Pag-IBIG vs Bank Loan: Which is Better?
Compare financing options side-by-side. See monthly payments, total cost, and which option saves you more.
How This Comparison Works
We compare Pag-IBIG and typical bank financing using the same loan amount and term:
- Pag-IBIG Rates: 5.75% - 9.75% depending on repricing period (2025 rates)
- Bank Rates: 7.5% - 9.5% typical fixed rates for 1-5 years
- Down Payment: Pag-IBIG requires 5-10%, banks typically require 20%
- Max Loan: Pag-IBIG caps at P6M, banks have higher limits
Key Differences
| Factor | Pag-IBIG | Bank |
|---|---|---|
| Interest Rate | Lower (5.75% - 9.75%) | Higher (7.5% - 9.5%) |
| Max Loan | P6,000,000 | Higher (varies by bank) |
| Down Payment | 5% - 10% | 20% typical |
| Processing Time | Longer (2-3 months) | Faster (2-4 weeks) |
| Requirements | 24 contributions | Income-based |
Related Tools
- Affordability Calculator — Find out how much you can borrow
- Reverse Affordability Calculator — Start from your target monthly payment
- Pag-IBIG Calculator — Detailed Pag-IBIG loan calculation
- Document Checklist — Get your document requirements
Related Guides
- Complete Pag-IBIG Housing Loan Guide — Deep dive into Pag-IBIG benefits and requirements
- OFW Condo Buying Guide — Country-specific guide for buying from abroad
- How to Buy Property While Working Abroad — Complete guide for remote buyers
Pag-IBIG vs Bank FAQs
What is Pag-IBIG repricing period?
Repricing period determines how long your Pag-IBIG interest rate stays fixed. Shorter periods (1-3 years) offer lower rates but may change after the period ends. Longer periods (20-30 years) have higher rates but stay fixed for the full loan term. Bank loans typically have fixed rates for 1-5 years, then convert to variable rates.
Which is better for OFWs — Pag-IBIG or bank?
For most OFWs, Pag-IBIG is better due to lower interest rates and smaller down payment requirements. However, if you need a loan above P6M or faster processing, a bank loan may be necessary.
Can I use both Pag-IBIG and bank financing?
Yes, some buyers use Pag-IBIG for P6M and get a second loan from a bank for the remaining amount. This requires meeting both sets of requirements and managing two loans.
Why do banks have higher interest rates?
Banks operate for profit while Pag-IBIG is a government program subsidizing housing for workers. Bank rates also include their operational costs and risk premium.
Is it faster to get approved with a bank?
Yes, typically. Bank loans can be approved in 2-4 weeks while Pag-IBIG takes 2-3 months. If timing is critical, some buyers start with bank financing and refinance to Pag-IBIG later.
What if I don't have 24 Pag-IBIG contributions?
You'll need to use bank financing or wait until you have enough contributions. OFWs can contribute through the Pag-IBIG Overseas Program to build their contribution history.
Ready to Apply?
Get your personalized document checklist for either Pag-IBIG or bank financing.