Bank Loans

Bank home loan rates in the Philippines are set individually by each bank and move with BSP (Bangko Sentral ng Pilipinas) policy rate adjustments. The BSP raised its overnight rate to 5.00% on August 27, 2026 (third consecutive hike in 2026). Rather than deriving bank rates from a generic "BSP + spread" heuristic, we checked actual published rates for a 3-year fixed period directly against multiple banks:

7 of 11 major banks checked (BDO and EastWest verified against their own official rate pages directly; China Bank, Security Bank, RCBC, BPI, and Metrobank via their promo/rate pages rather than a full standard rate card). PNB and UnionBank could not be verified in this pass; Landbank and PSBank were not checked. Real 3-year-fixed rates cluster 6.25%–7.75% — meaningfully below what an "BSP 5.00% + 3–4% spread" heuristic would suggest (8–9%).

After the fixed period ends, rates are repriced annually. We model the repriced rate as fixed for the remainder of the term to simplify projections — in reality, repricing happens every 1–5 years depending on the bank.

Pag-IBIG (HDMF) Loans

Unlike a bank loan, Pag-IBIG lets the member choose their own repricing period — 1 to 30 years — independently of the loan term itself (e.g. a 15-year loan can still use a 3-year repricing period). The chosen period sets the rate for that period; after it elapses, the rate reprices for the remainder of the term. The simulator now exposes this as its own selector (previously hardcoded to always price a 3-year repricing period regardless of what was selected — fixed 2026-09-13).

Pag-IBIG rates confirmed directly from pagibigfund.gov.ph as displayed on the housing loan page. These rates are valid until December 31, 2026. The site also shows promo rates (4.5% and 5.75%) for specific loan brackets — these are promotional and not used in our base calculations.

Maximum loan: ₱10,000,000 — confirmed from the official Pag-IBIG Fund housing loan page (Sep 2026 banner: "UP TO P10M NA!"). Loan must mature before the borrower turns 70. Source: pagibigfund.gov.ph, verified September 2026.

At repricing, the rate is capped: for 3-year and 5-year repricing periods, HDMF policy sets the new rate to the lower of the then-prevailing FRBP-framework rate or the prior rate plus 2 percentage points — a real consumer protection against rate shocks. We model a smaller, conservative +0.5% delta for the Stress Test scenario, which sits comfortably inside that cap.

Promo rates (valid until Dec 31, 2026): 4.5% for loans up to ₱4.9M (socialized/affordable housing, first 3 years), 5.75% for loans ₱4.9M–₱10M (first 3 years). After the promo period the standard repricing rates above apply.

In-House / Developer Financing

In-house financing rates are not regulated and vary by developer. We model these at 14–18% per annum, which reflects typical developer financing terms in the Philippine market. No repricing occurs — the rate is fixed for the full term.

Income Tax — TRAIN Law (RA 10963, as amended)

We apply the revised tax table effective January 2023 onwards under the Tax Reform for Acceleration and Inclusion (TRAIN) Law:

Source: Bureau of Internal Revenue (BIR) — Revenue Regulations No. 8-2018 as amended by TRAIN.

SSS (Employee Share)

We apply 5.0% of monthly salary credit (MSC), minimum MSC ₱5,000, maximum MSC ₱35,000. Maximum employee contribution: ₱1,750/month. Per SSS Circular No. 2024-006 (signed December 19, 2024, effective January 2025), which increased the contribution rate to 15% total and raised the MSC ceiling. Previous rate was 4.5% capped at ₱30,000.

PhilHealth (Employee Share)

2.5% of monthly basic salary (5% total, split 50/50 with employer), with a floor of ₱10,000 (minimum ₱250 employee share) and ceiling of ₱100,000 (maximum ₱2,500 employee share) per month. This is the final scheduled rate under RA 11223 (Universal Health Care Law), confirmed effective 2026.

Pag-IBIG (Member Contribution)

2% of monthly salary, capped at ₱200 per month employee contribution (on salaries above ₱10,000). Per Republic Act No. 9679 (Home Development Mutual Fund Law of 2009). Same rate and cap whether or not the borrower is an OFW.

OFW Income — Different Tax & Contribution Treatment

Selecting OFW as employment type changes how the "Monthly Gross Salary" field is treated (fixed 2026-09-13 — previously the simulator taxed OFW salary exactly like a local employee's, understating take-home by roughly 20%):

Net effect: an OFW earning ₱200,000/month nets about ₱189,550 take-home under this treatment, versus ₱153,343 if (incorrectly) taxed as a local employee — a ~24% difference that materially affects DSR and approval odds for exactly the demographic Pag-IBIG serves most (see the OFW loan guidance in Section 9).

Self-Employed Income — 8% Flat Tax, Not Employee Brackets

Selecting Self-Employed also changes how "Monthly Gross Salary" is taxed (fixed 2026-09-14 — previously treated identically to a local employee's salary, overstating the tax burden):

Net effect grows with income, since 8% flat increasingly beats climbing graduated brackets: at ₱200,000/month, self-employed take-home is now ₱175,217 (was ₱153,343) — about 14% higher; at ₱400,000/month the gap widens to about 22%.

CGT is a seller cost and is excluded from our calculations. The simulator only models buyer closing costs.

LRA Registration Fee tiers used: <₱1.75M = ₱8,000 | ₱1.75M–₱3.5M = ₱12,000 | ₱3.5M–₱7M = ₱20,000 | >₱7M = ₱25,000. The LRA's actual basic-fee formula (0.25% of value up to ₱1M + 0.20% of the excess, plus a 1% Legal Research Fund surcharge) produces a lower number for a single registration than these tiers — but a real purchase typically requires two separate registrations (the title transfer, and a separate annotation of the bank's/Pag-IBIG's mortgage on the title), which roughly doubles the cost and lands close to these tiers. Treat these as an approximation of the combined cost, not one official fee schedule.

RPT basis: Metro Manila LGUs assess residential property at 20% of fair market value (LGC Sec 218) and may charge up to 2% basic RPT (Sec 233 — note provinces are capped lower, at 1%, which we previously conflated with the Metro Manila rate) plus up to 1% Special Education Fund (Sec 235). At the ceiling, that's 3% of assessed value = 0.6% of market value. Actual RPT is set per LGU ordinance within these caps and can be lower — this figure represents the upper end most Metro Manila cities assess near.

We use the standard mortgage amortization formula (constant payment, reducing balance):

MRI and fire insurance are computed separately and added on top of M to arrive at the total monthly payment. At each repricing date, a new M is computed on the remaining balance for the remaining term.

This is the same formula used by all Philippine banks and Pag-IBIG. The total interest paid over the life of the loan equals (M × n) − P.

Example — ₱4M loan, 7%, 20 years:

The year-by-year projections (cash flow, equity, buy vs. rent) use the following assumptions. These are applied uniformly — they do not vary by location or property type.

Philippine banks assess home loan applications primarily on some form of Debt Service Ratio (DSR) — the percentage of income consumed by all loan obligations. Our thresholds are our own house methodology, built from industry rule-of-thumb figures rather than one single regulatory table:

We compute DSR against net take-home pay (after income tax, SSS, PhilHealth, Pag-IBIG) rather than gross income. This is a deliberate, conservative modeling choice, not a universal rule — Pag-IBIG's own published qualification rule actually uses a 35% cap on GROSS monthly income, not net, which is a meaningfully easier bar to clear than what this tool models. Individual bank policies aren't published in enough detail to confirm whether they use net or gross, or exactly where they draw the line. We use the stricter net-income basis so an "approved" result here is a conservative signal, at the cost of sometimes rating a Pag-IBIG-eligible borrower as "marginal." All existing loan obligations are added to the new amortization in the numerator.

The 35%/40% thresholds themselves reflect commonly-cited industry rules of thumb, corroborated by Pag-IBIG's own published policy and general Philippine real estate finance guidance — not a single BSP-mandated number. BSP Circular No. 855 covers general bank credit-risk-management practices but does not itself specify a numeric DSR cap, so we no longer cite it as the source of these percentages. See also: HDMF Housing Loan Guidelines.

The following factors affect real home loan outcomes but are not captured by this simulator:

• Credit score / credit history — banks pull credit bureau records. A poor payment history can decline a financially qualified application.
• Employment stability — banks require 2 years of continuous employment. Probationary employees, recent job changers, and those with irregular income may face stricter scrutiny.
• Property appraisal — banks lend against the lower of selling price or appraised value. If the bank appraises the property below the purchase price, the loan amount is reduced.
• OFW income haircut — banks typically apply a 20–30% reduction to foreign-sourced income. Our tool advises entering 70–80% of actual remittance but does not automatically apply this haircut.
• Self-employed ITR gap — banks use declared taxable income from 2-year ITR averages, which may differ significantly from actual cash earnings.
• Developer in-house financing underwriting — in-house financing criteria vary widely and are not regulated. Some developers approve regardless of income documentation.
• Interest rate path after repricing — we model a single repriced rate for the remaining term. In practice, rates are reviewed periodically and may change multiple times.
• Prepayment — making extra principal payments reduces total interest significantly but is not modeled here.
• Opportunity cost of down payment — capital deployed as a down payment could otherwise be invested. The buy vs. rent comparison does not account for investment returns on the down payment amount.
• Zonal values for CGT — capital gains tax for sellers uses the higher of selling price or BIR zonal value, which changes periodically.

The following are the income documentation requirements for Pag-IBIG housing loan applications. You also need 2 copies of the completed Housing Loan Application Form and 1 valid ID with photo (1×1).

For Locally Employed Individuals — any one of:

• Certificate of Employment and Compensation (CEC) — gross monthly income and allowances, signed by authorized employer signatory (1 original)
• Latest Income Tax Return (ITR) with BIR Form 2316, acknowledged by BIR (1 photocopy)
• One-month Payslip within the last 3 months, signed by authorized employer signatory (1 certified true copy)

For Self-Employed Individuals — any one of:

• ITR (BIR Form 1701) certified by BIR + Audited Financial Statements + Official Receipt of tax payment + DTI Registration + Mayor's/Business Permit + sketch of business location
• Commission Voucher or Certification of commission received (last 12 months, 1 original)
• Bank Statements or passbook for last 12 months (1 original or photocopy) with authorization for bank verification
• Notarized Lease Contract + proof of ownership (if income from rental)
• Certificate of Engagement from client/business owner (1 original)

For OFW Borrowers — any one of:

• Employment Contract certified by POEA or Philippine Consular Office (within past 12 months) — either POEA Standard Contract or employer contract (1 photocopy each)
• Certificate of Employment and Compensation (CEC) on employer letterhead, within past 12 months (1 original)
• Supporting documents: Payslip, OWWA Membership Certificate, Overseas Employment Certificate, Passport with Working Visa, Bank remittance record (1 original)

Valid IDs accepted (22 types including):

National ID, Passport, Driver's License, PRC ID, NBI Clearance, Police Clearance, Voter's ID, TIN ID, SSS Card, GSIS e-Card, OWWA e-Card, PhilHealth Card, Senior Citizen Card, and others. Note: Barangay Certification and Company IDs from private entities are not acceptable for housing transactions.