Property agents will say “yes” to anything that closes a deal. But what happens when you’re the one stuck paying RM2,000 (or more) every month?
That’s the exact situation one Malaysian almost fell into, until they asked a question most of us are too shy to.
A concerned netizen messaged financial educator Ammar Faris (@ammarfrs on X) asking:
My salary is around RM5,000. What’s the right house price I should aim for? I visited a sales gallery recently and the agent said I could go for a house that costs over RM500,000. Should I?”
Rather than giving a simple yes or no, Ammar shared a breakdown that every Malaysian should consider before jumping into homeownership, especially when sales agents are quick to give the green light.
Step 1: Start with your debts
Buying a house isn’t just about how much you earn. It’s also about how much you owe. That’s why Ammar’s first step is to list all your existing debts:
- Car loans
- Credit cards
- Instalment plans (AEON, Courts Mammoth, etc.)
Once you list everything out, calculate how much of your monthly salary is going to paying off these debts.
Let’s say you’re paying RM1,000 a month in total debts. If your salary is RM5,000, that means:
RM1,000 ÷ RM5,000 = 0.2 → 20%
So now the question is, are you debt-free, under 20%, or above 20%? Because that changes your game plan.
Step 2: Use this formula to know your budget
Now here’s where Ammar’s method comes in clutch. Depending on your debt situation, you can calculate how much house you should aim for.
Let’s break it down.
a. If you’re debt-free
If you don’t owe anyone anything, congrats. You’ve got the most wiggle room.
You can afford up to 5 times your annual salary.
RM5,000 x 12 months x 5 = RM300,000
With a 10% deposit, your monthly loan repayment would come up to around RM1,300–RM1,500.
This is the ideal range for those with minimal commitments.
b. If your debt is less than 20% of your salary
Even with some debt, you’re still in a decent position. You can afford up to 4 times your annual salary.
RM5,000 x 12 x 4 = RM240,000
This would put your monthly repayment at around RM1,000–RM1,200, assuming a 10% deposit.
Still manageable, but you’ll want to make sure you have enough buffer for other living expenses.
c. If your debt is more than 20% of your salary
Here’s where things get tighter. If your debts already take up more than 20% of your income, it’s best to play it safe.
In this case, stick to 3 times your annual salary.
RM5,000 x 12 x 3 = RM180,000
That would give you monthly instalments of about RM700–RM900, again assuming a 10% deposit.
It might not be your dream home, but it’s one you can realistically afford.
But don’t forget, a house isn’t your only commitment
Ammar also shared a crucial rule of thumb. Your mortgage should never exceed 30% of your monthly income.
It’s easy to overlook this when you’re excited about finally owning a home, but homeownership doesn’t end at loan repayments.
You’ll still need to cover:
- Maintenance
- Utilities
- Groceries
- Transport
- Children’s expenses
- Emergency savings
And let’s not forget about renovation costs or furnishing your new space.
Sure, you might feel confident that your income will grow in the next few years. But Ammar reminds everyone to buy based on what you earn now, not what you hope to earn later.
It’s tempting to go big, especially when agents tell you you’re “loan-eligible.” But loan approvals don’t factor in every real-world expense or lifestyle commitment.
Just because you can doesn’t mean you should
At this point, you might be thinking, “But the agent said I can get the loan approved.”
Sure, you can get the loan. But should you?
At the end of the day, you’re the one who has to make the monthly payments for years to come,” Ammar warns.
So, if you’re earning RM5,000 a month and eyeing a RM500K property, take a moment to reassess.
Even if the bank gives you the green light, they’re not the ones who’ll be cutting back on food, delaying holidays, or stressing every month if things get tight.
