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How much home loan can I get in Malaysia using my salary?

Purchasing a home in Malaysia typically entails obtaining a housing loan from a bank to finance your purchase. However, many people are unaware of how much home loan they can qualify for based on their income. Check out this article to get an idea of how much the banks will lend you for your property purchase.

This article will discuss Malaysia's overall median income, or the typical take-home pay of a rakyat or an average individual. It will also go over the various median incomes in the Southeast Asian country's various states and federal territories, as well as the corresponding loanable amounts. This article will also discuss the debt service ratio (DSR), other costs of homeownership, and the various housing loans available in Malaysia.


Malaysian state median incomes and home loanable amounts

According to the latest government data, 2020 Salaries & Wages Survey Report by the Department of Statistics Malaysia (DOSM), the average Malaysian's monthly income is RM2,062 or RM24,744 per year.


Assuming a home loan term of 35 years, an interest rate of 3%, a monthly debt obligation of RM200, and a maximum percentage of gross income to be spent on mortgage repayment of around 30%. As a result, the average Malaysian (individual borrower) can borrow up to RM160,842 and his monthly loan repayments cannot exceed RM619. This is determined by internal calculations.


Table 1: An individual borrower with a median income

Location

Monthly median income (RM)

Annual median income (RM)

Monthly loan repayment (RM)

Maximum loan (RM)

Malaysia

2,062

24,744

619

160,842

Note:

  • For individual borrowers

  • Loan term: 35 years

  • Max percentage of income to be spent on loan: 30 percent

  • Interest rate: 3 percent

  • Monthly debt obligation: RM200

Notably, financial experts advise that your monthly mortgage payment should not exceed one-third of your gross income. This is to ensure that you can comfortably repay your mortgage while still having enough money for necessities and emergencies.


Borrowing as an individual, on the other hand, means having less purchasing power and fewer real estate options. Spouses and joint borrowers who both earn a living, on the other hand, have more purchasing power and can afford a more expensive residential property.


For example, a couple with a median income can borrow up to RM322,684, but their monthly loan payments cannot exceed RM1,238. This is based on the same assumptions as above, except that the existing monthly debt obligation is doubled to RM400.


Table 2: Joint borrowers, each with a median income

Locatioin

Monthly median income (RM)

Annual median income (RM)

Monthly loan repayment (RM)

Maximum loan (RM)

Malaysia

4,124

49,488

1,238

321,684

Note:

  • For husband and wife, assuming each has a median income

  • Loan term: 35 years

  • Max percentage of income to be spent on loan: 30 percent

  • Interest rate: 3 percent

  • Monthly debt obligation: RM400

Please keep in mind that the overall country's median income is RM2,062 per month or RM24,744 per year. As a result, some states and federal territories have higher or lower median incomes than Malaysia as a whole.


According to the latest Salaries & Wages Survey Report, the Federal Territory of Putrajaya (RM3,717), Federal Territory of Kuala Lumpur (RM3,037), and the state of Selangor (RM2,725) have the highest median incomes in Malaysia, where an individual median income earner can afford a house costing between RM212,550 and RM289,723.


Kelantan (RM87,567), Kedah (RM101,338), and Terengganu have the lowest median incomes in the country (RM105,496). As a result, an individual with a median income in these states can only afford residential properties costing between RM87,567 and RM105,496. The assumptions are the same as above, with an RM200 monthly debt obligation.


Table 3: Median income in different Malaysian states (individual borrowers)

Location

Monthly median income (RM)

Annual median income (RM)

Monthly loan repayment (RM)

Maximum loan (RM)

W.P. Putrajaya

3,717

44,604

1,115

289,723

W.P. Kuala Lumpur

3,037

36,444

911

236,715

Selangor

2,725

32,700

818

212,550

W.P. Labuan

2,130

25,560

639

166,039

Johor

2,124

25,488

637

165,519

Melaka

2,120

25,440

636

165,259

Pulau Pinang

2,082

24,984

625

162,401

Negeri Sembilan

2,062

24,744

619

160,842

Pahang

1,753

21,036

501

130,181

Sabah

1,716

20,592

486

126,283

Perak

1,629

19,548

452

117,448

Sarawak

1,593

19,116

437

113,551

Perlis

1,571

18,852

428

111,212

Terengganu

1,514

18,168

406

105,496

Kedah

1,474

17,688

390

101,338

Kelantan

1,343

16,116

337

87,567

Note:

  • For individual borrowers

  • Loan term: 35 years

  • Max percentage of income to be spent on loan: 30 percent

  • Interest rate: 3 percent

  • Monthly debt obligation: RM200

Even those living in the three states with lower median incomes can purchase a better home priced between RM175,134 and RM210,992 if there are two borrowers, each with a median salary (e.g., husband and wife). Similarly, those living in the wealthier states and Federal Territories can afford a half-million-ringgit residential property.


Table 4: Median income in different Malaysian states (joint borrowers)

Location

Monthly median income (RM)

Annual median income (RM)

Monthly loan repayment (RM)

Maximum loan (RM)

W. P. Putrajaya

7,434

89,208

2,230

579,446

W. P. Kuala Lumpur

6,074

72,888

1,822

473,430

Selangor

5,450

65,400

1,636

425,100

W. P. Labuan

4,260

51,120

1,278

332,078

Johor

4,248

50,976

1,274

331,038

Melaka

4,240

50,880

1,272

330,518

Pulau Pinang

4,164

49,968

1,250

324,802

Negeri Sembilan

4,124

49,488

1,238

321,684

Pahang

3,506

42,072

1,002

260,362

Sabah

3,432

41,184

972

252,566

Perak

3,258

39,096

904

234,896

Sarawak