6 Pag-IBIG Home Loan Tips: Up Your Chances of Approval

For most people, the purchase of a house and lot in the Philippines is best and easier accomplished with funding from a lending institution. The Home Development Mutual Fund, or better known as Pag-IBIG Fund, is doubtless the most preferred housing loan provider in the Philippines. A resounding testament to this is the whopping ₱117.85 billion worth of housing loans recorded by the state-run financing institution in 2022.

The process of getting approval for a Pag-IBIG housing loan application, though, could be a tedious process involving multiple requirements to fulfill and submit for evaluation. Even if your hopes are high that your home loan application will be approved, it is never guaranteed. But there are ways to increase your chances of having your home loan approved. Let's tackle everything you need to do to get your application favored and receive your loan proceeds.

Overview of How Pag-IBIG Housing Loan Works

The Pag-IBIG Fund lets housing loan applicants borrow up to P6 million. To qualify for the loan, the first thing to remember is that there must be at least 24 monthly membership savings paid for by a Pag-IBIG member. If payment was not made continuously, Pag-IBIG accepts a lump-sum payment equivalent to 24 months.

Aside from a residential house and lot purchase, it is good to note that Pag-IBIG also allows the following purposes to avail of housing loans:

• Residential lot purchase 

• House and lot purchase

• Condominium unit purchase

• House construction loan

• Home improvement loan

• Housing loan refinancing

• Home equity loan

Needless to say, it's not easy and fast to get approval for a Pag-IBIG housing loan. According to Pag-IBIG Fund itself, the processing of loan applications takes about 20 working days. Once an applicant secured all the necessary documents for eligibility evaluation, it will take 17 days to receive a loan approval or rejection.

Seal the Home Deal: 6 Pag-IBIG Home Loan Tips

The prospect of disapproval could be prevented if a principal borrower is able to secure all the eligibility requirements, as well as establish his financial capacity to pay for the home loan. This could be a daunting task to do. In this article, we rounded up all the things you need to not only increase your chances of approval, but to actually be approved and become a few more steps closer to your dream home!

1. Keep Your Present Employment Status

Are you thinking of quitting your current work but confident that you would immediately get a new and better-paying job? Don't make it coincide with your home loan application. A continuous employment history with a minimum of two years is an eligibility requirement that you must fulfill. An employment gap, no matter how short-lived, could have a negative impact on your home loan application process.

2. Check Your Credit Score and Improve It

The importance of keeping a good credit score is sometimes overlooked by housing loan borrowers. But having a good-enough credit score, with a minimum of 600, is a major criterion to evaluate the creditworthiness of a principal borrower. If the latter's credit report contains a history of missed payments or an outstanding loan, it's a recipe for rejection. So make sure to fulfill all your financial obligations first before applying for a housing loan.

3. Loan an Amount that You Think You Can Pay

As mentioned, the maximum loanable amount for qualified Pag-IBIG members is P6 million. But do not think of it as a green light to exhaust the total amount. Choose to become more realistic and request an amount that you think you can pay for. Pag-IBIG has an affordability calculator which you can use as a guide to the maximum amount that you can request.

4. Offer a Higher Down Payment

When applying for housing loans, it's extremely important to establish and demonstrate your financial capabilities. One of the proven methods of giving lenders this impression is by making a higher downpayment. Not only will it increase your chances of approval, but it will also help you reduce your total monthly amortizations.

The ideal amount for a down payment is 20 percent of the real estate property's value. Another advantage of increasing your down payment is that you'll be borrowing less money from Pag-IBIG. If this sounds good to you and won't mind delaying your property purchase, work on building a higher down payment amount. It's a win-win outcome.

5. Take Advantage of Pag-IBIG’s Affordable Housing Loan Program

For low-income borrowers, do not be discouraged. Pag-IBIG's Affordable Housing Loan Program caters to low-income applicants with a maximum loanable amount of ₱750,000. To qualify, you must at least earn a gross monthly income of P15,000 if you're in Metro Manila and P12,000 if you live in the province. The loan limit is still a winsome deal if you keep your vigilance on residential houses that have the mentioned price yet the quality isn't compromised.

Depending on your total monthly income, interest rates for this housing loan type are 3 percent and 6.5 percent. For as low as ₱2,445.30 for the monthly amortization, owning a quality yet affordable house and lot are very much attainable. Thanks to Pag-IBIG's Affordable Housing Loan Program for minimum-wage earners.

6. Have a Checklist of the Eligibility Requirements to Submit

Don't apply for a Pag-IBIG housing loan unless you're certain you have all the necessary documents! If you're unsure of the complete requirements, refer to the list below, write it down in your notebook, or type it in your smartphone's notepad. Once you're ready to apply, create a checklist and put the completed requirements in an envelope.

Here are the complete requirements to submit for your housing loan application:

• Housing Loan Application Form

• Vicinity map of the property

• Proof of employment and income

• Updated Tax Declaration and Tax Receipt

• Valid IDs 

• Updated and Certified True Copy of Title

• Additional requirement by loan purpose (e.g. if it's for a house renovation or a home construction loan)

Actions to Take if Your Home Loan Application is Rejected

It could be discouraging if you received a disapproval letter for your housing loan. Do not give up your dream of owning your dream house and lot just yet. There are still other ways to get a home loan approved and settled. Refer to our helpful tips below.

1. Get a Co-Applicant

In the event of a home loan disapproval, having a co-borrower will help you to be reconsidered after a heartbreaking rejection. A co-borrower essentially joins you in your home-loan journey to establish your creditworthiness. This makes your co-applicant a co-owner of your property until all the repayment obligations are settled. Just like you, your co-borrower will be evaluated, especially his or her financial capacity and creditworthiness as well.

Your co-borrower, moreover, must only be relatives up to the second degree. This includes your spouse, parents, siblings, in-laws, and cousins. But more than kinship, choose a co-borrower who is genuinely willing and financially capable to share the home loan application with you. To further boost your chances, you can also look for a guarantor in addition to a co-borrower.

2. Lower Your Requested Loan Amount

One of the main reasons housing loans get rejected is requesting an unrealistically high loan amount that does not go well with their current financial status. As a remedy, lowering your requested loan amount will give you a much better chance of getting your home loan approved. However, if you really intend to purchase a house and lot within the price range that you initially borrowed for, consider delaying your property purchase and work on adding income sources to save up more money for the downpayment and your desired loan amount.

3. Consider Other Housing Loan Providers

While Pag-IBIG is indeed the most sought-after financial institution among Filipino homebuyers, there are two other options that you can still choose from. These are bank financing or in-house financing.

Banks are even better if you are eyeing a higher loanable amount, lower interest rates, and a relatively faster processing time, although this is met with higher fees. In-house financing, on the other hand, which is funding directly from real estate developers, is considered the last resort if both Pag-IBIG and bank financing fail. But just because it is a last resort doesn't mean it's not a good deal.

At Lumina Homes, our affordable house and lot for sale are paired with quality house features and housing models. On top of this, Lumina Homes communities nationwide are strategically located in accessible neighborhoods, where essential establishments are not far away. Secure your real estate investment with Lumina Homes today and make a home reservation!