Applying for a home loan in Malaysia can feel overwhelming — different banks, confusing jargon (DSR, LTV, MRTA...), and nobody gives you a straight answer about what documents you actually need.
I spent time researching this thoroughly and put together a complete guide at Sorted — here are the key things you need to know before you walk into a bank.
Am I Eligible? The Four Factors Banks Care About
Banks assess four things:
- Income — minimum ~RM3,000/month for most banks
- DSR (Debt Service Ratio) — total monthly debt commitments ÷ net income. Max 60–70%
- Credit history (CCRIS/CTOS) — no active impaired accounts, no 3-month arrears
- Employment — minimum 6–12 months with current employer (permanent)
Quick DSR check
If your net monthly income is RM5,000 and you have RM1,200 in existing commitments (car, PTPTN), and the new home loan payment would be RM1,500/month:
DSR = (1,200 + 1,500) / 5,000 × 100% = 54% → Likely eligible
How Much Can You Borrow?
| Property | Max Loan (LTV) | Min Down Payment |
|---|---|---|
| 1st & 2nd property | 90% | 10% |
| 3rd property and above | 70% | 30% |
Important: The bank lends against whichever is lower — the purchase price or the banks own valuation. Budget accordingly.
Documents You Need
For salaried employees:
- MyKad (front and back)
- Latest 3 months payslips
- Latest 6 months bank statements
- Latest EPF statement (from i-Akaun)
- Latest EA Form
- Employment confirmation letter
For self-employed / business owners:
- Latest 2 years Income Tax Returns (Borang B with LHDN acknowledgement)
- Latest 6 months business bank statements
- SSM extract (dated within 3 months)
What Does It Actually Cost?
Beyond the down payment, budget for:
| Cost | Amount |
|---|---|
| Stamp duty on Loan Agreement | 0.5% of loan amount |
| Legal fees (Loan Agreement) | ~0.5% on first RM500k |
| Property valuation | RM300–800 |
| MRTA / MLTA insurance | RM3,000–20,000+ |
| Fire insurance (annual) | ~RM200–600 |
On a RM500,000 property with 90% loan, expect total cash outlay of RM70,000–90,000 including down payment and all upfront costs.
MRTA vs MLTA — The One Everyone Gets Wrong
You must insure your mortgage. Two options:
MRTA (reducing): Coverage decreases as you repay the loan. Cheaper one-time premium. Beneficiary is the bank. Tied to this specific loan — cant move it.
MLTA (level): Coverage stays fixed. Higher monthly premium but has investment component. Beneficiary is your family. Portable — can move to a new property.
Key fact most banks wont tell you: You are NOT obligated to buy the banks own MRTA/MLTA. Get quotes from independent insurers (Great Eastern, Prudential, AIA) — can be 20–40% cheaper for the same coverage.
Common Mistakes to Avoid
- Signing the SPA before confirming loan approval — if rejected, you lose the booking fee
- Applying to many banks simultaneously — multiple CCRIS hard enquiries hurt your score
- Forgetting total cash required — 10% down + legal fees + SPA stamp duty + MRTA = often RM80k+
- Ignoring the lock-in period — typically 3–5 years; early exit penalty = 2–3% of loan amount
- Buying MRTA from the bank without shopping — banks in-house MRTA is often 20–40% pricier
First-Time Buyer Schemes Worth Checking
- BSN MyFirstHome Scheme — 100% financing (no down payment) for incomes ≤ RM5,000/month, properties up to RM300,000
- Stamp Duty Exemption — first-time buyer, property ≤ RM500,000 gets full stamp duty exemption
- EPF Account 2 Withdrawal — can withdraw to fund the down payment
Full guide with interactive DSR calculator, bank rate comparison, key terms glossary, and FAQ: hlteoh37.github.io/sorted-my/guides/home-loan-guide/
Part of Sorted — step-by-step guides to Malaysian bureaucracy and life admin.
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