How Much Home Loan Can I Borrow

How to calculate the maximum home loan I can still borrow from bank for my next property? Here is an example of calculation based on a salesperson’s salary plus commission:

May 2012 = RM 5,268.95
April 2012 = RM 6,348.10
March 2012 = RM 12,437.30
February 2012 = RM 5,833.55
January 2012 = RM 4,278.89
December 2011 = RM 3,978.30

Total Income = RM 38,145.09
Average Income = RM 6,357.52
80% of Average Income = RM 5,086.02 (due to the inconsistent pay, the income will be recognized by bank at a lower rate)
Remarks: Refer to the net income in your pay slip, not the gross income as per new guideline on home loan application introduced by Bank Negara Malaysia effective from 1 January 2012.

Debt Burden Ratio:
DBR 80% = RM 4,068.82
DBR 75% = RM 3,814.52
DBR 70% = RM 3,560.22
Remarks: The DBR varies from bank to bank. Generally, it ranges from 70% to 80%. In fact, some banks even go up to 100%. Please double check with your mortgage officer.

Existing Commitment:
Housing loan = RM 860.00
Car Loan = RM 1,380.00
Personal Loan = RM 532.00
Total Commitment = RM 2,772.00
Remarks: You may refer to the CCRISS report as most of your commitment will be stated in the report. For your info, PTPTN loan will not appear in the report.

Maximum Monthly Installment I Can Afford for New Home Loan,
= DBR (75%) – Existing Commitment
= RM 3,814.52 – RM 2,772.00
= RM 1,042.52
Remarks: Try this CIMB Home Loan Calculator, it shows your eligibility for the new home loan should not more than RM205,650.33 (assume BLR-2.1, BLR=6.6%, 30yrs)

6 thoughts on “How Much Home Loan Can I Borrow”

  1. Haruki

    Good one, Horlic. You have calculated the front end and back end DSR here. Very clear example.

    • Horlic Lim

      Haruki, I hope more new buyer able to reach this article and understand their credit limit before paying booking fees to agent.

      Heard too many cases of failing to get a loan from bank after pay booking fees due to the credit limit issue.

  2. SM

    good job. very useful indeed.

    on the commitment is there any other contribution considered? eg credit card.

    • Horlic Lim

      SM, credit card outstanding, cc installment scheme will be appeared in the ccriss report, too. Better go to print out the ccriss to double check. TQ

  3. kissman

    as always, thank you good sir 🙂