Complete Guide For First Time Home Buyer to Buying a House in Malaysia

Purchasing your first home is an exciting milestone, but it can also be overwhelming without the right guidance. Malaysia's property market offers a variety of options, each with its own set of considerations. From understanding financial requirements and choosing the right location to navigating legalities and securing a home loan, the process involves several crucial steps. This comprehensive guide aims to simplify the journey for first-time homebuyers in Malaysia, providing clear, actionable insights to help you make informed decisions and achieve your dream of homeownership with confidence.

Understanding the property market in Malaysia

The first step in your house-buying journey is to decide what type of property suits your needs. Malaysia offers a variety of homes, each with unique features and benefits. Here’s an overview to help you make an informed decision:

Types of homes

• Terrace Houses: Landed properties like terrace houses can be further classified into corner lots, intermediate lots, and end lots. Each has its advantages, like larger land areas for corner lots but potentially higher costs.
• Townhouses: These are often confused with other property types. In Malaysia, a townhouse typically refers to a unit within a multi-floor building that shares common facilities with other units.
• High-Rise Buildings: These include condominiums and serviced apartments. While they share similarities, serviced apartments often come with additional services like housekeeping.
• Dual Key Units: This concept includes two separate living spaces within one property, offering flexibility for multi-generational living or rental income.
• Bungalows & Semi-detached Houses: Traditionally seen as luxury homes, bungalows are standalone homes that provide spacious layouts and privacy and semi-detached houses share one wall with a neighbouring home, balancing privacy and cost, and typically include small gardens and driveways.

Land title types

• Freehold Properties: Freehold properties offer permanent ownership, meaning you own the property outright with no expiration date. This type of ownership provides greater security and can be a more attractive option for long-term investment.
• Leasehold Properties: Leasehold properties are owned for a fixed term, typically 99 years. After the lease period expires, ownership reverts back to the state unless renewed. Leasehold properties may have lower initial costs but can involve complexities and additional expenses over time.

Legal titles

• Strata Title: Common in high-rise buildings and gated communities, a strata title signifies shared ownership of common areas such as lobbies, gardens, and facilities, while individual units are owned separately. This type of title is crucial for ensuring maintenance and management of shared spaces.
• Master Title: A master title covers the entire development project and is usually held by the developer until individual titles are issued. It's important to confirm when and how individual titles will be transferred to ensure full ownership rights.
• Individual Title: This title is for landed properties and indicates sole ownership of the land and the building on it. Individual titles provide clear ownership rights and responsibilities without shared common areas.

Bumi lot and Malay Reserve Land (MRL)

• Bumi Lot: Reserved for Bumiputera buyers, Bumi lots often come with potential discounts and incentives aimed at encouraging homeownership among the Bumiputera community. These properties are subject to specific sale and transfer restrictions.
• Malay Reserve Land (MRL): MRL properties are restricted to Malay owners and come with stricter regulations regarding transfer and ownership. Understanding these regulations is essential to ensure compliance and to avoid legal issues in the future.

Plot ratio

Plot ratio refers to the density of development in a particular area, indicating the ratio of a building's total floor area to the size of the land on which it is built.

• A higher plot ratio means more units can be developed on the same plot of land, potentially leading to lower property prices due to higher density. However, this can also result in increased population density and strain on local infrastructure and amenities. 
• A lower plot ratio typically means fewer units, offering more space and potentially higher property values.

Working out the budget as first time home buyer

When planning your budget for purchasing a home, it's essential to consider more than the monthly instalment repayment and the down payment. First-time homebuyers should be aware of various costs that can significantly impact the overall expense.

All in all, you need to prepare the below:

Upfront payment

Here’s what your major initial costs could look like:

Stamp duty exemption for first-time homebuyers

First-time homebuyers in Malaysia purchasing properties valued up to RM500,000 can benefit from a full stamp duty exemption until the end of 2025. 

For properties priced between RM500,001 and RM1 million, a 75% stamp duty exemption is available until December 31, 2023. Beyond this, properties above RM500,001 will not qualify for any exemption starting from 2024.

Additionally, as per Budget 2024, foreigners, including non-citizens and foreign-owned companies (excluding Malaysian permanent residents), will face a flat stamp duty rate of 4% on property transfers, effective January 1, 2024.

Monthly instalments

When planning your budget for a home loan, it’s essential to understand your monthly instalments and ensure they fit within your household income. Experts recommend allocating no more than one-third of your total income to home loan repayments, ensuring financial stability while managing your mortgage. Based on a current market interest rate of 4.5% per annum and a 10% down payment, here are the estimated monthly instalments and recommended household incomes for various property prices over a 35-year tenure:

Home loans in Malaysia typically come in two types: flexi loans and fixed-rate loans. Flexi loans offer flexibility in repayment and interest savings, while fixed-rate loans provide stability with constant interest rates. 

Type of home loan in Malaysia

When buying a property in Malaysia, selecting the right type of home loan is crucial. The three major types of loans are basic term, semi-flexi, and full-flexi.

• Basic Term Loan: Follows a fixed repayment schedule with constant monthly instalments, offering certainty but limited flexibility for additional payments.
• Semi-Flexi Loan: Allows for additional payments to reduce the principal and interest, with the option to withdraw excess payments, though often requiring bank approval.
• Full-Flexi Loan: Offers maximum flexibility, functioning like a current account where you can freely make additional payments or withdrawals, but typically comes with a monthly maintenance fee.

Mortgage life insurance: MLTA vs MRTA

Buying a home is a significant commitment, often taking up to 35 years to fully repay. Mortgage life insurance is crucial as it protects this investment if you are unable to continue payments due to unforeseen circumstances such as death or total permanent disability (TPD). There are two main types of mortgage life insurance in Malaysia: Mortgage Reducing Term Assurance (MRTA) and Mortgage Level Term Assurance (MLTA). Both ensure that your home loan is paid off, preventing it from becoming a financial burden for your dependents.

MRTA: The sum insured decreases over time, matching the outstanding loan amount. It's generally more affordable and often required by banks.

• Compulsory: Not legally, but may be required by lenders.
• Cost: Single lump sum at policy start, based on age, loan amount, and term.
• Refund: No refund; payout covers remaining loan.

MLTA: Provides a fixed sum insured throughout the policy term, offering protection plus savings.

• Compulsory: Not legally, but may be required by lenders.
• Cost: Higher premiums paid periodically, based on age, insured amount, and term.
• Refund: Payout can exceed loan amount, with excess going to beneficiaries.

The cost of mortgage life insurance can vary based on several factors, including your age, loan amount, loan tenure, health status, and the type of policy chosen. Here’s a rough estimation of how much you each of the mortgage life insurance would cost (assuming 30 years), calculated with a MLTA/MRTA calculator:

Maintenance fee & sinking fund

Both maintenance fees and sinking funds are crucial for property management and upkeep, ensuring your property remains in good condition.

• Sinking Fund: A sinking fund is like a collective emergency fund for the property. All residents contribute, and the fund is used for major repairs and renovations, such as lobby renovations or gym refurbishments.
• Maintenance Fee: Maintenance fees cover daily upkeep and minor repairs, such as gardening, cleaning, and security. These fees ensure the property remains well-maintained on a day-to-day basis.

Cost of fees:

• Maintenance Fees: Vary based on property type, amenities, and management efficiency. High-end properties with luxurious facilities will have higher fees but typically we are looking at RM 0.25 - RM 0.5 psf.
• Sinking Fund: Typically set at 10% of the total maintenance fees. Higher maintenance fees lead to a higher sinking fund contribution.

Assuming you are staying in a serviced apartment with a RM 0.35 psf of maintenance fees, here’s how much you would need to pay monthly for different sizes:

Property taxes

As a property owner in Malaysia, you will be liable for several taxes:

Assessment Tax

Known as "cukai taksiran" or "cukai pintu," this tax is collected twice a year by your local council for the upkeep and improvement of the municipality. It is calculated based on a percentage of the estimated annual rental value of your property, typically ranging anywhere from 4% to 8%.

If your rental value is around RM 2,000/ month or RM 24,000/ year, and assuming the rate is at 5%, your assessment tax would be around RM 1,200/ year (RM 600 every 6 months).

Quit Rent and Parcel Rent

• Quit Rent (Cukai Tanah): A land tax imposed by state governments, calculated by multiplying the property's size by a specified rate. For example, RM0.035 per square foot for a 2,000 sq ft property results in RM70 annually.
• Parcel Rent (Cukai Petak): For strata properties, replacing quit rent, calculated similarly but directly billed to individual strata owners since 2018 in Selangor, Penang, and Kuala Lumpur.

Real Property Gains Tax (RPGT)

RPGT is a capital gains tax payable upon the sale of a property. Owners who do not profit from the sale are exempt. The RPGT rates vary based on the number of years the property is owned, with an exemption provided on sales from the sixth year onwards.

Summarising total cost

As discussed above, buying a property is more than just your monthly instalments and down payment, there are a lot more costs that come with owning a home. Here’s a quick summary on all the costs that come with buying and owning a property. 

Assuming you bought a 900 sq ft newly launched serviced apartment at RM 500,000, with a potential rental value of RM 2,000 as a first time home buyer:

• Main upfront payment = RM 62,500 (RM 9,000 stamp duty exempted)
• Misc upfront payment = RM 2,500 - RM 4,000 (e.g., legal disbursement fee, gov tax on legal fees,  loan processing fee, etc)
• Monthly instalment = RM 2,130
• Insurance = RM 2,000/ year (MLTA) or RM 17,500 lump sum (MRTA)
• Maintenance fee & sinking fund = RM 346.5/ month
• Property Taxes = RM 1200/ year

This would work out to be:

Buying under construction vs sub sale property

When deciding between buying an under-construction property and a sub-sale (completed) property, there are several factors to consider:

Unspoken cost for under construction properties

For under-construction properties, the progressive payment schedule is a significant factor. Payments are made in stages, typically linked to construction milestones in which the banks will start releasing the payment to the developer and the buyer will need to start paying a progressive monthly instalments.

Here’s a breakdown of the progressive payment schedule and an illustration of your monthly instalments until you start paying full monthly instalments. Assuming RM 500,000 property at 4.5% interest and a 36 months of development period.

That said, until you start paying for your full monthly instalment, you will likely need to pay a total of RM 23,671.88 (progressive payment in 36 months)! And that is a cost that is often overlooked when buying an under construction property.

Searching and analysing your new home

Searching property via property portals

The initial step in finding your new home involves extensive searching, and property portals are invaluable for this purpose. Websites like PropertyGuru and iProperty list thousands of properties, allowing you to filter based on location, price range, property type, and more. Whether you are looking for a luxury bungalow or an affordable apartment, these portals offer a broad spectrum of options to suit various needs and budgets.

Key Factors to Consider:

• Location: Proximity to work, schools, public transport, and amenities.
• Price Range: Ensuring the property fits within your budget.
• Property Type: Condominiums, landed houses, serviced apartments, etc.
• Amenities: Availability of facilities like gyms, swimming pools, parks, and security features.
• Developer Reputation: Researching the developer’s track record for timely delivery and quality of construction.

Working with a real estate agent

Engaging a real estate agent can significantly streamline your home search process. These professionals have in-depth market knowledge, understand developer reputations, and are well-versed in handling the legal paperwork involved in property transactions.

Benefits of Working with an Agent:

• Market Expertise: Agents have extensive knowledge of local property markets and can provide insights on property values and trends.
• Access to Listings: They often have access to listings that may not be available on public property portals.
• Negotiation Skills: Agents can negotiate on your behalf to secure the best possible deal.
• Legal Guidance: Assistance with legal documents, ensuring that all paperwork is correctly completed and filed.

Doing your own research on trends and historical transaction prices

It’s essential to conduct your own research to ensure you’re getting a good deal on your new home. Comparing costs against similar properties helps you gauge whether you’re overpaying or if there are better options available.

Research Tools:

• Valuation and Property Services Department (https://napic2.jpph.gov.my/): This government site provides comprehensive data on previous property transactions, allowing you to see historical prices and trends in specific areas and property types.
• Brickz (https://www.brickz.my/): Offers detailed historical transaction data, including price trends for specific projects and neighbourhoods. This tool helps you understand the market value of properties and how prices have evolved over time.

Key Considerations:

• Historical Prices: Understanding past transaction prices helps you evaluate if the current asking price is fair.
• Market Trends: Identifying whether property prices in the area are increasing, stable, or declining.
• Property Overhang: With a surplus of properties in the market, you might find opportunities to negotiate better prices or take advantage of developer incentives.

Steps to buying and owning your home

You have come so far on your journey to finding the perfect home. From understanding the property market, budgeting effectively, and diligently searching for properties, you are now on the cusp of securing your dream home. The final steps in this process are crucial and involve securing financing, navigating legalities, and ensuring everything is in order for a smooth transition into homeownership. Here are all the steps you need to follow to successfully secure your new home:

Step 1 – Secure financing

Securing financing is a crucial first step in the property buying process. Before signing any deals, ensure you have the financial backing necessary to complete the purchase. Banks will rely heavily on your CCRIS (Central Credit Reference Information System) Report and CTOS score to assess your loan eligibility.

Getting to Know Your Financial Health

• Debt Service Ratio (DSR): Your DSR should ideally be in the 30%-40% range, reflecting your ability to manage loan repayments without financial strain. The DSR is calculated by dividing your total monthly debt obligations by your gross monthly income.
• CCRIS and CTOS Reports: Regularly check these reports to understand your credit standing. You can obtain your CCRIS report through Bank Negara Malaysia, and your CTOS report twice a year for free.

Tips for Selecting a Bank:

• Compare different banks and their loan offerings to find the best interest rates and terms.
• Choose a loan that best fits your financial situation, whether it’s a fixed-rate loan for stability or a flexi-loan for flexibility in repayments.
• Prepare necessary documents, such as proof of income, bank statements, identification, and details of existing debts, to streamline the application process.

Loan Application Process:

1. Submit your documents: Provide the required documents to the bank and complete the loan application form.
2. Await approval: The bank will assess your application, which usually takes 1-2 days but can take longer if additional documents are needed.
3. Sign the Letter of Offer: If approved, review the terms and sign the Letter of Offer. This formalises the loan approval.
4. Pay the earnest deposit: Secure the property by paying the earnest deposit, typically 2% of the property price.
5. Reapply if rejected: If your loan is rejected, review the reasons and consider applying with other banks or improving your credit standing before reapplying.

Step 2 – Employ a lawyer

Although not legally required, hiring a lawyer is highly recommended to navigate the complex legal aspects of property transactions. Lawyers ensure all documents are legally binding and protect you from hidden clauses.

Tips for Choosing a Lawyer:

• Specialisation: Find a lawyer who specialises in conveyancing, the legal process of transferring property ownership.
• Experience: Do your research and review their experience in handling property transactions.
• Verification: Ensure they are registered with the Malaysian Bar.
• Affordability: Make sure their fees align with your budget and discuss the payment structure upfront.

Step 3 – Letter of offer/Intent to Purchase

Once you find a property, express your intent to purchase through a Letter of Intent. This document outlines the initial conditions of the offer, including the earnest deposit (usually 2% of the property price).

• Earnest deposit: This contributes to the overall down payment and shows your commitment to the purchase.
• Sale and Purchase Agreement (SPA): The SPA should be signed within 2-3 weeks of the Letter of Intent. It outlines the terms and conditions of the purchase, including payment schedules, property details, and any contingencies.

Step 4 – Sign the SPA

The Sale and Purchase Agreement (SPA) is a critical legal document outlining the terms and conditions of your property purchase.

Considerations:

• Review: Some developers offer free SPA drafting services, but having your own lawyer review it is wise to protect your interests.
• Details: Ensure all terms are clearly understood, including the payment schedule, handover date, and any penalties for delays or breaches of contract.

Step 5 – Sign loan agreement and MOT

At this stage, you should have received confirmed home loan offers. The next step is to sign the Loan Agreement, which formalises the terms and conditions of your home loan. Although these terms are primarily influenced by standard banking procedures, it’s advisable to have your lawyer review the document to ensure there are no hidden clauses or unfavourable terms.

Documents:

• Loan Agreement: This legal document outlines the terms of your home loan, including the interest rate, repayment schedule, and any additional fees. Review it thoroughly with your lawyer.
• Memorandum of Transfer (MOT): This document legally transfers property ownership to you. It’s essential for properties with either a Strata Title or an Individual Title.
• Deed of Assignment: If you’re purchasing a stratified property that is still under a Master Title, you will sign a Deed of Assignment. This document transfers the ownership of the property from the developer to you once the Strata Title is issued.

Process:

1. Review the Loan Agreement: Ensure all terms, including the interest rate and repayment schedule, are favourable. Seek clarification on any ambiguous terms.
2. Sign the Loan Agreement: Once satisfied, sign the agreement in the presence of your lawyer.
3. Sign the MOT or Deed of Assignment: Depending on the property type, sign the appropriate document to transfer ownership legally.

Step 6 – Pay fees and costs

Upon signing the SPA, you'll need to pay the remaining down payment and other associated costs such as stamping fees and legal fees.

Key Payments:

• Remaining down payment: Usually, 8% of the property price after the 2% earnest deposit.
• Stamping fees: These are required for the SPA, Loan Agreement, and MOT.
• Legal fees: Covering the cost of your lawyer’s services.
• Other costs: Include valuation fees, insurance, and administrative charges.

Step 7 – Receive the vacant possession

Receiving Vacant Possession means you can take ownership of your property. This must occur within 36 months for strata-titled properties and 24 months for individually-titled properties.

Key Points:

• Inspection: Conduct a thorough inspection for defects. Check the property against the SPA specifications.
• Defect liability period: The developer is legally bound to repair any defects found within a specific period, usually 12-24 months after handover.
• Certificate of Completion and Compliance (CCC): This document certifies that the property is safe and fit for occupancy. Ensure you receive it before moving in.

By following these steps, you can navigate the property buying process smoothly, ensuring all legal and financial aspects are covered, and ultimately securing your dream home.

Pro tips: Grow your wealth to own your first home

Owning your first home is a significant milestone, and growing your wealth is a crucial step to achieving that goal. One effective way to build your financial foundation is by investing in General Investing by StashAway. It offers diversified investment portfolios tailored to your risk preferences and financial goals, ensuring your investments are spread across different asset classes, which reduces risk and enhances potential returns. Additionally, StashAway's low fees and automated portfolio management help maximise your investment growth, making it easier to save for a home down payment.

Starting with StashAway is simple. You can sign up on the platform, set your financial goals, and choose an investment portfolio that aligns with your risk tolerance. With the flexibility to start at any amount and ability to add funds regularly, StashAway provides an accessible way to grow your wealth. Utilising their educational resources and tools, you can stay informed and make better financial decisions, bringing you closer to owning your first home.

Government housing schemes to support home ownership in Malaysia

In 2025, there are several government housing schemes in Malaysia designed to assist various income groups in achieving homeownership. Here is an overview of various current initiatives available:

1. Skim Jaminan Kredit Perumahan (SJKP) – Housing Credit Guarantee Scheme

The Skim Jaminan Kredit Perumahan (SJKP) helps gig workers, self-employed individuals, and those without fixed income secure home loans with a government-backed guarantee.

Eligibility Criteria:

• Malaysian citizen
• First-time homebuyer
• No fixed income requirement (open to gig workers, self-employed individuals, and those without formal income documentation)
• Property price up to RM500,000

Financing Terms:

• 100% loan approval (no down payment required)
• Government guarantee up to RM500,000
• Financing tenure up to 35 years or until the borrower reaches 70 years old

How to Apply:

• Apply via participating banks, find out more details here.

2. Projek Perumahan Rakyat (PPR) – People's Housing Project

The Projek Perumahan Rakyat (PPR) provides low-cost housing to low-income groups in urban and suburban areas.

Eligibility Criteria:

• Malaysian citizen
• Aged 18 and above
• Household income not exceeding RM3,000 per month
• Does not own a home

Key Features:

• Apartments (5–18 floors) and terrace houses
• Min. size: 700 sq ft (3 bedrooms, 1 living room, 1 kitchen, 2 bathrooms)
• Includes community facilities like prayer halls, playgrounds, and shops

How to Apply:

• Apply online via Sistem Pengurusan Perumahan Negara (SPRN)

3. Rumah Mesra Rakyat (RMR) – Friendly People's Housing Scheme

The Rumah Mesra Rakyat (RMR) helps low-income families who own land but lack funds to build a house. Managed by Syarikat Perumahan Negara Berhad (SPNB).

Eligibility Criteria:

• Malaysian citizen
• Aged 18–60 years
• Household income between RM750–RM3,000 per month
• Owns land or has land owned by immediate family members
• First-time homebuyer or currently living in inadequate housing

Key Features:

• Single-story house (3 bedrooms, 2 bathrooms)
• House size: 750 sq ft
• Prices: RM75,000–RM85,000 (varies by location)

How to Apply:

• Apply via SPNB website

4. Sejati MADANI – Homeownership & Community Development

The Sejati MADANI initiative supports homeownership and rural housing development as part of Budget 2025.

Key Features:

• RM1 billion allocated for housing and community projects
• RM600 million for rural housing projects
• RM200 million for Kampung Angkat MADANI expansion (200 villages)
• RM100 million for home repairs in rural areas

How to Apply:

• Applications will be managed by state housing departments and government agencies

5. Maybank HouzKEY – Homeownership Financing

Maybank HouzKEY is a Shariah-compliant lease-to-own financing solution that allows buyers to own a home without paying a down payment.

Eligibility Criteria:

• Malaysian citizen
• First or second homebuyer
• Meets Maybank’s credit assessment

Key Features:

• 100% financing (no down payment required)
• Lower monthly payments (lease-based financing model)
• Properties include new launches, under-construction, and completed homes

How to Apply:

• Apply online or visit a Maybank branch
• Once approved, sign the financing agreement and start making payments

6. Perumahan Rakyat 1Malaysia (PR1MA) – 1Malaysia People’s Housing Programme

The PR1MA initiative provides affordable homes for middle-income Malaysians in strategic urban and suburban locations.

Eligibility Criteria:

• Malaysian citizen
• Aged 21 years and above
• Single or married
• Household income between RM2,500–RM15,000
• First or second homebuyer

Key Features:

• Property types: Apartments and terrace houses
• Sizes: 600–1,200 sq ft (apartments) / 850–1,850 sq ft (terrace houses)
• Prices: RM100,000–RM400,000

How to Apply:

1. Register on PR1MA website
2. Apply for preferred projects
3. Enter the balloting process
4. Secure financing (PR1MA offers Skim Pembiayaan Fleksibel PR1MA (SPEF) and Rent-to-Own schemes)
5. Sign Sale & Purchase Agreement (SPA)

Your path to homeownership in Malaysia

Buying a home in Malaysia is a significant milestone, but with the right planning, financial strategy, and knowledge of the property market, it can be a smooth and rewarding process.

As a first-time homebuyer, understanding key factors—such as budgeting, financing options, legal requirements, and hidden costs—will help you make an informed decision. Whether you’re purchasing through a housing scheme, a bank loan, or a developer’s financing plan, always assess affordability, compare loan rates, and factor in long-term commitments before signing an agreement.

The Malaysian property market offers a range of opportunities, from high-rise apartments in urban centers to landed properties in suburban areas. Take the time to research locations, visit properties, and consult with real estate experts to find a home that fits your needs and future plans.

Most importantly, act wisely and plan ahead—buying a home is not just about securing a roof over your head, but also about making a smart investment for your future.