Mortgage Affordability: How much can I afford? How much of a house can I afford?

This depends on your income and other financial obligations.

As a rule of thumb, most buyers purchase properties that cost between 1.5 to 2.5 times their annual income. For example, a buyer earning RM40,000 a year would purchase a property between RM60,000 and RM100,000.

Furthermore, the monthly payment should not exceed 1/3 of your gross monthly income.

In assessing your payment capability, the banking institution would also take into account your other debt payments such as car financing, personal financing and credit cards.

Further Reading

Before you commit to purchase a property, you should first work out a budget to help you determine how much you can afford and the ceiling price on any property you may wish to buy.

As a guide, your monthly commitments on paying instalments for your house, car and other payments should not exceed 1/3 of your gross monthly household income.

Your source of funding can be all or any combination of the following:
  1. Savings

  2. Withdrawal from Employee Provident Fund (EPF) account

  3. Loan facility from a financial institution


You should have sufficient personal savings to pay for the downpayment and other related costs associated with buying a house.

A good estimate would be about 10%-20% of the purchase price as downpayment and another 3%-5% for related costs, such as legal fees and stamp duties.


You could also withdraw from your Account 2 to make the initial downpayment.

Please contact your nearest EPF office to inquire.

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Reprinted with permission from BankingInfo (A Consumer Education Programme)

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Knowledge Base ID :   1262
Last Reviewed :   May 22, 2014
Source :   BankingInfo
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