Loan Approval Requirements

When applying for a home construction loan in the Philippines, different banks and financial institutions have specific loan approval requirements. However, most lenders follow a similar set of criteria to assess your eligibility. Below are the typical loan approval requirements, broken down by document type and financial criteria:

1. Proof of Identity

• Why It’s Required: To verify your personal details and confirm that you are who you say you are.

• Documents You Need:

  • Government-issued ID (e.g., passport, driver’s license, UMID, PRC ID)

  • Birth Certificate or Marriage Certificate (if applicable)

• Pro Tip: Make sure your ID is current and valid to avoid delays in your application.

2. Proof of Income

• Why It’s Required: To demonstrate your ability to repay the loan. Lenders need to verify that you have a stable income source to cover the monthly payments.

• Documents You Need (if employed):

  • Latest Income Tax Return (ITR) with BIR stamp (for the previous year)

  • Payslips for the last 3 to 6 months

  • Certificate of Employment (showing salary, tenure, and employment status)

• Documents You Need (if self-employed):

  • Latest Income Tax Return (ITR) and Audited Financial Statements for the past 2 to 3 years

  • Business Registration (DTI or SEC Registration)

  • Bank Statements for the last 6 to 12 months (to verify cash flow)

• Pro Tip: Providing a higher monthly income will increase your chances of approval and potentially give you access to better loan terms.

3. Bank Statements

• Why It’s Required: Banks need to see your financial history and cash flow to assess whether you have sufficient savings and liquidity.

• Documents You Need:

  • Bank Statements for the last 3 to 6 months (showing salary deposits or business income)

• Pro Tip: Maintaining a healthy balance in your savings account helps demonstrate your financial stability and may improve your loan eligibility.

4. Credit History

• Why It’s Required: Your credit score and history help banks assess your financial discipline and whether you’ve managed debt responsibly in the past.

• Documents You Need:

  • Credit Report from credit bureaus like CIBI or TransUnion Philippines

• Pro Tip: Aim for a credit score of 600 and above to qualify for better rates. Pay off outstanding debts before applying to boost your credit score.

5. Proof of Property Ownership (if applicable)

• Why It’s Required: If you already own the land where you plan to build, banks will need proof of ownership to secure the loan.

• Documents You Need:

  • Certified true copy of the Land Title (TCT for Torrens Title, or CCT for condominium titles)

  • Tax Declaration of the property

  • Lot Plan or Survey Plan from a licensed geodetic engineer

• Pro Tip: Make sure the title is free from encumbrances, such as liens or existing mortgages, to avoid delays in approval.

6. Building Plans and Permits

• Why It’s Required: Banks will assess the viability of your construction project and ensure it’s properly planned and permitted.

• Documents You Need:

  • Architectural Plans signed by a licensed architect or engineer

  • Bill of Materials (BOM) or Construction Cost Estimate

  • Building Permits from the local government (barangay clearance, building permits, etc.)

  • Contract to Sell or Deed of Sale (if you’re purchasing the lot)

• Pro Tip: Providing accurate and complete construction plans with a detailed cost breakdown gives the bank confidence in your project and funding needs.

7. Down Payment or Equity

• Why It’s Required: Most banks require you to put down at least 20% of the total project cost or property value. This reduces the bank’s risk and demonstrates your commitment to the project.

• Documents You Need:

  • Proof of your available down payment (bank account statement showing the funds)

• Pro Tip: Offering more than the required 20% down payment can help reduce your loan interest rate and make approval easier.

8. Co-Borrower or Co-Maker Documents (if applicable)

• Why It’s Required: If you apply with a co-borrower or co-maker (such as a spouse or family member), their financial capacity will also be assessed.

• Documents You Need (for co-borrower):

  • Same documents required for proof of identity, proof of income, and bank statements as listed above

• Pro Tip: Adding a co-borrower with a strong credit history and stable income can improve your chances of approval and potentially increase the loanable amount.

9. Loan Application Form

• Why It’s Required: This form collects all necessary information about you, your project, and the requested loan amount.

• Documents You Need:

  • Fill out the home loan application form provided by the bank, accurately listing your personal details, employment history, and loan request.

• Pro Tip: Be thorough and honest when filling out the form. Any inconsistencies between your application and supporting documents can lead to delays or even rejection.

10. Insurance (often required at final approval)

• Why It’s Required: Banks typically require Mortgage Redemption Insurance (MRI) and Fire Insurance to protect their investment in case of unforeseen events like death or fire.

• Documents You Need (to be provided after loan approval):

  • Proof of MRI (covers the outstanding loan balance in case of the borrower’s death)

  • Proof of Fire Insurance (covers the property in case of fire)

• Pro Tip: Some banks offer in-house insurance policies, but you can also shop around for competitive rates from third-party insurers.

Summary of Key Documents for Loan Approval:

Document Type	Examples / Details
Proof of Identity	Government-issued ID (Passport, Driver's License)
Proof of Income	Payslips, ITR, Certificate of Employment (for employees); Audited Financial Statements (for self-employed)
Bank Statements	3 to 6 months of recent bank statements
Credit History	Credit report from TransUnion or CIBI
Proof of Property Ownership	Land Title (TCT or CCT), Tax Declaration, Lot Plan
Building Plans & Permits	Architectural Plans, Bill of Materials, Building Permits
Down Payment Proof	Bank statement showing available funds for down payment
Co-Borrower Documents	ID, Proof of Income, Bank Statements (same as borrower)
Loan Application Form	Filled out loan form provided by the bank
Insurance (after approval)	MRI and Fire Insurance policies

Pro Tips to Increase Loan Approval Chances:

1. Complete Your Documents: Incomplete applications can delay the process or lead to rejection. Ensure all required documents are ready and up-to-date.

2. Improve Your Credit Score: Pay off any outstanding debts, settle any disputes on your credit report, and avoid taking out new loans before applying.

3. Offer a Larger Down Payment: If you can, offering more than 20% of the property or project cost shows commitment and lowers the risk for the bank.

4. Consider a Co-Borrower: Adding a spouse or family member with a strong financial profile can strengthen your application.

5. Choose the Right Bank: Some banks are more flexible than others, especially if you already have a good banking relationship with them (e.g., existing savings accounts or credit cards).

Loan Approval Requirements