Home › Buyer Guides › How to Calculate Monthly Amortization for a House in the Philippines
The formula, in plain terms
Philippine banks and Pag-IBIG Fund both use the standard amortizing-loan formula. You pay the same amount every month for as long as the rate stays fixed. Early payments are mostly interest, and later payments are mostly principal.
M = P × r × (1 + r)n ÷ [(1 + r)n − 1]
- M: monthly amortization (principal + interest)
- P: loan amount, which is the selling price minus your downpayment (equity)
- r: monthly interest rate, the annual rate ÷ 12 (6.25% ÷ 12 = 0.0052083)
- n: number of monthly payments (30 years × 12 = 360)
Worked example: a ₱2.5M house and lot
Say you are buying a ₱2,500,000 house and lot and paying 10% equity to the developer. The developer then turns the remaining 90% over to your lender (this is called loan takeout).
- Loan amount: ₱2,500,000 − ₱250,000 equity = ₱2,250,000
- Monthly rate: 6.25% ÷ 12 = 0.0052083
- Payments: 30 years × 12 = 360
- (1 + r)360 = 6.4892
- M = 2,250,000 × 0.0052083 × 6.4892 ÷ (6.4892 − 1) = ₱13,853.64
In month one, ₱11,718.75 of that payment is interest and only ₱2,134.89 reduces your loan. That ratio slowly flips over the years. It's also why extra principal payments in the early years save the most interest.
In Excel or Google Sheets, type =PMT(6.25%/12, 360, -2250000) to get the same answer.
Same loan, different rates and terms
All figures below are for a ₱2,250,000 loan, before insurance. They show how much the rate and the term move your monthly figure and your total interest.
| Rate and term | Monthly amortization | Total interest paid |
|---|---|---|
| 3.0%, 30 years (Pag-IBIG socialized promo level) | ₱9,486 | ₱1,164,993 |
| 4.5%, 30 years (Pag-IBIG 2026 promo, loans up to ₱4.9M) | ₱11,400 | ₱1,854,151 |
| 4.5%, 20 years | ₱14,235 | ₱1,166,307 |
| 6.25%, 30 years | ₱13,854 | ₱2,737,309 |
| 7.25%, 20 years (typical bank range) | ₱17,783 | ₱2,018,030 |
| 7.25%, 15 years | ₱20,539 | ₱1,447,095 |
| 9.75%, 30 years (top of Pag-IBIG's regular range) | ₱19,331 | ₱4,709,151 |
Two lessons stand out. First, a longer term lowers the monthly payment but greatly increases total interest. Second, the rate after your fixed period matters as much as the promo rate itself.
Add what the formula leaves out
The formula gives principal and interest only. What actually leaves your bank account each month is higher:
- Mortgage Redemption Insurance (MRI): pays off the loan if the borrower dies. It is required by Pag-IBIG and banks, and Pag-IBIG adds it to your monthly amortization.
- Fire insurance: required on the house for the life of the loan, billed monthly (Pag-IBIG) or yearly (many banks).
- Homeowners association (HOA) dues: usually start soon after turnover. Ask the developer for the current rate per square meter or per month.
- Real property tax (amilyar): paid yearly to the city or municipal treasurer. Divide it by 12 for your monthly budget. See the amilyar guide.
Equity months vs. loan months
The figure in a developer's sample computation often isn't the loan amortization at all. In pre-selling, the first 12 to 36 months are usually equity (downpayment) installments paid to the developer. The loan amortization starts only after takeout. Using the ₱2.5M example:
- Reservation fee: ₱10,000 (deducted from equity)
- Equity: ₱240,000 balance over 12 months = ₱20,000/month to the developer
- After takeout: about ₱11,400/month to Pag-IBIG at 4.5% for 30 years, plus MRI and fire insurance
Many buyers are surprised that the equity phase costs more per month than the loan itself. If you are still paying rent during that phase, budget for both payments at once.
Plan for repricing
Philippine housing loans are fixed for a set period, such as 1, 3, 5, or 10 years. After that the rate resets to whatever applies at the time. On the ₱2,250,000 loan at 4.5% for 30 years, the balance after 3 years is about ₱2,136,000. If the rate reprices to 7.5% at that point, the payment jumps from ₱11,400 to about ₱15,395, an increase of roughly 35%. Before you sign, check that you could still pay comfortably at 2 to 3 percentage points above your starting rate.
Check affordability with the 35% rule
Pag-IBIG generally caps your amortization at about 35% of gross monthly income, and many banks use a similar debt-to-income test. Divide the monthly amortization by 0.35 to estimate the minimum gross household income a lender will want: ₱11,400 ÷ 0.35 ≈ ₱32,600. Divide by 0.30 instead if you want a comfortable buffer. My income guide goes through this in detail.
Frequently asked questions
What is the formula for monthly amortization in the Philippines?
M = P × r × (1 + r)^n ÷ [(1 + r)^n − 1]. P is the loan amount, r is the annual rate divided by 12, and n is the number of monthly payments. In Excel, use =PMT(rate/12, months, -loan).
How much is the monthly amortization for a ₱2 million loan?
At 4.5% for 30 years it is about ₱10,134. At 6.25% it is about ₱12,314, and at 7% it is about ₱13,306, before MRI and fire insurance.
Is monthly amortization the same as the monthly downpayment?
No. In pre-selling, the early monthly payments are equity paid to the developer. The amortization is the loan payment to Pag-IBIG or a bank after takeout, and it is usually a different amount.
Does Pag-IBIG include insurance in the monthly amortization?
Yes. Pag-IBIG's monthly amortization includes the Mortgage Redemption Insurance and fire insurance premiums, so expect it to be slightly higher than the formula alone gives.
How can I lower my monthly amortization?
Make a bigger downpayment, choose a longer term (up to 30 years with Pag-IBIG), apply during a promo-rate window, add a co-borrower to qualify for better terms, or choose a lower-priced unit.
Related buyer guides
- Housing Loan Interest Rates in the Philippines Explained
- How Much Monthly Income Do You Need to Buy a House in the Philippines?
- Pag-IBIG Housing Loan: Requirements, Process, and Tips for First-Time Buyers
- Bank Financing vs Pag-IBIG: How to Choose Your Home Loan
Official sources and further reading
Reviewed for accuracy on October 4, 2026. Rates, fees, thresholds, and agency procedures change. Confirm transaction-specific details with the issuing agency, your lender, or a lawyer before you pay or sign.
About the author: Jeremiah Villagomez is a PRC-accredited and DHSUD-accredited Real Estate Salesperson based in San Pablo City, Laguna. He helps first-time buyers, OFWs, and relocating families buy house and lot homes with Pag-IBIG, bank, or cash financing. More about Jeremiah · Call 0976 302 6551
Have a specific situation? Call or text 0976 302 6551 and I will run the numbers for your exact unit, budget, and financing route for free.
