Law Summary
Loan Uses
- Development of residential subdivisions or medium-rise residential buildings
- Construction of units eligible for mortgage financing under existing Pag-IBIG Home Financing Program guidelines
- Prohibited use: purchase of land parcels
Eligibility Criteria
- Developer must achieve at least 70% score under a credit scoring system
- For horizontal projects: 60% weighting to financial performance, 40% to project evaluation
- For vertical projects: 70% weighting to financial performance, 30% to project evaluation
- Evaluation includes all on-going and prospective projects regardless of loan subject
- Sales packages must not exceed appraisal values under housing financing guidelines
Loan Amount Determination
- Based on actual project needs supported by cash flow projections
- Horizontal projects: loan capped at the lowest of 40% of prudent production cost, developer’s debt capacity, or Single Borrower’s Limit
- Vertical projects: loan capped at lowest of 60% of land development and construction costs, debt capacity, or Single Borrower’s Limit
- Loan ceiling: ₱250 million for horizontal, ₱500 million for vertical projects
Interest Rate
- Determined through financial and risk evaluation of the developer
Loan Term
- Based on project’s cash flow projections
- Maximum term of 3 years
Collateral Requirements
- Secured by first real estate mortgage on property being developed, free of liens
- Partial releases allowed if loan-to-appraisal value remains at 70%
Loan Release Conditions
- Releases aligned with cash flow projections
- Equity injections before release: 20% of production cost (horizontal), 40% of land and construction cost (vertical)
- Raw land value counts toward equity
- In joint ventures, developer must infuse at least 10% construction costs as equity
- Outstanding loan cannot exceed 70% of collateral value
Loan Payment Schedule
- Interest: paid quarterly starting end of first quarter from initial release
- Principal: paid quarterly starting on or before 18 months from initial release
- Takeout proceeds applied to principal, minimum 25% allocation
Additional Terms and Conditions
- Developer must secure permits/clearances before approval: development permit, ECC, DAR conversion/exemption, HLURB clearance to mortgage, license to sell
- Project appraisal by Pag-IBIG or approved entities not older than 6 months
- Construction must start within 1 year of approval notice and complete within loan term
- Loan processing fee: 1% of approved loan or ₱50,000, whichever is lower; includes ₱10,000 non-refundable filing fee
- Service fee: 0.1% of amount drawn
- Penalties: 0.05% daily on unpaid amounts
- Developers with outstanding loans may apply for new loans within Single Borrower’s Limit
- Defaults in one loan affect other loans (cross-default)
- Pag-IBIG Fund may impose additional conditions and reject unacceptable applications
Approval and Administration
- Applications subject to approval by designated authorities
- Issues on interpretation resolved by officers or escalated up the chain
Amendments and Repeal
- Senior Management Committee can modify guidelines consistent with Fund’s mandate and laws
- Previous conflicting circulars or memoranda are repealed or amended
Effectivity
- Circular is effective immediately upon issuance