Q&A: How to Score a Housing Loan if You Are Self-Employed

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In this post from our Q&A series, Lamudi Philippines lists the ways self-employed Filipinos can secure a housing loan.

Q: How to Score a Housing Loan if You Are Self-employed?

A: Perhaps the biggest advantage of being self-employed is to never have to report to a boss. But there are disadvantages as well. The most burning question among self-employed Filipinos is if they are even qualified to apply for a housing loan (or any loan for that matter).

The first step for self-employed loan applicants is to get their finances in order. This involves getting ready with their income tax return (ITR), and they must use BIR Form no. 1701 (Annual Income Tax Return for Self-Employed Individual, Estates and Trusts), which is specifically for taxpayers who are engaged in trade and business, practicing their professions (doctors, lawyers, accountants, etc.) but not employed at specific companies, and those who have mixed income (engaged in trade/business or profession but who are also earning compensation income).

Once self-employed individuals have their ITR ready, they can now apply for a housing loan at any bank or lender in the Philippines. A quick check of the Philippine National Bank’s housing loan section yielded the following results:

1. Business-owners

Individuals who run their own business must present at least one government-issued ID, a copy of the business permit from the Department of Trade and Industry (DTI) or their Securities and Exchange Commission (SEC) registration, and financial statements of their business.

2. Practicing Professionals

Professionals practicing their trade (doctors, lawyers, accountants, etc.) must include in their application information on their office or clinic address (including schedules and contact numbers) and bank statements for the last six months, while commission-based individuals must present vouchers or bank statements reflecting their commission income.

3. Rental Property and Transport Business Owners

For rental property owners, they must submit a copy of the lease contracts or a copy of the property’s transfer certificate title and bank statements for the last six months, while transport business owners must present their franchise permit from the Land Transportation Franchising & Regulatory Board (LTFRB) and bank statements for the last six months.

The most important factor that will increase the chance of getting a housing loan approved is for the applicant to prove that he or she repay the loan. Therefore, banks will also be checking cash reserves. Having a sizeable down payment will help as well, as this will lower the loan amount.

Sources: Moneymax

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