LOCAL SHELTER PLANNING

Module 2B: Affordability Analysis

October 25, 2021 (Monday)
9:00 AM – 4:00 PM
Batangas Cluster 1

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 1. Data Gathering

6. Strategy Monitoring 2. Situational Analysis

and Evaluation
DRR &
Climate
Change
Integration
3. Goals and
5. Implementation
Objectives
Planning
Formulation

4. Strategies
Development
 MODULE BREAKDOWN

1 2 3 4
SITUATIONAL WORK AND
ORIENTATION VISIONING FINANCIAL
ANALYSIS
PLAN
• Rationale • Shelter Needs Assessment • Vision • Implementation
• Policy Environment • Affordability Analysis • Goals and Objectives Planning
• LSP Process • Resource Analysis • Strategies • Strategy Monitoring
• Data Requirements Formulation and Evaluation
 MODULE BREAKDOWN

SITUATIONAL
2 ANALYSIS Future Need

1. Shelter Needs Assessment Backlog

Upgrading
2. Affordability Analysis

3. Resource Analysis
 Affordability Analysis
• Assessment of financial resources of different income groups to
be used for housing and it enables the identification of the types
of housing options and financing schemes which are feasible for
these income groups.
• Purpose: To determine affordable housing loan and come up
with affordable housing options and/or financial schemes.
5

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 DATA REQUIREMENTS SOURCE
Income group distribution PSA (Family Income and Expenditures Survey),
Typical (median income) M/CSWDO, Nat’l HH Targeting System (DSWD)

Poverty threshold & poverty incidence NEDA

% of income for capital costs of housing PSA, Family Income and Expenditure Survey (FIES)

Loan terms of gov’t housing loans NHA, NHMFC, SHFC, HDMF

Monthly rental of existing housing, Land
6
cost, land development cost, house MAO, Local Survey or interview of renters
construction cost, indirect cost

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 MODULE BREAKDOWN

SITUATIONAL
2 ANALYSIS Future Need

A. Shelter Needs Assessment Backlog

B. Affordability Analysis Upgrading

C. Resource Analysis
 MODULE BREAKDOWN

SITUATIONAL
2 ANALYSIS
A. Shelter Needs Assessment Determining Affordable
Housing Loan
Determining Affordable
B. Affordability Analysis Housing Options
Graduated Amortization
C. Resource Analysis Scheme
 MODULE BREAKDOWN

SITUATIONAL
2 ANALYSIS
A. Shelter Needs Assessment Determining Affordable
Housing Loan
Determining Affordable
B. Affordability Analysis Housing Options
Graduated Amortization
C. Resource Analysis Scheme
 MODULE BREAKDOWN

SITUATIONAL
2 ANALYSIS
Determining Affordable • Determining Income
Housing Loan Groups
B. Affordability Determining Affordable • Determining
potential percent of
Housing Options
Analysis Graduated Amortization
income for housing
• Determining loan
Scheme affordability
 Affordability Analysis
Income Group 1st 2nd 3rd 4th 5th 6th
Monthly HH Income Bracket
Minimum:
Maximum: DETERMINING
% of new units INCOME GROUPS
Number of units:
______________
Typical monthly income
Potential % of income for
upgrading / new housing DETERMINING
POTENTIAL PERCENT
Potential capital cost for housing OF INCOME FOR
Monthly: HOUSING

Annual:

11
Loan Terms:
*Interest rate
*Repayment period, years
DETERMINING
LOAN
*Annuity Factor
AFFORDABILITY
Affordable housing loan

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 DETERMINING INCOME GROUPS
• The LGU Planners must determine the income distribution most
applicable to the locality. The total population of the LGU should be
divided into six income groups. The first income group shall be
devoted for households (HH) below poverty threshold.

• Family income data available at the LGU level shall be used. In case
this is not available the PSA provincial or regional data on Family
Income and Expenditure (FIES) survey can be used as reference to
arrive at the six income groups. For the purpose of this task, family
12 income may be equated with household income.
Note: The FEIS presents regional income and expenditure information. Thus, it may not represent the true
income profile of the households in a city or municipality. The numbers are usually too high especially for non-
urban areas. If there is a reliable local income survey, it is best to use this as the basis for coming up with the
income groups.

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 DETERMINING INCOME GROUPS
STEP 1. DETERMINE THE POVERTY
THRESHOLD
) x Average HH size

Table 1.  Updated Annual Per Capita Poverty Threshold, Poverty Incidence and Magnitude of Poor
Families with Measures of Precision, by Region and Province: 2015 and 2018
  Per Capita Poverty Threshold (PhP)
  2015 2018
PHILIPPINES*          22,747           25,813 
Region IV-A*          25,642           27,928 
Batangas*          30,086           33,068 
Cavite*          27,394           29,157 
Laguna b/, c/          21,278           23,688 
Quezon*          20,962           22,805 
Rizal          25,126           28,647 
1
3
SOLVE FOR 2018 MONTHLY HOUSEHOLD POVERTY THRESHOLD
HH size of Philippines = 4.2; HH size of Batangas = 4.2
 Philippines:             P _______ ÷ 12 months X ____ HH size = P ______
 Batangas:             P _______ ÷ 12 months X ____ HH size = P ______

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 1. DETERMINE THE POVERTY
THRESHOLD
Table 1.  Updated Annual Per Capita Poverty Threshold, Poverty Incidence and Magnitude of Poor Families with
Measures of Precision, by Region and Province: 2015 and 2018

  Per Capita Poverty Threshold (PhP)

  2015 2018
PHILIPPINES*          22,747           25,813 
Region IV-A*          25,642           27,928 
Batangas*          30,086           33,068 
Cavite*          27,394           29,157 
Laguna b/, c/          21,278           23,688 
Quezon*          20,962           22,805 
Rizal          25,126           28,647 

SOLVE FOR 2018 MONTHLY HOUSEHOLD POVERTY THRESHOLD

HH size of Philippines = 4.2; HH size of Batangas = 4.2; HH size of Alitagtag = ?
 Philippines:             P 25,813 ÷ 12 months X 4.2 HH size = P 9,034.55
 Batangas:             P 33,068 ÷ 12 months X 4.2 HH size = P 11,573.80
 Talisay:             P 33,068 ÷ 12 months X 4.58 HH size = P 12,620.95

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 1. DETERMINE THE COMPOSITION OF INCOME
GROUPS
OPTION 1. ACCORDING TO ANNUAL INCOME
CLASSES
FIES Table 2 Total and Average Annual Family Income and FIES Table 8 Distribution of Families by Income Class, by Main
Expenditure by Income Class and by Region Source of Income and by Region

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 1. DETERMINE THE COMPOSITION OF INCOME
GROUPS
OPTION 1. ACCORDING TO ANNUAL INCOME
CLASSES
Percentage Distribution of Families by Income,
2018 % of
Annual Income* Monthly Income Income Group
Families**
Under 40,000 0.23 Under 3,333
40,000-59,999 0.82 3,333 – 4,999

60,000-99,999 3.85 5,000 - 8,332

100,000-249,999 36.25 8,333 – 20,832

250,000-499,999 37.68 20,833 – 41,666

500,000 and over 21.17 41,667 and over

Source: PSA 2018 Family Income and Expenditure Survey (FIES)
*Table 2 Total and Average Annual Family Income and Expenditure by Income Class and by Region
**Table 8 Distribution of Families by Income Class, by Main Source of Income and by Region

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 1. DETERMINE THE COMPOSITION OF INCOME
GROUPS
OPTION 1. ACCORDING TO ANNUAL INCOME
CLASSES
Percentage Distribution of Families by Income,
2018 % of
Annual Monthly
Familie Income Group %
Income* Income
s**
Under 40,000 0.23 Under 3,333 Difference per Income
Bracket:
40,000-
0.82 3,333 – 4,999 41,667 x 0.20 = 8,333.4
59,999
60,000- 1st: under 3,333 0.23
3.85 5,000 - 8,332 2nd: 3,333 – 11,666 0.82+3.85+12.08(36.2
99,999 3rd: 11,667 – 20,000 5/3) = 16.75
100,000- 4th: 20,001 – 28,334 12.08(36.25/3)
36.25 8,333 – 20,832 5th: 28,335 – 36,667 12.08(36.25/3)+18.84(
249,999
6th: 41,667 and over 37.68/2)= 30.92
250,000- 20,833 – 18.84(37.68/2)
37.68
499,999 41,666 21.17
500,000 and 41,667 and
21.17
over over

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 1. DETERMINE THE COMPOSITION OF INCOME
GROUPS
OPTION 1. ACCORDING TO ANNUAL INCOME
CLASSES
Percentage Distribution of Families by Income,
2018 % of Monthly
Annual Income* Income Group %
Families** Income
Under 40,000 0.23 Under 3,333 Difference per Income
Bracket:
40,000-59,999 0.82 3,333 – 4,999 41,667 x 0.20 = 8,333.4

1st: under 3,333 0.23

60,000-99,999 3.85 5,000 - 8,332 2nd: 3,333 – 11,666 0.82+3.85+12.08(36.25/3) =
3rd: 11,667 – 20,000 16.75
100,000-249,999 36.25 8,333 – 20,832 4th: 20,001 – 28,334 12.08(36.25/3)
5th: 28,334 – 41,666 12.08(36.25/3)+18.84(37.68/
250,000-499,999 37.68 20,833 – 41,666 6th: 41,667 and over 2)= 30.92
18.84(37.68/2)
21.17
500,000 and over 21.17 41,667 and over
Source: PSA 2018 Family Income and Expenditure Survey (FIES)
*Table 2 Total and Average Annual Family Income and Expenditure by Income Class and by Region
**Table 8 Distribution of Families by Income Class, by Main Source of Income and by Region

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 1. DETERMINE THE COMPOSITION OF INCOME
GROUPS
OPTION 1. ACCORDING TO ANNUAL INCOME
CLASSES
Percentage Distribution of Families by Income,
2018Income Final Income
Monthly Income % of Families % of New Units
Group Group
1st Under 3,333 0.23 8.61
1st
3,333 – 11,000 0.23+8.38(16.75/2)
2nd 16.75 8.38
11,001 – 11,666 2nd
(16.75/2)
3rd 11,667 – 20,000 12.08 3rd 12.08
4th 20,001 – 28,334 30.92 4th 30.92
5th 28,334 – 41,666 18.84 5th 18.84
6th 41,667 and over 21.17 6th 21.17
Poverty Threshold: 11,573.00

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 1. DETERMINE THE COMPOSITION OF INCOME
GROUPS
OPTION 1. ACCORDING TO ANNUAL INCOME
CLASSES
Percentage Distribution of Families by Income, Difference of Income Bracket:
12,000
Income % of
Monthly Income Final Income Group % of New Units
Group Families
1st 8,252 and below 45 12,621 and below 45+12.5= 57.5
12.5(25/2)+10(20/2) =
2nd 8,253 – 15,000 25 12,622 – 24,622
22.5
3rd 15,001 – 30,000 20 24,623 – 36,623 10(20/2)+3(6/2) = 13
4th 30,001 – 45,000 6 36,624 – 48,624 3(6/2)+1.5(3/2) = 4.5
5th 45,001 – 60,000 3 48,625 – 59,999 1.5(3/2)
6th Over 60,000 1 Over 60,000 1
Poverty Threshold: 12,620.95

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 2. DETERMINE THE COMPOSITION OF INCOME
GROUPS
OPTION 2. ACCORDING SOURCE OF INCOME OR
EMPLOYMENT
EXAMPLE:
• The target household (HH) beneficiaries’ income groupings are based on the information gathered by the City
Assessor’s Office when it surveyed the areas for a re-assessment of real properties in 2010:
• 1st income group – families of sugarcane farm workers, trisikad/tricycle drivers, small fisherfolk and odd-job wage
earners earning a household monthly income of PhP8,000 and below, and comprising about 45% of the total need
• 2nd income group – families of tricycle operators, casual workers, small businessmen, and vendors earning a
household income of PhP8,001-PhP15,000/month, representing 21.75% of the need
• 3rd income group – families of permanently employed and skilled laborers earning PhP 15,001-PhP30,000/month,
composing 25.50% of the need
• 4th income group – OFW-supported families receiving PhP30,001-PhP45,000 monthly, comprising 4.85% of the
need
• 5th income group – families of middle-class professionals earning around PhP45,001-PhP60,000 monthly,
representing 2.10% of the need
• 6th income group – families of highly paid professionals and entrepreneurs earning more than PhP60,000 every
month, comprising 0.80% of the need

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 3. DETERMINE NUMBER OF UNITS PER INCOME
GROUP
Number of Units**
Income Group Monthly Income % of New Units
7,803*

1st 11,000 and below 8.61 672

2nd 11,001 – 11,666 8.38 654
3rd 11,667 – 20,000 12.08 943
4th 20,001 – 28,334 30.92 2,413

5th 28,334 – 41,666 18.84 1,470

6th 41,667 and over 21.17 1,652
*Total number of units needed based on demand analysis
**Number of units per income group = Total number of units x (% of new units/100)

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 3. DETERMINE NUMBER OF UNITS PER INCOME
GROUP
Number of Units**
Income Group Monthly Income % of New Units
7,803*

1st 11,000 and below 8.61 672

2nd 11,001 – 11,666 8.38 654
3rd 11,667 – 20,000 12.08 943
4th 20,001 – 28,334 30.92 2,413

5th 28,334 – 41,666 18.84 1,470

6th 41,667 and over 21.17 1,652
*Total number of units needed based on demand analysis
**Number of units per income group = Total number of units x (% of new units/100)

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING INCOME GROUPS
STEP 3. DETERMINE NUMBER OF UNITS PER INCOME
GROUP
Number of Units**
Income Group Monthly Income % of New Units
????*

1st 12,621 and below

2nd 12,622 – 24,622

3rd 24,623 – 36,623

4th 36,624 – 48,624
5th 48,625 – 59,999
6th Over 60,000

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 RECAP
Income Group 1st 2nd 3rd 4th 5th 6th
Monthly HH Income Bracket
Minimum: 11,573 11,000 and below 11,001 – 11,666 11,667 – 20,000 20,001 – 28,334 28,334 – 41,666 41,667 and over
Maximum: 41,667
% of new units 8.61 8.38 12.08 30.92 18.84 21.17

Number of units: 7,803 672 654 943 2,413 1,470 1,652

Typical monthly income

Potential % of income for

upgrading / new housing

Potential capital cost for housing

Monthly:
Annual:
Loan Terms:
*Interest rate
*Repayment period, years
*Annuity Factor
Affordable housing loan

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 MODULE BREAKDOWN

SITUATIONAL
2 ANALYSIS
Determining Affordable • Determining Income
Housing Loan Groups
B. Affordability Determining Affordable • Determining
potential percent of
Housing Options
Analysis Graduated Amortization
income for housing
• Determining loan
Scheme affordability
DETERMINING POTENTIAL PERCENT OF
INCOME FOR HOUSING
STEP 1. DETERMINE TYPICAL (MEAN) MONTHLY INCOME PER INCOME
GROUP
Income Group Monthly Income Typical Monthly Income*

1st 11,000 and below 5,800**

2nd 11,001 – 11,666 11,334
3rd 11,667 – 20,000 15,884
4th 20,001 – 28,334 24,168

5th 28,334 – 41,666 35,000

6th 41,667 and over 45,000**
*Typical Monthly Income: (Lower Limit + Upper Limit)/2
**Assumption

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING POTENTIAL PERCENT OF
INCOME FOR HOUSING
STEP 1. DETERMINE TYPICAL (MEAN) MONTHLY INCOME PER INCOME GROUP,
LGU
Income Group Monthly Income Typical Monthly Income*

1st 12,621 and below 6,000**

2nd 12,622 – 24,622 18,622
3rd 24,623 – 36,623 30,623
4th 36,624 – 48,624 42,624

5th 48,625 – 59,999 54,312

6th Over 60,000 60,000
*Typical Monthly Income: (Lower Limit + Upper Limit)/2
**Assumption

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING POTENTIAL PERCENT OF
INCOME FOR HOUSING
STEP 2. DETERMINE PERCENT INCOME WHICH CAN BE ALLOTTED FOR HOUSING BY
EACH INCOME GROUPS
FIES Table 9 Total Annual Family Expenditure, by Major
Expenditure Group, by Income Class and by Region

Exclude the following:

• Food
• Fuel, Light and water
• Transportation and communication
• Household operations
• Clothing, Footwear and other wear
• Education
• Medical Care
• House Maintenance and minor repairs
• Taxes Paid

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

FIES Table 9 Total Annual Family Expenditure, by Major
Expenditure Group, by Income Class and by Region
DETERMINING POTENTIAL PERCENT OF
INCOME FOR HOUSING
STEP 2. DETERMINE PERCENT INCOME WHICH CAN BE ALLOTTED FOR HOUSING BY
EACH INCOME GROUPS
% % Income Potential % of
Potential Income Monthly
income for
Income allotted to
Typical % of Group Income essential needs housing*
Income allotted
Monthly income
Group to 1st Under 3,333 72.9 27.1
Income for
essential
housing* 2nd 3,334 – 11,666 73.5 26.5
needs
3rd 11,667 – 20,000 74 26
1st 6,000 73.5 26.5
4th 20,001 – 28,334 72.9 27.1
2nd 18,622 74 26
5th 28,334 – 41,666 70.8 29.2
3rd 30,623 70.8 29.2 6th 41,667 and over 64.6 35.4

4th 42,624 64.6 35.4 SOURCE: FIES Table 9 Total Annual Family Expenditure, by Major Expenditure
Group, by Income Class and by Region

5th 54,312 64.6 35.4

6th 60,000 64.6 35.4

*Potential % of income (100% - % Income allotted to essential needs)

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

DETERMINING POTENTIAL PERCENT OF
INCOME FOR HOUSING
STEP 3. DETERMINE POTENTIAL MONTHLY AND ANNUAL CAPITAL COST FOR HOUSING

Potential Potential
Potential % of
Typical Monthly Monthly Capital Annual Capital
Income Group income for
Income Cost for Cost for
housing
Housing* Housing**
1st 6,000 26.5 1,590 19,080
2nd 18,622 26 4,842 58,101
3rd 30,623 29.2 8,942 107,303
4th 42,624 35.4 15,089 181,067
5th 54,312 35.4 19,226 230,712
6th 60,000 35.4 21,240 254,880
*Typical Monthly Income x (Potential % of income for housing/100)
**Potential Monthly Capital Cost for Housing x 12

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 RECAP
Income Group 1st 2nd 3rd 4th 5th 6th
Monthly HH Income Bracket
Minimum: 11,573 11,000 and below 11,001 – 11,666 11,667 – 20,000 20,001 – 28,334 28,334 – 41,666 41,667 and over
Maximum: 41,667
% of new units 8.61 8.38 12.08 30.92 18.84 21.17

Number of units: 7,803 672 654 943 2,413 1,470 1,652

Typical monthly income 5,800 11,334 15,884 24,168 35,000 45,000

Potential % of income for upgrading /
new housing
28.4 28.4 26.5 26 27.1 35.4
Potential capital cost for housing
Monthly: 1,647 3,219 4,209 6,284 9,485 15,930
Annual: 19,766 38,626 50,511 75,404 113,820 191,160

Loan Terms:

*Interest rate

*Repayment period, years

*Annuity Factor

Affordable housing loan

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 MODULE BREAKDOWN

SITUATIONAL
2 ANALYSIS
Determining Affordable • Determining Income
Housing Loan Groups
B. Affordability Determining Affordable • Determining
potential percent of
Housing Options
Analysis Graduated Amortization
income for housing
• Determining loan
Scheme affordability
DETERMINING LOAN AFFORDABILITY
STEP 1. DETERMINE LOAN TERMS

Loan Terms*
Potential Potential
Typical
Income Monthly Annual
Monthly
Group Capital Cost Capital Cost Repayment Annuity
Income Interest Rate
for Housing for Housing Period Factor

1st 5,800 1,647 19,766 3% 30 19.600

2nd 11,334 3,219 38,626 3% 30 19.600

3rd 15,884 4,209 50,511 6% 30 13.765

4th 24,168 6,284 75,404 7% 25 11.654

5th 35,000 9,485 113,820 8% 25 10.675

6thPag-IBIG Housing
*Option: 45,000 Loan 15,930 191,160 8% 25 10.675

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 ANNUITY FACTOR
Present value interest factor of an (ordinary) annuity of P1 per period at i% for n periods
Period 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14%
1 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877
2 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.713 1.690 1.668 1.647
3 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322
4 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914
5 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433
6 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 3.889
7 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288
8 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 4.799 4.639
9 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946
10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.889 5.650 5.426 5.216
15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 7.191 6.811 6.462 6.142
16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.379 6.974 6.604 6.265
36
17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6.373
18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.702 7.250 6.840 6.467
19 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.839 7.366 6.938 6.550
20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.963 7.469 7.025 6.623
25 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6.873
30 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.694 8.055 7.496 7.003
DETERMINING LOAN AFFORDABILITY
STEP 2. DETERMINE AFFORDABLE HOUSING LOAN

Loan Terms*
Potential Potential
Typical Monthly Annual Affordable
Income
Monthly Capital Capital Housing
Group Interest Repayment Annuity Loan**
Income Cost for Cost for
Housing Housing Rate Period Factor

1st 5,800 1,647 19,766 3% 30 19.600 387,414

2nd 11,334 3,219 38,626 3% 30 19.600 757,070

3rd 15,884 4,209 50,511 6% 30 13.765 695,284

4th 24,168 6,284 75,404 7% 25 11.654 878,758

5th 35,000 9,485 113,820 8% 25 10.675 1,215,029

*Option: Pag-IBIG Housing Loan
6th 45,000 15,930 191,160
**Potential Annual Capital Cost for Housing x Annuity Factor
8% 25 10.675 2,040,633
Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities
 RECAP
Income Group 1st 2nd 3rd 4th 5th 6th
Monthly HH Income Bracket
Minimum: 11,573 11,000 and below 11,001 – 11,666 11,667 – 20,000 20,001 – 28,334 28,334 – 41,666 41,667 and over
Maximum: 41,667
% of new units 8.61 8.38 12.08 30.92 18.84 21.17

Number of units: 7,803 672 654 943 2,413 1,470 1,652

Typical monthly income 5,800 11,334 15,884 24,168 35,000 45,000

Potential % of income for

28.4 28.4 26.5 26 27.1 35.4
upgrading / new housing

Potential capital cost for housing

Monthly:
1,647 3,219 4,209 6,284 9,485 15,930
Annual: 19,766 38,626 50,511 75,404 113,820 191,160
Loan Terms:
*Interest rate 3% 3% 6% 7% 8% 8%
*Repayment period, years 30 30 30 25 25 25
*Annuity Factor 19.600 19.600 13.765 11.654 10.675 10.675
Affordable housing loan 387,414 757,070 691,044 878,758 1,215,029 2,040,633

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 MODULE BREAKDOWN

SITUATIONAL
2 ANALYSIS
Determining Affordable
Housing Loan
B. Affordability Determining Affordable
Housing Options
Analysis Graduated Amortization
Scheme
DETERMINING AFFORDABLE
HOUSING OPTIONS
• The housing options should include both the lot and
dwelling unit, either to be rented or leased on a long-
term basis or amortized.
• The planners should make cost estimates of each
possible solutions based on the minimum allowable
standards. It should include the following:
• Direct Cost: cost of land, land development, and house
construction
• Indirect Cost: professional fees, taxes, processing fees,
licenses, administrative overhead costs, marketing fees, etc.

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 DETERMINING AFFORDABLE
HOUSING OPTIONS
It should be in accordance with the provisions under BP 220 (Rules and Standards
for Economic and Socialized Housing Projects).

Basic needs of human settlements:

1. Water Water Supply System
2. Movement and circulation Road pavement
3. Storm drainage Drainage system
4. Solid and liquid waste disposal Sewage disposal system
41
5. Park/playground Open Spaces
6. Power Electrical power supply

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 Set-back
Front = 1.5 m
Rear = 2.0 m
Sides = 1.5 m

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 Affordable Housing Options
Example of Assumptions*:
• Land development cost pegged at minimum of P1,300/
• House construction cost of 1 story row house = P11,000/
• House construction cost for lofted shell = P12,000/
• House construction cost for lofted complete house = P14,000/
• House construction cost for low-rise buildings (LRBs) = P17,000/
• Indirect cost for house and lot packages is 12%. This will cover planning & design, permits, bonds,
insurances, works & engineering supervision, project management, and taxes, and other not specified items.
• Indirect cost for LRBs is 20%. This will cover planning & design, permits, bonds, insurances, works &
engineering supervision, project management, taxes, other not specified items, and project site maintenance.
• For first & second income groups, the costs of housing options are higher than the affordable housing loan.
A graduated amortization scheme will be used to make the options affordable. Monthly rent or amortization
will start at an amount equivalent or lower than the monthly capital cost for housing pertinent to the particular
income group.
• Floor areas and costs of LRBs are compliant with HLURB Board Resolution No. 969 series of 2018:
43 Adopting the New Price Ceiling for Socialized Condominium Projects (for areas outside of NCR, San Jose
del Monte City in Bulacan Province; Cainta and Antipolo City in Rizal Province; San Pedro City in Laguna;
Carmona and the Cities of Imus and Bacoor in Cavite, Province.

*Best-cost estimates may be inquired with practicing engineers, architects,

contractors, and developers of housing projects in the locality.

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 Affordable Housing Options
Land development House construction  Indirect cost
Land cost (P) Total Unit Cost     
Total cost (P) cost (P)  
Income Lot Size land
Main Options
Group (m2) need /
unit (m2) / m2 /unit / m2 /unit (P) /unit /unit (P)

First
Income

Second
Income

Third
Income

Fourth
Income

Fifth
Income

Sixth
Income

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 Affordable Housing Options
Land development cost House construction  Indirect cost
Land cost (P) Total Unit Cost     
Total (P) cost (P)  
Income Lot Size land
Main Options
Group (m2) need /
unit (m2) / m2 /unit / m2 /unit (P) /unit /unit (P)

Third Developed land

Income w/c includes
concrete roads,
concrete lined
canal with load
bearing cover, 51.79 P51,790 P67,327 P264,000 P45,974.04 P 429,091.04
36.25 P1,000 P1,300 P11,000
septic vaults,
sewerage lines, (3.5 sqm x
6.857 sqm (12%)
electrical = 24 sqm)
connection; w/ 24
sqm 1 storey row
house
Land Cost + Land Devt Cost + HC Cost
Lot size ÷ 0.70Land cost / x Total Land Need
Land devt cost / x Total Land Need
Construction cost for
(Land design
Cost X floor
+ Land Devtarea
Cost + HC Cost) XCost
+ Indirect 0.12

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 Affordable Housing Options
House
Land development Indirect cost Total Unit
Land cost (P) construction 
Total cost (P)   Cost     
Income
Lot
land
cost (P)
Main Options Size
Group need /
(m2)
unit (m2)
/ m2 /unit / m2 /unit (P) /unit /unit (P)

       
         
    1,000.00 7,860 1,300.00 10,218     P574,833.60
     
     
5.5 7.86  
5 stories LRB with 22 sqm 17,000.00 467,500.00  
    P 97,115.60
floor area; estimated at 24      
     
units per floor & 120 units      
     
per bldg.; with electrical &      
    (P485,578 x  20%
water connections     (Standards &
First     indirect cost)
    (22 sqm FA price ceiling
Income      
Rent or amortization starts   +5.5  sqm compliant with
    Land cost will not be Complete amenities  
at P600/ month and will   common 2018 updated
    recovered since only including shared parking    
gradually increase every 3 area = 27.5 standards for
    the units will be sold. area Indirect cost for
years    sqm X condo)
    documentation
    P17000)  
  Land
  cost not included in total unit cost    
and building
 
    maintenance.
  but  is   considered in computing for 20%      
 
indirect cost

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

Affordable Housing Options
Example: Computation for land area per unit for Low-rise Buildings

Ratio Particulars
 
Ratio of saleable areas vs
common areas (lobby, Floor area = 22 m2
80 % : 20%
stairway, hallways, etc.)
No. of floors = 5

Ratio of saleable areas No. of units/floor = 24

(building footprints) vs open  
spaces 70% : 30%

 Solve for land needed:

1.Using the 80% saleable : 20% common areas ratio, solve for lot size needed per unit (inside the
building, including common areas)
22 m2 floor area ÷ 80% = 27.5 m2 ;  27.5 m2 ÷ 5 floors = 5.5 m2
 
2) Using the 70% Saleable areas  : 30% open space, solve for land area per unit (inside & outside of
building) 
5.5 m2 ÷ 70% = 7.86 m2

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

Affordable Housing Options
If the proposed shelter standards and unit costs are not
affordable to the target groups:
• reduce standards; thus reducing costs 
• raise income levels (livelihood interventions)
• Subsidize on public good (e.g. drainage system, etc.)
• Innovate on financing schemes e.g. graduated amortization scheme

Finally, every income group should have at least one possible

housing option, but there is no stopping the TWG from
making more than one option for an income group especially
if there are already specific sites with pre-identified
beneficiaries.

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 MODULE BREAKDOWN

SITUATIONAL
2 ANALYSIS
Determining Affordable
Housing Loan
B. Affordability Determining Affordable
Housing Options
Analysis Graduated Amortization
Scheme
 GRADUATED AMPORTIZATION SCHEME
Affordable housing loan  P 141,120.00 Housing Option P 574,833.60

Year of Implementation  Monthly Rental  Total  Remarks 

Year   1 to 2  P  600.00 X 24 months  14,400.00 40% increase every 2
Year   3 to 4  P  840.00 X 24 months  20,160.00 years, initially, up to
12th year; then 13th-
Year    5 to 6  P  1,176.00 X 24 months  28,224.00
15th years; and lastly,
Year 7 to 8  P 1,646.40  X 24 months  39,513.60 from 16th to 25th years.
Year 9 to 10  P 2,304.96 X 24 months  55,319.04
Year 11 to 12  P 3,226.95 X 24 months  77,446.80
Year 13 to 15  P 4,517.73 X 36 months  162,638.28
Year 16 to 25 P 6,324.82X 120 months 758,978.40
  TOTAL   1,156,680.12 

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 GRADUATED AMPORTIZATION SCHEME

1) Cost of unit when constructed is P574,833.60.  After 25 years, LGU can collect 1,156,680.12 
There is a gain of 581,846.52.  If this is spread out in 25 years, effective interest rate is only 4% per
year.

P1,156,680.12 – P574,833.60 = 581,846.52 ÷ P574,833.60 = 1.01 X 100 = 101 % ÷ 25 years =

4.0%
 
2) The incremental increase of 40% every X number of years is not a standard. This can be modified
based on policies of the LGU.

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

NOTES TO REMEMBER
• First income group is exclusively for HHs below poverty threshold. (Remember to round-off the
poverty threshold)
• As much as possible, the unit cost of housing options should not exceed the affordable housing
loan of a particular income group.
• For the lowest two income groups, when cost of options are higher than affordable loan, explore
innovative schemes to make your options affordable (graduated amortization, subsidy, public
rental, rent-to-own, usufruct, etc.)
• Avoid EQUITY collection esp. for low income groups
• House & lot package is encouraged.  Lot only as an option is discouraged
• Interest rate is variable.  Thru the SP/SB, the LGU may peg own loan terms (interest rate & no.
of years repayment) for their in-house programs
• Cost of land, land development & house construction is variable, depending on project location
• Loft can increase floor area
• Higher density housing is promoted to maximize use of land
• 70% to 30% ratio of saleable to non-saleable lot is not in BP 220 but in PD 957 – it is used as
basis to estimate lot sizes/land need
• The incremental increase of 40% every X number of years is not a standard. This can be modified
based on policies of the LGU.

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities

 THANK YOU
Environmental, Land Use, and Urban Planning and Development Division
Department of Human Settlements and Urban Development - Region IV - A (CALABARZON)
Dencris Business Center, National Highway, Brgy. Halang, Calamba City, Laguna
Contact Number: 0960-575-4447
E-mail: [email protected]
Facebook: DHSUD R4A Maasahan

Building Adequate, Livable, Affordable and Inclusive (BALAI) Filipino Communities