Knowing the Right Budget for Your Dream Home: Filipino Buyer’s Guide 2025

How Much Can You Afford for a House in the Philippines?

So, you’re planning to buy a new home for the first time? This big financial decision you’re making may require a little more effort than usual. You must decide first on how much you can afford before visiting open houses or browsing listings online. Determining your budget goes beyond just looking at the listing price. Don’t worry, we will discuss the key factors and hidden costs you might overlook when determining your home-buying budget.

Assess Your Monthly Income and Expenses

Start by calculating your total household income. Include your salary, side gigs, bonuses, and any other reliable income sources. Next, deduct your current monthly expenses, such as utilities, groceries, transportation, and debts. This will give you a clear picture of how much you can realistically allocate for your monthly mortgage payments.
As a general rule, financial experts recommend that your total monthly housing expenses should not exceed 30% to 40% of your gross monthly income. This includes your mortgage payment, property taxes, homeowner’s association dues, insurance, and maintenance costs.

Understand Loan Eligibility and Pre-Approval

In the Philippines, most homebuyers finance their purchase through banks or Pag-IBIG Fund housing loans. Getting pre-approved for a loan gives you a realistic budget based on your creditworthiness, income stability, and existing debts. Most banks require a minimum down payment of 20% of the property’s value, while Pag-IBIG offers more flexible options for qualified members. When applying for a loan, lenders will also consider your Debt-to-Income ratio. A lower DTI means you’re less burdened by existing debts, making you a more attractive borrower.

Factor in Hidden and Additional Costs

Many Filipino buyers mistakenly focus only on the property’s selling price. However, additional costs can quickly add up, including:

• Documentary     Stamp Tax – 1.5% of the selling price or zonal value, whichever is higher.
  
  
• Transfer Tax – varies by Local Government Units, but usually around 0.5% to 0.75%.
  
  
• Registration Fees – typically 0.25% of the property value.
  
  
• Notarial Fees – legal documentation costs.
  
  
• Homeowner’s     Association Dues and Maintenance Fees – ongoing monthly obligations.
  
  
• Moving Expenses and Home Furnishing Costs – often overlooked but important to consider
  

Use Online Mortgage Calculators

Take advantage of online mortgage calculators provided by local banks and real estate websites. These tools allow you to stimulate your loan terms, interest rates, and monthly payments, giving you a better understanding of your financial capacity.

Plan for Emergencies and Future Expenses

​Aside from initial costs, be prepared for unforeseen circumstances such as job loss, medical emergencies, or property repairs. It is highly advisable to have an emergency fund that can cover at least six months of living expenses before taking on a mortgage.

Final Thoughts

Now, how much you can afford simply boils down to carefully evaluating your finances. By planning and considering all important factors, you can make informed buying decisions that lead to long-term financial stability and peace of mind. Start by knowing your budget today, and move closer to your dream home. Let our seasoned real estate agents in Baguio City help you achieve your ultimate house goal by checking out REALS.PH property listings.