supported with DTI Registration and Mayor’s Permit/Business Permit
- Commission Vouchers reflecting issuer’s name and contact details for the last 12 months
- If income is from foreign remittances, pensions, etc. — bank statements or passbook for the last 12 months
- If income is from rental payments — copy of lease contract/s and tax declaration/s
- Certificate of Employment(COE) issued by business owner
- Other document/s validating your income source
- For Overseas Filipino Workers (OFWs)
- Employment contract from employer, or POEA Standard Contract
- CEC written with employer/company’s official letterhead/signed by employer (for household staff and similarly situated employees), with photocopy of the employer’s ID or passport
- ITR filed with respective host country or government
- For local employees
- Pag-IBIG documents
- Member’s data form
- Contribution print-outs
- Health statement (if loan is greater than Php2M or if applicant is older than 60)
- Your chosen condo’s documents
- Copy of Condominium Certificate of Title (CCT) or Transfer Certificate of Title (TCT) and/or Contract to Sell (CTS)
- Copy of condo’s tax declaration, tax clearance, or tax receipt
- Authorization of Tax Mapping and Inspection of Property, signed by owner
- Copy of payment for appraisal fee
Considerations when consulting for a loan
Lenders look at certain factors when considering the viability of a housing loan in the Philippines. These include:
- Your citizenship and age — In general, you must be a Philippine resident between 21 to 65 years old upon the maturity of your loan. If you’re an Overseas Filipino Worker (OFW), you have to have the special power of an attorney and a COE approved by the Philippine Overseas Employment Administration (POEA) to be eligible. If you’re a foreigner, you need to meet visa requirements and have an ACR I-CARD to be eligible.
- Your income and income stability — Lenders often prefer individuals with stable income streams and reliable savings. For Pag-IBIG home financing, they prefer members with at least 24 months of personal savings and at least one monthly contribution within the last six months. Banks, meanwhile, check your income stability, savings, and expense habits to assess worthiness. To strengthen your eligibility, consider getting a co-borrower to increase your pool of funds, or paying a higher downpayment on the property. Prepare your proof of income and savings as listed in the previous section of this guide too.
- Your employment history or business track record — Lenders want to see if you’ve been locally employed under the same employer for at least two years, or have had at least two profitable years for self-employed or self-run businesses. These requirements vary per bank, but in general, they want proof of your income, even if you have gaps in employment or a commission-based income. So make sure you establish documentation as early as possible with commission records, 12-month payslips or 24-months tax returns, registrations, and more.
- Your credit history and credit behavior — Lenders will check with your bank to review your credit history and behavior, and see if you exhibit any financial red flags like a reputation for late payments or other existing major debts. They’ll also look at your debt-to-income (DTI) ratio to see if it keeps below their respective thresholds. In general, make sure to pay credit card debt in a timely manner and to maintain a healthy credit score and prevent difficulties down the line. If you have poor credit history, consider co-borrowing with someone who has a great credit history to bolster eligibility.
- The property’s acceptability — Last but certainly not least is the property’s acceptability itself; lenders will want proof that the condo you’re buying is truly worth the money. Banks will assess the property’s LTV ratio calculation to determine exactly how much they’ll lend to you. Lenders will also look at the developer’s reputation, the property’s age and zoning, its insurance requirements, and other condo-specific considerations before approval.
Photo courtesy of Mikhail Nilov via Pexels
An early self-assessment guide to qualify for a condo loan
Given all these considerations, it’s important to assess yourself ahead of any consultations to ensure your own progress and readiness. To make sure you’re truly prepared for such a financial commitment, follow these steps prior to consultation.
Step 0: Self-audit
Before anything else, conduct a self-audit with this quick loan readiness checklist:
- Age. Will I be between the ages of 21 to 65 upon the maturity of my loan?
- Citizenship. Am I a Philippine resident with proof of citizenship or residence?
- Gross income. Does my gross income and savings history match Pag-IBIG standards, or meet the requirements of my chosen bank lender?
- Employment tenure. Have I been employed under the same employer for at least two years, or have had at least two profitable years for my self-owned business?
- Credit history. Do I have a high credit score and no other outstanding major debts?
- Pag-IBIG contributions. Have I made at least one monthly contribution within the last six months?
- Required documents. Do I have all the documents necessary to prove all previously listed qualifications?
Step 1: Pre-qualification and pre-approval
The first actual step you’ll need to take is to request for pre-qualification and pre-approval from at least two to three different lenders. These are two different preliminary steps; pre-qualification is when you submit self-reported information for lenders to estimate the amount they can give you, while pre-approval is when you submit an application for lenders to conduct their financial background checks on you.
Depending on the bank, loan pre-qualification can be a quick process conducted online and finished within an hour. Pre-approval, on the other hand, requires more documentation and may take up to 10 days to complete. Make sure to request pre-qualification and pre-approval from at least two to three different banks so that you can find the lender with the best amounts and processes for your needs.
Step 2: Extra steps for Pag-IBIG
If you’re planning to pursue Pag-IBIG funding, make sure to gather all previously listed documents for your application, like your contribution history and other general requirements. Once you’re ready you can visit Virtual Pag-IBIG, the fund’s online service portal, to file an application.
Step 3: Compare and contrast
As you seek approval from various banks and lenders, don’t forget to compare and contrast your condo options to find the best one for your needs too. Build a spreadsheet or table to compare each condo’s seller prices, expected downpayment rates, and other factors side by side. Do this Real Estate Comparison on the Condo Arena site for an even easier assessment.
Step 4: Consider additional qualifying metrics
If you still fall short of qualifying, consider additional metrics to increase your chances of approval. Add a co-borrower, increase your downpayment rate, or pay off other outstanding debts to qualify. If these don’t work, look for smaller units or cheaper projects you can better afford on Condo Arena’s Property List.
Remember to consult with a property lawyer, experienced real estate agent, or financial adviser to gain greater insights prior to your investment. Ask questions unique to your needs during consultations, like “if I have a short employment tenure, can I still qualify?” or “what’s better for me, Pag-IBIG or bank funding?” By consulting one-on-one with an expert, you can get help for your specific situation and gain greater chances for eligibility.
Condo loan eligibility, simplified
Remember to bring these tips with you as you begin your home financing journey:
- Assess your own eligibility. See if you meet the requirements for a loan first, before exploring banks and other financing options.
- Study all the options available. From banks to Pag-IBIG, study every option available to you to see which one works best for your needs.
- Consult with the experts. Talk to financial and real estate advisers to get expert insight and unique tips into your investment.
Ready to finance your home purchase? Find the perfect real estate for your investment dreams at Condo Arena.
