Modified Guidelines on Pag-IBIG Affordable Housing

Legal basis, prior issuances, and repeal

The circular is issued pursuant to approval of the Management Committee during its series of meetings (Issuance/Adoption clause).
Republic Act No. 7394 governs prepayment without prepayment penalty for Pag-IBIG housing loans under these guidelines (Section 10.1).
The circular repeals Pag-IBIG Fund Circular No. 379 and all memoranda, rules, regulations, and other issuances inconsistent with these guidelines (Section 17).

Coverage and loan purpose uses

These guidelines cover all retail and developer-assisted housing loan applications for the Pag-IBIG Fund Affordable Housing Program (AHP) received by the Fund upon effectivity (Section 1).
Housing loan proceeds may finance one or a combination of the following permitted purposes (Section 2):
- Section 2.1: Purchase of fully developed residential lot or adjoining residential lots not exceeding one thousand square meters (1,000 sq. m.).
- Section 2.2: Purchase of a residential house and lot, townhouse, or condominium unit, which may be old or brand new, including property mortgaged with the Fund, or adjoining units; the subdivision project must comply with BP No. 220 required facilities.
- Section 2.3: Construction or completion of a residential unit on a residential lot owned by the borrower or a relative of the borrower based on Section 8.1.2.
- Section 2.4: Home improvement on the house owned by the borrower or a relative based on Section 8.1.2, or on a property currently secured under a Contract-to-Sell (CTS) or Deed of Conditional Sale (DCS) between Pag-IBIG Fund and the buyer, covering any alteration intended to be a permanent integral part that enhances durability and material value.
- Section 2.5: Refinancing an existing housing loan, provided the borrower is regularly paying with no payment beyond thirty (30) days past due for the last six (6) months from date of application.

Eligibility requirements for AHP applicants

A member qualifies for the Pag-IBIG Fund AHP by meeting the eligibility requirements on membership, income, age, legal capacity, checks, account status, arrears status, and prior account history (Section 3).
Membership requirements (Section 3.1) include:
- Section 3.1.1: Must be an active member under the Pag-IBIG I Membership Program, evidenced by remittance of at least twenty-four (24) monthly savings at the time of application.
- Section 3.1.2: If monthly savings are short, an applicant may apply if total savings upon application are at least equivalent to 24 monthly savings based on the mandatory rate, inclusive of EE and ER counterparts.
- Section 3.1.3: A non-member may apply if the required 24 monthly savings based on the mandatory rate are remitted in lump sum, inclusive of EE and ER counterparts; the lump sum is treated as a single remittance for the applicable month as of the payment date.
Income limit (Section 3.2): Gross monthly income must not exceed Seventeen Thousand Five Hundred Pesos (P17,500), defined as basic monthly compensation and cost of living allowance.
Age limits (Section 3.3): Not more than sixty-five (65) years old at application and not more than seventy (70) years old at maturity.
Capacity and checks (Sections 3.4 and 3.5):
- Applicant must have the legal capacity to acquire and encumber real property.
- Applicant must pass satisfactory background/credit and employment/business checks of Pag-IBIG Fund.
Account updates and arrears (Sections 3.6 and 3.7):
- If with existing Pag-IBIG housing account, it must be updated if the applicant is principal buyer/borrower or co-buyer/co-borrower.
- Applicant must have no outstanding Pag-IBIG Short-Term Loan (STL) in arrears at application; STL in arrears requires account update.
No disqualifying prior housing account events (Section 3.8): Applicant must not have any Pag-IBIG housing account that was foreclosed, cancelled, bought back due to default, or subjected to dacion en pago, including cases where the borrower is no longer interested to pursue the account and surrenders the property.

Loan limits and how amounts are computed

Qualified members may apply for a housing loan of up to Seven Hundred and Fifty Thousand Pesos (P750,000.00) (Section 4).
The allowable loan amount is based on the lowest of:
- actual need,
- desired loan amount, and
- loanable amount based on gross monthly income, capacity to pay, and the loan-to-appraised value ratio (Section 4).
Loanable amount based on income clusters (Section 4.1): The housing loan shall not exceed the limit for the applicable income cluster, with:
- Cluster 1 (NCR) income up to P15,000 and up to P17,500,
- Cluster 2 (Regions) income up to P12,000 and up to P14,000,
- loanable amount ceiling up to the Socialized Housing Loan Ceiling, and overall cap up to P750,000.
Loanable amount based on capacity to pay (Section 4.2):
- All applications are evaluated based on the borrower’s capacity to pay.
- Monthly repayment must not exceed thirty-five percent (35%) of the borrower’s gross monthly income.
- For tacked loans, the individual gross monthly income of the borrower is considered.
- For government employees paying through salary deduction, net take-home pay must not fall below the minimum requirement prescribed in the General Appropriations Act.
Tacked loans limits and conditions (Section 4.2.4):
- Up to three (3) qualified Pag-IBIG members may apply for a tacked loan.
- If applicants are related within the second civil degree of consanguinity or affinity:
  - Their individual gross monthly income is considered in determining their respective capacities to pay.
  - Co-borrowers who qualify as tacked borrowers are jointly and severally liable with the principal borrower for the entire housing loan obligation.
- If co-borrowers are non-relatives, or related beyond the second civil degree:
  - The purpose must be for either purchase of residential unit or lot or purchase of lot with house construction.
  - The subject property must be registered in the names of all the borrowers.
  - All borrowers must execute the REM.
  - The mortgage is released only upon full payment of the entire housing loan obligation.
- Tacked loan applications require approval of the appropriate level of approving/signing authorities.
Loan-to-appraised value (LTV) ratio limits (Section 4.3):
- Up to the Socialized Housing Loan Ceiling: 100% LTV.
- Over the Socialized Housing Loan Ceiling up to P750,000: 95% LTV.

Interest rates and repricing rules

For borrowers under AHP, interest rates apply for the first five (5) years or ten (10) years, whichever is applicable (Section 5.1).
Interest rate schedule for the first fixed period depends on income cluster and loan amount (Section 5.1):
- 3.0% applies to borrowers earning up to P15,000 for Cluster 1 (NCR) and up to P12,000 for Cluster 2 (Regions) with loan amount up to the socialized housing loan ceiling (Section 5.1.1).
- 6.5% applies to borrowers earning up to P17,500 for Cluster 1 and up to P14,000 for Cluster 2 with housing loan of up to P750,000 for the first ten (10) years (Section 5.1.2).
Applicable interest rates may change subject to approval of the Management (Section 5.1 note).
Repricing after fixed period (Section 5.2):
- After the 5-year or 10-year period, interest is repriced based on the prevailing interest rate in the Fund’s Full Risk-Based Pricing (FRBP) Framework.
- For borrowers opting for a 3-year or 5-year fixing period, repricing is based on the prevailing FRBP rate or increased by two percent (2%), whichever is lower.
- Thereafter, repricing occurs periodically depending on the chosen fixed pricing period.
- The base rate for succeeding repricing is the interest rate from the immediately preceding repricing period.
Interest accrual during takeout releases (Section 5.3): Interest is also applied and charged from initial release of proceeds until final/full release (DV/Check Date) if proceeds are released in staggered basis.

Loan term, amortization payment, and penalties

Loan term limit (Section 6):
- Loans are repaid over a maximum term of thirty (30) years.
- The term must not exceed the difference between age seventy (70) and the principal borrower’s present age.
- The principal borrower is treated as 70 years old at the time the borrower reaches their 70th birthday.
Equal monthly amortizations (Section 7.1.1):
- Loans are paid in equal monthly amortizations sufficient to cover principal and interest, plus insurance premiums, over the loan term.
- Payment is made whenever feasible through salary deduction, but only with the borrower’s written consent for salary-deduction deduction.
Collection servicing agreements (Section 7.1.1):
- Pag-IBIG Fund and the employer may enter into a Collection Servicing Agreement to effect salary-deduction collection.
- Salary deduction for Pag-IBIG housing loan payments must have priority over other obligations of the same nature after statutory deductions.
Other payment modes (Section 7.1.2):
- Post-dated checks.
- Payment to an accredited developer with a Collection Servicing Agreement with the Fund.
- Accredited Collection Partners.
- Auto debit arrangement with banks.
- Any other collection system implemented by the Fund in the future.
Deduction from loan proceeds on takeout (salary deduction) (Section 7.1.3): For salary deduction, an amount equivalent to one (1) month amortization is deducted from loan proceeds upon takeout (DV/Check Date), and it forms part of the borrower’s payment.
Monthly payment due dates (Section 7.2):
- Payments commence on the month immediately following the takeout date (DV/Check Date), and continue monthly until full settlement (Section 7.2.1).
- For staggered releases, payment date coincides with the DV/Check Date of the final release or the constructive takeout date, whichever applies (Section 7.2.2).
- If the due date falls on a non-working day in the Pag-IBIG branch where the loan is maintained, payment is made until the next working day (Section 7.2.3).
Partial payments and penalty (Section 7.3): Partial payments are accepted, but the unpaid portion of the amount due is charged with the applicable penalty.
Penalty for late payment (Section 7.4): Unpaid amounts after the due date incur a penalty of 1/20 of 1% for every day of delay.
Order of application of monthly payment (Section 7.5):
- Penalties first (Section 7.5.1).
- Insurance premiums next (Section 7.5.2).
- Interest next (Section 7.5.3).
- Principal last (Section 7.5.4).

Collateral and property requirements

The housing loan is secured by collateral acceptable to Pag-IBIG Fund, generally consisting of the same residential properties where takeout proceeds are applied; off-site collateral under AHP is not allowed (Section 8).
Retail housing loans—required security (Section 8.1):
- Section 8.1.1: For retail accounts, security consists of a First REM on the subject properties fully covering the obligation as stipulated in the loan agreement and promissory note.
- Section 8.1.2: Accommodation mortgages are allowed only for principal borrowers related to the accommodation mortgagor up to the second civil degree of consanguinity or up to the first civil degree of affinity; the accommodation mortgagor and borrower sign the REM as co-mortgagors to fully cover the housing loan.
- Section 8.1.3: Titles (OCT/TCT/CCT) issued by the Register of Deeds must be registered in the name of any one or more borrowers; for Third Party REM or accommodation mortgage, title is registered in the name of the accommodation mortgagor.
Developer-assisted housing loans—CTS and DCS (Section 8.2):
- CTS documentation (Section 8.2.1):
  - The developer executes a CTS with a Pag-IBIG Fund member for purchase of the unit/lot used as collateral, subject to the Takeout Mechanism rules under the developer’s CTS/REM scheme.
  - The developer executes a Deed of Assignment assigning the CTS to the Fund, annotated on the property title.
- DCS documentation (Section 8.2.2):
  - Property title is transferred in the name of the Fund; transfer costs are for the account of the developer.
  - Upon borrower’s written request and if LTV ratio does not exceed fifty percent (50%), title may be transferred in the borrower’s name.
  - If title is in the Fund’s name, a DCS is executed with the borrower.
  - If title is transferred directly to the borrower, the developer executes a Deed of Absolute Sale to the borrower; the borrower executes an LMA and promissory note with the Fund.
Lien-free requirement and surety bond rule (Section 8.3):
- The property must be free from all liens and encumbrances except those provided under Section 4, Rule 74 of the Rules of Court.
- If no adverse claim has been filed and the lien remains effective within two (2) years from settlement and distribution, the developer/borrower must put up a surety bond as security for the loan.
- The surety bond must be callable and pay the approved loan amount if another person, including an heir of the registered owner, lays a claim against the collateral.
- The surety bond must cover the remaining prescriptive period as of the loan application date.
- If the two-year prescribed period has already expired and no adverse claim has been filed, no surety bond is required.
Appraisal and taxes (Sections 8.4 and 8.5):
- Property is appraised by Pag-IBIG Fund or its authorized representatives/agents (Section 8.4).
- Real estate taxes must be updated as of the quarter immediately preceding application and yearly thereafter.
- The borrower must submit a copy of the official receipt of paid real estate taxes for the preceding year not later than June 30 if it is the current year, and every year thereafter.

Insurance and redemption coverage

Borrowers must be compulsorily covered by Mortgage Redemption Insurance or Sales Redemption Insurance (MRI/SRI), whichever is applicable (Section 9.1).
For tacked accounts, each borrower and co-borrower is covered under MRI/SRI to the extent of their corresponding obligation, and MRI/SRI premiums equal the aggregate premiums for each borrower’s housing loan (Section 9.1).
Interim MRI/SRI coverage (Section 9.1.1): Effective on the date of issuance of Pag-IBIG Fund’s Notice of Approval (NOA) / Letter of Guaranty (LOG).
Regular MRI/SRI coverage (Section 9.1.2): Non-medical, yearly renewable insurance with a uniform premium rate effective on the date of takeout.
Claims application of proceeds (Section 9.1.2): If death or permanent/total disability occurs for any borrower, Pag-IBIG Fund applies MRI/SRI proceeds to the entire outstanding housing loan obligation; any excess is paid to the borrowers or their heirs.
Fire and Other Allied Perils Insurance (FAPI) (Section 9.2):
- Principal borrower must obtain FAPI for an amount equivalent to the appraised value of the housing component or the loan amount, whichever is lower.
- For staggered releases, principal borrower must obtain interim FAPI from issuance of NOA/LOG.

Prepayment, default, and enforcement effects

Prepayment without penalty (Section 10.1): Borrower may prepay in full or in part without prepayment penalty under Republic Act No. 7394, subject to a service fee fixed by the Fund.
Treatment of accelerated payments (Section 10.2):
- Amounts in excess of the monthly amortization due are treated as advance amortization and applied on the next amortization due date.
- On borrower request, and if the amount to be applied equals at least one (1) monthly amortization, the excess is applied to principal.
- Borrower’s preference on the treatment must be noted/properly disclosed in the Pag-IBIG Fund receipt.
Events constituting default (Section 11.1): Borrower is in default if any of the following occurs:
- Fails to pay three (3) monthly amortizations (Section 11.1.1).
- Fails to submit proof of payment of real estate taxes for the year (Section 11.1.2).
- Violates or fails to perform any obligation in contracts with Pag-IBIG Fund (Section 11.1.3).
- For multiple housing loans, default in any housing account constitutes default in all other housing accounts (Section 11.1).
Acceleration and ongoing charges at default (Section 11.2):
- Outstanding obligation—including principal, accrued interests, penalties, fees, and other charges—becomes immediately due and demandable.
- Unpaid amounts continue incurring penalty of 1/20 of 1% per day for every day of delay (Section 11.2.1).
- The obligation continues to bear interest at the stipulated rate from when it becomes due and demandable (Section 11.2.2).
Disqualification from further housing accounts (Section 11.3): While the account remains due and demandable, borrower is not granted another housing account under any Pag-IBIG housing programs.
CTS/DCS cancellation or foreclosure (Section 11.4): Pag-IBIG Fund cancels the CTS/DCS or forecloses the mortgage in accordance with existing guidelines.
Effect of payments on foreclosed/default accounts (Section 11.5): Payments do not revive the housing loan account unless payment is sufficient to fully update the account.
Recovery of pre-loan developer payments (Section 11.6): Any amount paid by the borrower to the seller/developer prior to loan takeout is recoverable from the seller/developer.

Fees, subsequent loans, and program alignment

Processing and appraisal fees (Section 12): For every housing loan availment, the borrower pays the corresponding processing and appraisal fees for the application.
Subsequent housing loans secured by the same or different collateral (Section 13):
- Borrower with an existing Pag-IBIG housing loan may avail a subsequent housing loan secured by the same collateral (including the value of improvements) or a different collateral property, if conditions are met (Section 13.1):
  - Active Pag-IBIG Fund member (Section 13.1.1).
  - Housing account(s) updated (Section 13.1.2).
  - Capacity to pay (Section 13.1.3).
- The aggregate value representing outstanding balances of existing housing accounts upon application and the new AHP housing loan must not exceed P750,000 (Section 13.1).
- For co-borrowers under a tacked account, the borrower’s proportionate share in the outstanding balance of the existing housing loan is included in computing the aggregate value (Section 13.1.3 cross-rule in text).
- The existing and subsequent housing loans are separate and distinct, without prejudice to cross-default (Section 13.2).
Alignment with special Pag-IBIG housing finance programs (Section 14): Unless otherwise specified in the memorandum of agreement or implementing guidelines of special housing loan programs, the terms and conditions in these guidelines are adopted.

Review, issue resolution, and operational approvals

Review schedule (Section 15): The guidelines are subject to review at any time but not more often than once every two (2) years, considering the Fund’s viability and prevailing market conditions.
Resolution of interpretation and implementation issues (Section 16):
- Issues are resolved as much as possible by the concerned officer.
- Matters not satisfactorily resolved are escalated to the next higher approving authorities.

Effect of the circular

The guidelines are effective after fifteen (15) calendar days from completed publication in the Official Gazette or a newspaper of general circulation (Section 18).
Pag-IBIG Fund circular signing authority appears as ACMAD RIZALDY P. MOTI, Chief Executive Officer (signature block).