How Much Salary to Buy a House in Malaysia?
Buying a house is a major financial commitment, and knowing how much salary you need is crucial. The amount depends on factors such as house price, loan eligibility, monthly repayment, and other costs.
1. Key Factors Affecting Home Affordability
Before determining the salary needed, consider these:
i) Loan Eligibility & Debt Service Ratio (DSR)
- Debt Service Ratio (DSR) measures how much of your income goes toward debt repayment.
- Most banks in Malaysia allow DSR between 30% to 70%.
- A DSR below 60% is ideal for easier loan approval.
Formula: DSR=(Total Monthly Debt PaymentsTotal Monthly Income)×100%DSR = \left(\frac{\text{Total Monthly Debt Payments}}{\text{Total Monthly Income}}\right) \times 100\%
✔ Example: If your salary is RM5,000 and you have RM2,000 in monthly debt, your DSR is 40%.
ii) Home Loan Monthly Repayment Calculation
The monthly repayment depends on:
- Loan Amount – Typically 90% of property price (10% down payment required).
- Interest Rate – Varies from 3.5% to 4.5% per annum.
- Loan Tenure – Maximum 35 years or up to age 70.
✔ Formula for Monthly Repayment: M=P×r1−(1+r)−nM = \frac{P \times r}{1 – (1 + r)^{-n}}
Where:
- M = Monthly repayment
- P = Loan amount
- r = Monthly interest rate (annual interest ÷ 12)
- n = Total months (years × 12)
2. Salary Requirements Based on House Price (4% Interest, 35 Years Loan)
| House Price (RM) | Loan Amount (90%) | Monthly Repayment (4%) | Minimum Salary (DSR 60%) |
|---|---|---|---|
| RM200,000 | RM180,000 | ~RM797 | RM1,328 |
| RM300,000 | RM270,000 | ~RM1,195 | RM1,992 |
| RM400,000 | RM360,000 | ~RM1,594 | RM2,657 |
| RM500,000 | RM450,000 | ~RM1,992 | RM3,321 |
| RM600,000 | RM540,000 | ~RM2,391 | RM3,985 |
| RM800,000 | RM720,000 | ~RM3,188 | RM5,313 |
| RM1,000,000 | RM900,000 | ~RM3,985 | RM6,642 |
🔹 Assumptions:
- 90% loan financing.
- 4% interest rate.
- 35-year loan tenure.
- Maximum 60% of salary allocated for loan repayment.
3. Additional Costs to Consider
i) Upfront Costs (One-Time Payment)
- Down Payment – 10% of property price.
- Stamp Duty – Charged based on property price:
- RM100,000 & below: 1%
- RM100,001 – RM500,000: 2%
- RM500,001 – RM1,000,000: 3%
- Above RM1,000,000: 4%
- Legal & Valuation Fees – Around 2%–3% of the house price.
- Mortgage Insurance (MRTA/MLTA) – Optional but recommended.
ii) Monthly Costs (Recurring Expenses)
- Maintenance Fees (if condo/apartment) – RM100 to RM500 per month.
- Quit Rent & Assessment Tax – RM100 to RM500 per year.
- Home Insurance & Utilities – RM200 to RM1,000 per month.
4. How to Increase Your Home Loan Eligibility?
If your salary is not enough for your desired home price, consider these strategies:
✔ Reduce Debt – Pay off credit cards, car loans, and personal loans.
✔ Increase Income – Take on a side hustle, freelancing, or business.
✔ Apply with a Joint Applicant – Spouse, sibling, or parents can combine income.
✔ Look for Government Assistance –
- Skim Rumah Pertamaku (SRP) – 100% financing for first-time homebuyers.
- PR1MA Housing – Affordable housing with lower down payment.
- MyDeposit Scheme – 10% deposit subsidy.
✔ Opt for a Longer Loan Tenure – 35 years reduces monthly payments.
Conclusion
Your required salary depends on house price, loan tenure, interest rate, and DSR limit. If you are struggling with affordability, consider reducing debt, increasing income, or applying for government homeownership programs.
