Money, money, money! It makes the world go round is what they say, and it certainly has a big role to play in property. How much money you earn is pretty important when it comes to buying a home.
The simple and unavoidable reality is that your income directly impacts the amount of your mortgage loan. If you want to buy property in Malaysia, you’ll need to work out how much you can be approved for.
Top tip to start – a good rule of thumb is that banks will loan you up to 30% of your gross income annually.
If you’re a KL power couple earning millions of Ringgit every year, then you might be considering a home loan to purchase the luxurious apartment in The Troika in KLCC.
If you’re someone with a more standard income and are looking to retire in the tranquillity of nature, then it could be you’re looking for a beautiful terrace home in Kelantan.
There are plenty of properties for sale on PropertyGuru today. But what you can afford is heavily based on your earnings, and the mortgage loan agreement offered to you by a bank.
It’s time to look at average incomes, and home loan affordability in Malaysia.
A Question Of Incomes And Home Loans
First up, it’s good to know that your income isn’t the only factor that impacts your home loan offer. There are a number of other reasons why home loans are rejected.
Financial considerations are of course at the heart of this. It’s not just what you earn for example, but what your spending habits are like (and your outstanding debts) that affect your credit score.
The Debt Service Ratio (DSR) is a really important part of that. That’s basically how banks decide if you can afford to pay each month for your home loan in Malaysia.
If your DSR is way too high, your home loan application may be rejected as, on paper, you have too much debt and banks won’t want to risk giving you a loan. Here’s a simple formula to calculate your DSR:
(Total monthly commitments ÷ Net income) x 100% = Debt Service Ratio
Total monthly commitments: RM500 (car loan) + RM200 (PTPTN) + RM300 (credit card) = RM1,000
Net income: RM4,500
(RM1,000 ÷ RM4,500) x 100% = 22%
When applying for a loan, banks will only allow you to borrow up to a certain amount of your DSR. This, however, is subjective as each bank has different requirements, so it’s best to check with them before applying!
General economic conditions also play a part. If there’s a period of national or global economic hardship, banks tend to be more cautious in their investments… and ultimately, providing home loans is a bank directly investing in you.
Above all, remember to always do your research and understand the pitfalls before you apply!
Average Income And Home Loan Affordability
With all those considerations in mind, we need to explore average incomes in Malaysia to understand how affordability looks across the country.
Luckily, the Government and the Malaysian Department of Statistics do a good job of compiling that information.
It’s common knowledge that there’s a gap between average incomes for Malaysians who live in rural settings, compared to those who live in urban areas.
As such, we’ve put together a list of mean and median incomes across the two settings, as below:
*Editor’s note: As at time of writing, the 2021 Salaries & Wages Survey Report from the Department of Statistics Malaysia (DOSM) is the latest version released thus far.
*The term ‘rural’ is defined by the Department of Town and Rural Planning as areas where the lands are mostly used for agriculture or are forested.
*The term ‘urban’ is defined by the DOSM as areas where 60% of the population (aged 15 and older) are involved in non-agricultural activities.
With this information in hand, we can use the mathematical magic of PropertyGuru’s home loan calculator to work out affordability and maximum loan amounts for a range of income bands.
% of income spent on loan
Monthly debt obligations
Maximum Loan (RM)
Monthly Payment (RM)
Two things to remember about these calculations: First of all, they’re based on assumptions of interest rates, affordability, and current debt obligations.
That means they won’t necessarily match up directly with your own circumstances. They still give us a good guideline though.
The second thing to remember is that you’ll normally only receive a home loan up to a maximum 90% of the value of the property. You still need to find a way to fund the 10% down payment yourself.
What Property Can Your Salary Afford?
Now that we’ve completed the number crunching, let’s take a look at whether your salary can buy property in Malaysia! And this, ladies and gents, is the exciting bit.
1) Annual income: RM17,500 (Average monthly income: RM1,458)
Home Loan: RM86,500
Property Value: ~RM100,000
There are more than 1,000 properties on PropertyGuru today with a price range of RM100,000 or less. These affordable home choices offer a great place to stay in locations throughout the country.
Several developments in Kulai, Johor present a great example of affordable flats in this price range. The available units consist of two to three bedrooms, with a variety of built-ups starting from 570 sq ft.
2) Annual income: RM25,000 (Average monthly income: RM2,083)
Home Loan: RM142,962
Property Value: ~RM160,000
Most of the units at the Cheras Ria Apartments in Cheras carry reasonable prices up to RM160,000, with a three-bedroom and 1 bathroom layout and built-ups beginning from 550 sq ft.
You can discover more than 1,000 properties for sale priced RM140,000 to RM160,000 on PropertyGuru.
3) Annual income: RM30,000 (Average monthly income: RM2,500)
Home Loan: RM180,679
Property Value: ~RM200,000
The Rumah Pangsa Impian development in Bandar Saujana Putra is a great apartment complex with some ideal apartments in the RM200,000 range.
Apartments start at around RM120,000 for three bedrooms, two bathrooms, and a comfortable built-up of 650 sq ft for an affordable low-rise living.
There are plenty of amenities and facilities close by, such as shopping malls, petrol stations, healthcare facilities, schools, and even the Saujana Lake and Puchong Gateway.
If your household income is approximately RM30,000, you’ll be delighted to know there are over 3,000 properties for sale priced between RM180,000 to RM200,000 on PropertyGuru.
4) Annual income: RM35,000 (Average monthly income: RM2,917)
Home Loan: RM218,395
Property Value: ~RM245,000
Taman Topaz is a freehold apartment complex in Dengkil, Selangor, offering excellent amenities and a range of great units up to RM238,000.
The beautiful development contains a landscaped park, children’s playground, car park facilities, and convenience stores within the premises so residents won’t have to venture far to get their daily necessities.
This kind of accessible, affordable apartment is a great guide for this price range. For more apartments within this price range, check out Pangsapuri Segar Perdana in Selangor or Teratai Apartment @ Taman Sutera Indah, Selangor.
There are more than 5,000 properties in the price range of RM220,000 to RM245,000 on PropertyGuru.
5) Annual income: RM40,000 (Average monthly income: RM3,333)
Home Loan: RM255,886
Property Value: ~RM285,000
If you want to take a look at properties for a household income of ~RM40,000, then some of these apartment units at Pangsapuri Putra Harmoni @ Presint 9 offer a lovely view of affordability.
This freehold high-rise located off Putrajaya has units measuring roughly 700 sq ft, and is well-equipped with facilities and close to amenities like shops, educational institutions, restaurants, healthcare facilities, and more.
There are actually more than 4,000 properties across Malaysia priced between RM270,000 and RM285,000 on PropertyGuru.
6) Annual income: RM50,000 (Average monthly income: RM4,167)
Home Loan: RM331,320
Property Value: ~RM370,000
Royale Infinity in Penang is a beautiful freehold condominium nestled in Seberang Perai, offering plenty of unique facilities including an infinity swimming pool, forest park, and a sky garden.
Great for families and nature enthusiasts, the homes here start from RM243,000 for a unit with a built-up of 700 sq ft, whereas a 1,140 sq ft unit costs around RM350,000.
Strategically close to the Penang Second Bridge, IKEA Batu Kawan, Batu Kawan Technology Park, as well as various amenities for leisure and convenience, the sights and attractions of Penang Island are just a short drive away!
7) Annual income: RM100,000 (Average monthly income: RM8,333)
Home Loan: RM707,583
Property Value: ~RM785,000
Looking for a property that’s situated further from the hustle and bustle of city life, but is still within easy reach of all the major hotspots in Kuala Lumpur, Selangor, and beyond?
Bennington Residences at Setapak fits that bill, and best of all, offers several units that would fit the home loan amount! With built-ups ranging from 1,092 sq ft to 1,932 sq ft, you’d be able to choose one that best fits your needs and lifestyle.
With 2-acres of rainforest-themed facilities as well as a Triplex SkyLounge and SkyGym, you’ll not only be getting a myriad of wellness amenities, you can actually get a really spacious unit of 1,550 sq ft that has 4 bedrooms and 3 bathrooms.
On PropertyGuru’s listings page, you can leisurely browse through over 13,000 properties for sale that are priced between RM700,000 and RM785,000.
8) Annual income: RM200,000 (Average monthly income: RM16,667)
Home Loan: RM1,460,562
Property Value: ~RM1,600,000
While a combined household income of RM200,000 certainly puts you ahead of the averages in Malaysia, it’s a great way to look at those aspirational properties that hard work and a lucrative career can earn you!
If we’re looking for an example of luxury urban living, where better to go than Kuala Lumpur’s renowned Mont Kiara neighbourhood?
Trinity Pentamont in Mont Kiara is the image of a high-rise high-life in Kuala Lumpur. This exclusive condominium complex is currently under construction, with development expected to complete in 2022.
Apartments start at just over RM1.5 mil, offering up to five bedrooms and four bathrooms over 2,057 sq ft. This really is the height of modern luxury in exclusive urban living.
With apartments in this range, there’s often a focus on low-density living, meaning you’re paying for the privilege of more space and even fewer neighbours.
Trinity Pentamont boasts comprehensive security, immaculate grounds, and a range of exceptional amenities such as infinity pool, sky park, sunset grill, and yoga room. What a place to live!
Additional Costs For Homeownership
The cost of owning a home is more than just loans. In fact, there are many more add-ons to factor in when buying a home, all the way from finding an agent till the very last day of renovation.
Some additional home ownership costs you should take into consideration when purchasing a home are:
10% of the purchasing price
Stamp Duty for:
1) 1% – 4% of the purchasing price
3% of the purchasing price
Mortgage insurance (MLTA/MRTA)
Depending on your needs and situation