QuestionsQuestions (CIRCULAR NO. 403)
The loan proceeds may be used for: (1) purchase of fully developed residential lots up to 1,000 sq. m. (or adjoining residential lots); (2) purchase of residential house and lot/townhouse/condominium unit (old or brand new, including properties mortgaged with Pag-IBIG, or adjoining units in the same project that complied with BP 220); (3) construction or completion on a residential lot owned by the borrower or a relative (as provided in the guideline); (4) home improvement on the borrower’s/relative’s owned house or on a property under CTS/DCS, for permanent integral alterations enhancing durability/material value; and (5) refinancing an existing housing loan, provided the borrower has been regularly paying with no payment beyond 30 days past due for the last six (6) months from application.
Applicants must be active Pag-IBIG I members and have remitted at least 24 monthly savings at the time of application. If savings are still short, they may apply if total savings upon application is at least equivalent to 24 monthly savings based on the mandatory rate (including EE and ER counterparts). Non-members may also apply by remitting the required 24 monthly savings in lump sum (inclusive of EE and ER counterparts), treated as a single remittance for the applicable month as of the payment date.
The gross monthly income must not exceed ₱17,500. Gross monthly income is defined as basic monthly compensation and cost of living allowance.
Applicants must be not more than 65 years old at the date of application, and not more than 70 years old at maturity.
They must have passed satisfactory background/credit and employment/business checks of Pag-IBIG. If they have existing Pag-IBIG housing accounts, those must be updated. They must have no outstanding Pag-IBIG Short-Term Loan (STL) in arrears; if in arrears, the account must be updated. They must not have had Pag-IBIG housing accounts foreclosed, cancelled, bought back due to default, or subjected to dacion en pago (including surrender of property when borrower no longer wishes to pursue).
A qualified member may apply for up to ₱750,000 based on the lowest of: (1) actual need; (2) desired loan amount; and (3) loanable amount determined by gross monthly income, capacity to pay, and loan-to-appraised value (LTV) ratio.
Cluster 1 (NCR): income up to ₱15,000 (or up to ₱17,500) with loanable amount up to the socialized housing loan ceiling (up to ₱750,000). Cluster 2 (Regions): income up to ₱12,000 (or up to ₱14,000) with loanable amount up to the socialized housing loan ceiling (up to ₱750,000). The Circular reflects that the housing loan shall not exceed the limit for the applicable income cluster.
The monthly repayment must not exceed 35% of the borrower’s gross monthly income. For tacked loans, the individual gross monthly income of each borrower tacked into the loan is considered.
Their net take-home pay must not fall below the minimum requirement prescribed in the General Appropriations Act.
A tacked loan allows up to three (3) qualified Pag-IBIG members to apply for a single housing loan. If related within the second civil degree, the individual incomes are considered and co-borrowers must meet eligibility requirements and are jointly and severally liable. If co-borrowers are non-relatives or related beyond the second civil degree, additional conditions apply: (b) purpose must be for purchase of residential unit/lot or purchase of lot with house construction; (b) property must be registered in the names of all borrowers; (c) all borrowers must execute the REM; and (d) the mortgage is released only upon full payment of the entire housing obligation.
If the loan is up to the socialized housing loan ceiling (up to ₱750,000), the LTV ratio may be 100%. If above the socialized housing loan ceiling up to ₱750,000, the LTV ratio limit is 95%.
For the first five (5) years or ten (10) years (whichever is applicable): (1) If earning up to ₱15,000 for Cluster 1 and up to ₱12,000 for Cluster 2, with loan amount up to the socialized housing loan ceiling, the interest rate is 3% for the first 5 years. (2) If earning up to ₱17,500 for Cluster 1 and up to ₱14,000 for Cluster 2, with housing loan up to ₱750,000, the interest rate is 6.5% for the first 10 years.
At the end of the 5-year or 10-year period, the interest rate is repriced based on the Fund’s Full Risk-Based Pricing (FRBP) Framework. For borrowers opting for a 3-year or 5-year fixing period, the repricing follows the FRBP prevailing rate or is increased by 2%, whichever is lower. Thereafter, repricing occurs periodically depending on the chosen fixed pricing period, with the base rate being the interest rate from the immediately preceding repricing.
The housing loan is repayable for a maximum term of 30 years, and in no case may it exceed the difference between age 70 and the principal borrower’s present age. The principal borrower is considered 70 years old at the time they reach their 70th birthday.
Monthly amortizations may be paid through: (a) post-dated checks; (b) payment to an accredited developer with a Collection Servicing Agreement; (c) accredited collection partners; (d) auto-debit arrangement with banks; (e) any other collection system implemented in the future. Salary deduction is also allowed where feasible, but requires the borrower’s written consent.
Default occurs when the borrower (or co-borrowers in tacked loan) fails to pay three (3) monthly amortizations; fails to submit proof of real estate tax payment; or violates/fails to perform obligations under contracts. Default triggers acceleration: the outstanding obligation (principal, accrued interests, penalties, fees, charges) becomes immediately due and demandable and continues to incur penalty of 1/20 of 1% per day of delay and continues to bear interest at the stipulated rate. The borrower cannot be granted another Pag-IBIG housing account. Pag-IBIG may cancel the CTS/DCS or foreclose the mortgage, and payments do not revive the account unless sufficient to fully update it. For amounts paid to seller/developer prior to loan takeout, the seller/developer must refund/recoverability applies as stated in the Circular.