The transfer of a Pag-IBIG Fund housing loan to a sibling is legally permissible and commonly done through the Assumption of Mortgage procedure under Pag-IBIG Fund rules. This process allows the sibling (assumptor) to take over both the property title and the remaining loan obligation, releasing the original borrower from personal liability while preserving the original loan terms (interest rate, remaining term, and any repricing privileges).

This arrangement is particularly advantageous when current Pag-IBIG interest rates are higher than the original loan rate, as the assumptor inherits the more favorable terms.

Legal Basis

The procedure is governed by:

Republic Act No. 9679 (Home Development Mutual Fund Law of 2009)
Pag-IBIG Fund Circular No. 383 (Guidelines on the Assumption of Pag-IBIG Housing Loans), as amended by subsequent circulars (including Circular No. 428 and later issuances)
Pag-IBIG Fund Circular No. 409 (Enhanced Guidelines on Housing Loan Assumption)
Relevant provisions of the Civil Code on donation, sale, and mortgage
Bureau of Internal Revenue regulations on donor’s tax (RA 10963 or TRAIN Law, as amended by CREATE Law and latest BIR issuances)

Pag-IBIG expressly allows assumption of housing loans by immediate family members, which includes siblings (2nd degree of consanguinity).

When Assumption to a Sibling is Allowed

Pag-IBIG permits assumption in the following situations involving siblings:

Pure donation (most common for siblings/parents-to-children transfers)
Sale with consideration (less common between siblings due to taxes)
Combination of partial sale and partial donation
Transfer due to separation of property or family arrangement

The original loan must be updated (no arrears for at least 12 months at the time of application in most cases) and the property must have no structural violations or illegal constructions.

Advantages of Assumption to a Sibling

Assumptor inherits the original interest rate (crucial when rates have risen)
No new loan origination fees, MRI, fire insurance re-issuance from scratch
Processing fee is significantly lower for immediate family members (currently ₱3,000–₱5,000 only, compared to higher fees for non-relatives in some cases)
Faster processing (typically 15–30 days if complete)
No capital gains tax if done via donation (unlike sale)

Eligibility Requirements for the Assumptor (Sibling)

The sibling must qualify as if applying for a regular Pag-IBIG housing loan:

Must be a Pag-IBIG member with at least 24 months total contributions
Must have made at least 6 monthly contributions in the last 12 months (or qualify under the “updated” criterion)
Monthly gross income must support the remaining loan balance (debt burden ratio not exceeding 40%)
No outstanding Pag-IBIG housing loan (except when assuming a co-borrower’s share)
No record of defaulted Pag-IBIG loan or multi-purpose loan in default
Must not be more than 65 years old at loan maturity (70 if applying for extended term)
Must pass Pag-IBIG’s credit investigation and background check

If the sibling’s income is insufficient for the full outstanding balance, the original borrower must pay down the loan to the amount the sibling qualifies for before assumption can be approved.

Required Documents

A. From Original Borrower

Notarized Letter of Intent to Transfer/Request for Assumption
Valid government-issued IDs
Proof of updated loan status (latest Statement of Account)
Original Owner’s Duplicate Copy of TCT/CCT

B. From Assumptor (Sibling)

Notarized Letter of Intent to Assume the Loan
Accomplished Housing Loan Application (HLA) Form for Assumption
Proof of Pag-IBIG membership contributions (MID number and latest proof of remittance)
Proof of income (ITR, payslips, COE, or business documents if self-employed)
Valid government-issued IDs
Marriage contract (if applicable) or affidavit of non-marriage

C. Property and Transfer Documents

Notarized Deed of Absolute Donation (most recommended) or Deed of Sale
BIR Certificate Authorizing Registration (CAR) after payment of Donor’s Tax
Original TCT/CCT with annotation of donation/sale
Real Property Tax Clearance (current year)
Latest Tax Declaration
Condominium Certificate of Title (if condominium)
Certification of No Pending Case from HLURB/LGU (if subdivision)

D. Additional Pag-IBIG Requirements

Transfer Certificate of Title (TCT) in the name of the assumptor with mortgage annotation in favor of Pag-IBIG
Payment of assumption processing fee
Updated fire insurance policy naming the assumptor as insured
Updated MRI (Mortgage Redemption Insurance) – Pag-IBIG will compute new premium based on assumptor’s age

Step-by-Step Procedure

Prepare the Deed of Donation
Have a lawyer/notary public prepare the Deed of Absolute Donation stating that the property is donated subject to the existing Pag-IBIG loan, which the donee (sibling) agrees to assume.
Pay Donor’s Tax at BIR
File BIR Form 1800 (Donor’s Tax Return).
Rate: 6% of the fair market value or zonal value (whichever is higher) in excess of ₱250,000 per calendar year.
Secure electronic CAR (eCAR) within 3–5 days.
Register the Deed at Registry of Deeds
Pay transfer fees (approx. 0.5–0.75% of FMV depending on province/municipality) and registration fees.
New TCT will be issued in the sibling’s name with the existing Pag-IBIG mortgage annotation.
Submit Assumption Application to Pag-IBIG
File at the Pag-IBIG branch where the original loan was processed or the branch nearest the property.
Pay the assumption processing fee (₱3,000–₱5,000 for immediate family members as of 2025).
Pag-IBIG Evaluation
Credit investigation of assumptor
Verification of property documents
Re-computation of loan affordability
Approval and Release of Original Borrower
Upon approval, Pag-IBIG issues:
- New Loan and Mortgage Agreement signed by the assumptor
- Release of Mortgage from original borrower (original borrower receives Letter of Guarantee/Release of Liability)
- Updated amortization schedule
Annotation of New Mortgage Contract
New TCT is annotated with the assumption and new loan terms if any.

Fees and Costs Involved (Approximate as of 2025)

Donor’s tax: 6% of (FMV/zonal value – ₱250,000 exemption)
Documentary stamp tax on donation: ₱15 per ₱1,000 of FMV
Transfer tax: 0.5%–0.75% of FMV
Registration fees: approx. ₱10,000–₱20,000
Notarial fees for deed: ₱5,000–₱15,000
Pag-IBIG assumption processing fee: ₱3,000–₱5,000 (immediate family)
Updated MRI and fire insurance premiums: varies by age and loan balance

Total cost typically ranges from ₱150,000 to ₱400,000 depending on property value.

Tax Implications Summary

Transaction Type	Capital Gains Tax	Donor’s Tax	Documentary Stamp Tax
Pure Donation	None	6% on excess over ₱250,000	₱15 per ₱1,000
Sale	6% on selling price or FMV	None	₱15 per ₱1,000

Donation is almost always preferable between siblings.

Common Issues and How to Avoid Them

Sibling does not qualify for full balance → Original borrower must pay down excess principal first.
Loan has arrears → Must be fully updated for at least 12 months.
Property has illegal structures → Pag-IBIG will require removal or regularization.
Original TCT is lost → File petition for issuance of owner’s duplicate first.
Sibling is abroad (OFW) → Possible via Special Power of Attorney (SPA) consularized at Philippine embassy/consulate.

Alternative: Transfer Title Only, Keep Loan in Original Name

Some families simply donate the property but keep the loan in the original borrower’s name. This is legally risky because:

It violates the “due-on-sale” clause in the Pag-IBIG mortgage contract
Original borrower remains fully liable even if sibling stops paying
Pag-IBIG can foreclose and run after original borrower
Insurance and legal complications arise upon death of original borrower

This practice, while common, is strongly discouraged by lawyers and Pag-IBIG itself.

Conclusion

Transferring a Pag-IBIG housing loan to a sibling via assumption of mortgage is a straightforward, well-established, and taxpayer-friendly process when properly documented. It is the cleanest and safest way to pass property and loan obligation to a sibling while preserving favorable loan terms.

For the latest forms, exact fees, and processing times, consult the nearest Pag-IBIG Fund branch or their official website (www.pagibigfund.gov.ph). Engaging a lawyer experienced in Pag-IBIG assumptions is highly recommended to avoid delays or rejection.