How To Buy A New House in Malaysia: 10 Simple Steps!

PropertyGuru Editorial Team
How To Buy A New House in Malaysia: 10 Simple Steps!
Are you looking to buy a new home? You’ve come to the right place! Not only do we possess a comprehensive list of new properties for sale, we’ve also created this awesome 10-step guide on how to go about the purchasing process.
And if that isn’t enough, we’ve finished it up with a handy pros and cons guide to help you decide whether or not a brand new property is the right choice for you.

Step 1 – Work Out Your Budget

There’s no point in diving into a home search without first knowing what you’re looking for, and when it comes down to it, that begins with your budget.
We’ve got a range of great tools to help you work out your financing:
Of course, you have to take into consideration your down payment needs in your overall financing. That’s a lump sum equal to 10% of the total cost of the property that you’ll need to have saved up, in order to pay upfront.
Keep an eye out for financing opportunities targeted at first-time homebuyers, especially if you’ve got your sights set on affordable housing options!
You can’t always be certain which schemes you’ll ultimately be approved for, but government finance initiatives like the Residensi Wilayah (used to be called RUMAWIP) show the kind of schemes that are out there in the market.
Remember to also take into account additional costs, such as stamp duty and other miscellaneous legal fees. These can sometimes be overlooked by eager new buyers (by accident, of course).
But finding out you’ve got just enough money for a new home’s down payment, then realising you’re RM5,000 short because you forgot to factor in the other legal costs can be a real kick in the dreams!

A) List of affordable housing schemes in Malaysia

Located in the Federal Territory

Stratified houses with 3 bedrooms, 2 bathrooms, a kitchen, living room, dining room and yard.
Malaysian citizen

Born, residing or working in the Federal Territory

18 years old and above

First-time homebuyers

Gross income does not exceed RM5,000 per month
The houses are categorised into five types A, B, C, D, and E with different built-up sizes and eligibility criteria

A husband or wife may apply for RSKU together. However, only one offer will be given to each household
Malaysian citizen

Resident of Selangor18 years old and above

First-time homebuyers

For RSKU Homes Type A, the maximum household income must not exceed RM3,000 per month

For RSKU Homes Type B, C, D, and E, the maximum household income must not exceed RM10,000 per month
Temporary/transit homes for young families to stay as they build their careers

Maximum 3 years of stay

Monthly rental of only RM250
Malaysian citizen

Age 18 to 30 years old

Does not own a home

Gross income does not exceed RM5,000 per month

Works in the same state as the transit home is located
Designed to help those who are self-employed or with irregular income to own a home

Financing up to RM300,000.

Financing margin up to 100% (inclusive of MRTA / MRTT & LTHOT).

Financing period up to 35 years.
Malaysian citizen aged between 18 to 60 years old

Minimum Income: RM1,000 per month

For financing of first home and for own residence only

Financing only for low cost or average properties
Two categories of PPR: disewa (rented) and dimiliki (owned)

Rented PPR flats are for people in the low-income group and squatters at rental rate as low as RM124 a month.

Owned PPR flats are for the B40 group to buy units at RM35,000 (in Peninsular Malaysia) and RM42,000 (Sabah and Sarawak).

Unit sizes will range from 650 sq ft to 900 sq ft
Malaysian citizen18 years old and above

Total household income: Less than RM 3,000 per month

Does not own a property

B) What if I don’t qualify for these housing schemes?

Most of these housing schemes are limited to the B40 and M40 group, so competition is tough. If you don’t qualify, don’t give up hope just yet!
Outside of these schemes, many developers continue to offer financing options with reduced or even zero down payment.
All you have to do is hunt for the right one that suits you and your financial situation, and you’ll still be able to buy a house without a down payment.

C) Can a foreigner buy a house in Malaysia?

Yes, whether you’re an expat home-hunting or an investor looking for the right opportunity – Malaysia welcomes foreigners with open arms.

D) How much does a house cost in Malaysia?

Property prices in Malaysia vary greatly depending on the type of property and the location.
Median property prices range between RM300,000 and RM500,000. Terrace homes range between RM300,000 and RM800,000, while condominiums/apartments range between RM300,000 and RM600,000.
Of course, states like Selangor, Penang and Johor lean greatly towards the pricier end of the spectrum. To view median property prices by state, check out our article here!
Check out properties for sale

E) Do you have enough for the upfront costs?

When working out your budget, know that upfront costs don’t just mean the down payment alone. Below is a simple table on some of the expenditures which go into the upfront costs alone.



Approx 10% of property purchase price
Stamp duty on Memorandum of Transfer (MOT)
1% – 4% of property purchase price
Stamp duty on Sale and Purchase Agreement (SPA)
RM10 per stamping
Stamp duty on loan agreement
0.5% of loan amount
Real estate agent fees
3% of property purchase price
Mortgage insurance (MRTA/MLTA)
Subject to your situation/needs
However, first-homebuyers who purchase residential properties worth between RM500,001 to RM 1 million will enjoy a 75% stamp duty exemption up to 31 December 2023.
This was announced during the recent tabling of Budget 2023 and is an increase from the 50% exemption announced in July 2022, under the Keluarga Malaysia Home Ownership Initiative or i-MILIKI.
Another stamp duty exemption has been in place since the end of 2020. It will be available for both new-launch or sub-sale properties, as long as it is for a first-time home purchase and worth not more than RM500,000.
Here, the full stamp duty exemption is given to both instruments of transfer and loan agreement.
To receive this exemption, the following criteria must be met:
  • The SPA is completed between 1 January 2021 to 31 December 2025.
  • Only residential properties, excluding SOHO/SOFO/SOVO types, as well as serviced residences built for commercial use.
  • First-time homebuyers must be Malaysian citizens.
  • The buyer must not already own a residential property; if he/she has inherited a property or was given one (no matter if it’s an individual or joint ownership), then he/she is no longer eligible.
  • The exemption is given at 2 stages of transfer, i.e. from the property developer to a qualifying financial institution/bank, and from the bank to the Malaysian citizen.
Furthermore, stamp duty on the instruments of transfer of property will be fully exempted for property transfer between family members. However, this is limited to the first RM1 million of the property’s value. The remaining balance of the property’s value is subject to the existing stamp duty tier and a 50% remission is provided on the stamp duty imposed.
Stamp duty exemption is also provided for abandoned housing projects. This applies to instruments executed by a rescuing contractor or property developer on or after 1 January 2013 but not later than 31 December 2025.
There is also the issue of real property gains tax (RPGT). This is chargeable upon profit made from the sale of your land or real property. Effective from 1 January 2022, the RPGT rate for property disposals in the 6th year and subsequent years of property ownership is to be reduced to 0%.

F) How much is the down payment on a house in Malaysia?

The minimum down payment on a house in Malaysia is typically 10% of the property purchase price. You’re welcome to pay more upfront if it’s within your means.
The first part of a down payment is usually paid as part of an earnest deposit. In most cases, that’s a non-refundable 2% payment.

G) Make sure you have extra cash for miscellaneous fees and charges

On top of the fees listed above such as earnest deposit, down payment, stamp duties and agent fees – you should make sure to have a cash buffer on hand for other fees that you’ll encounter throughout the process.
These include bank processing fees, legal fees for the SPA and loan agreement and property valuation fees if applicable.
Check out properties for sale

H) Can you afford to pay the monthly instalments?

That’s the upfront costs alone, now let’s look at the bigger picture – can you afford this property long-term?
The monthly instalment depends on:
With so many factors that go into the picture, a home loan calculator can help you figure out how much your monthly instalment may cost.

Step 2 – Find Your New Property

This is the exciting bit when it comes to getting the best home for you! Luckily for you, we’ve got tens of thousands of new homes with great potential for you to search through.
Whether you’re after a posh luxury bungalow with a helipad in the garden, or a comfortably affordable apartment with great shared facilities, the one important factor to remember: LOCATION!
There are also a range of other factors which impact property value in Malaysia, so it’s important to have a list of what’s most important to you during your search.

How can a real estate agent help?

This is also where you’d probably want to bring in a real estate agent. These experienced professionals know the markets, know the reputation of developers, and know how to navigate the tricky waters of legal paperwork.
They can be a huge help in directing your efforts, informing you of how to get the best deal, and generally being the champion you need.
It really should go without saying, but don’t forget to get as much information as possible on the property.
Crucially, this is also a good time to ask developer’s agent important questions, such as the condition of the property, neighbourhood, and appliances included, to name a few.
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Check out properties for sale

Step 3 – Compare The Costs

If you’ve found a property you like, don’t just rush right in and throw your cash on the table! It’s important to take a step back and compare the costs against other similar properties.
This is a great way to understand whether you’re overpaying on a property, but also whether there might be some other similar projects that will offer you a better value for your money.
Here are some great places to check to get insight on property costs and trends:
In popular areas, there’s bound to be competition for available homes, but Malaysia’s current property overhang leaves some real opportunities to shop around and get a bargain.
That includes things like developer incentives, as well as just putting your negotiating skills to good use and trying to lower the price with more rebates.
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Step 4 – Secure Financing

For the general public – you’re going to need to secure financing before you sign a deal. Making sure you get this right is an essential step in finding the best new property for you.
It’s important to understand that all banks will rely on your CCRIS Report as well as your CTOS score to assess your suitability for a loan.
That doesn’t necessarily mean that if one bank rejects you, others will too, but it does offer a good insight into the decision-making process.
In addition, you’d also need to make sure that you’re not stuck with too many debts. This will cause your Debt Service Ratio (DSR) to reach unhealthy levels, instead of the recommended 30%-40% range.

PropertyGuru Tip

The DSR is basically a method used by banks to calculate whether or not you’re able to repay the loan you’re applying for.

A) Here’s how to calculate your Debt Service Ratio

Not sure where your DSR stands at? You can calculate an approximation for yourself using this formula.

B) Check your CCRIS and CTOS report in these few easy steps!

You don’t have to be in the dark with regards to your CCRIS and CTOS either. First, you can check out What Is CCRIS & How To Get Your CCRIS Report here.
As for CTOS, do you know how to request for your CTOS report? Unlike CCRIS, you can only check your basic CTOS credit report for free twice a year in January and July.
For a more comprehensive report, you can purchase the MyCTOS Score Report for a fee of RM24.85 (at the time of writing).
For an added layer of cyber-security, you may opt for the CTOS SecureID which is priced at RM86.90 per year.
To get your free basic MyCTOS report for the first time, you need to register here. From there, you can access it online or via the CTOS mobile app.

C) Tips on selecting a bank to apply for a housing loan

Loan Application
When choosing a bank to obtain your home loan from, check out their available home loans to see if it fits your bill. Not all banks may have the home loan to fit your needs.
That means that before deciding on a specific bank, you’ll first have to decide on what type of loan suits your financial situation best.

D) Preparation to apply for a housing loan

You’ve done the research, and you’re ready to apply for that home loan!

1) First things first, prepare the required documents as required by your bank.

2) Cross your fingers and wait for approval

Your loan approval will typically take 1-2 days or more if there’re any hiccups. You may be asked to present more documents to prove that you can afford the loan.

3) Sign your Letter of Offer

Once approved and both parties have agreed on the price and terms, you will then need to pay the earnest deposit and sign the Letter of Offer to confirm your intent to purchase.

E) If Your Housing Loan Is Not Approved, What Can You Do?

If your loan was rejected, it’s not the end of the world. There are a million and one reasons why that may be so. In this article, bank execs share some common reasons why home loans are rejected

Step 5 – Employ A Lawyer

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Some people suggest you don’t need a lawyer at all. While it’s true that you’re not legally obliged to employ one, it’s probably common sense to do so.
Lawyers are masters of the finer details, especially with legal jargon involved, and when it comes to an investment like property, you want to make sure those finer details are as accurate as possible.
This is particularly important when it comes to situations like ensuring whether that contract you just signed is legally binding or not (and that you aren’t scammed out of your money by hidden clauses).

Tips On Choosing A Real Estate Lawyer

If you do choose to go ahead with a lawyer, how should you go about hiring a good one?
  • Find one that specialises in conveyancing
  • Do your research and review their experience
  • Double-check that they are registered with the Malaysian Bar here
  • Make sure their rates are in line with your budget

Step 6 – Letter Of Offer/Intent To Purchase

If you’ve found your dream new house, you need to make sure you let the developer know. That’s where the Letter of Intent to Purchase comes in.
The Letter of Intent to Purchase is a document which states your intention to purchase a particular property.
It’s generally combined with an earnest deposit, which is an upfront payment for 2% of the total cost of the property. That 2% also counts towards your overall 10% down payment requirements.
The Letter of Intent to Purchase sets out the initial conditions of offer and purchase. That includes things like whether you get a return on your earnest deposit if, for whatever reason, the sale falls through.
It also sets out the date by which the Sale and Purchase Agreement (SPA) should be signed, usually within 2-3 weeks of the signing of the Letter of Intent.

Step 7 – Sign The SPA

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This whole thing is rolling along nicely! You’ve got your dream house picked, your financing is on the path to being sorted, and you’ve laid out your intentions clearly. Next up, signing the Sale and Purchase Agreement (SPA).
The SPA is an incredibly important legal document which sets out the full terms and conditions of your purchase. This is exactly why you got a lawyer involved in the first place.
Some developers may offer a free SPA drafting service as a perk, but remember that the lawyer in question is ultimately working with the best interests of the developer in mind.
While a top developer is unlikely to sneak in some sinister clause that means you owe them your first-born to get access to the swimming pool, it’s always good to get your own legal professional to look over the details first.
The fine print of the SPA is a crucial part of getting the right deal on your new property. Saving RM1,000 on a nifty developer rebate only to find out you can’t access any of the exclusive shared facilities would really undermine the value of that purchase.

Step 8 – Sign Loan Agreement And MOT

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Unless something has gone horribly wrong, you should have some confirmed home loan offers on the table at this point. It’s now up to you to confirm this offer by signing the Loan Agreement.
This is a legal document which sets out the terms and conditions of your home loan. Although they’re largely influenced by standard procedures from the bank, it’s still a good idea to have your lawyer take a look over it if you can.
This is also where you’ll sign your Memorandum of Transfer. This is the legal document which transfers ownership in the case of properties with either a Strata Title or an Individual Title.
If you’re buying a stratified property as part of a larger development, it might be the case that you’ll sign a Deed of Assignment instead, which conveys ownership of property which is still under a Master Title.

Types of Property Titles

Title document held by the developer or landowner at the point of construction.
Individual Title
Individually located properties such as landed properties.
Strata Title
Condominium/apartment complexes where individual property units form part of a larger shared development.

Types of Property Documents

Letter of Offer
Document which sets out your initial desire to purchase, and a seller’s willingness to sell.
Sale And Purchase Agreement (SPA)
Comprehensive agreement setting out the terms and conditions of a purchase.
Loan Agreement
Legal document to officially confirm the home loan agreement that you have signed with your bank.
Memorandum Of Transfer (MOT)
Document which legally confirms the actual transfer of ownership.

Step 9 – Pay Fees And Costs

Here comes the big money bit! You’ve got to hand over your hard-earned cash. Once the SPA is signed on the dotted line, you’ll need to pay the remaining share of your 10% down payment, and ensure your home loan payment is transferred.
Of course it’s not just those big ticket payments that you have to make. You’ll also have to cover all the relevant stamping fees and legal fees required.
It might hurt a little bit watching all that money roll out of your accounts, but remember that you get an awesome new property at the end! Whether that’s an investment property, or your very first home, that’s an exciting proposition all around.

Step 10 – Receive The Vacant Possession

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It’s time to receive your Vacant Possession! You did it! This is the part where a house now becomes a home.
The Notice of Vacant Possession must be completed within 36 months of signing the SPA for a strata-titled property, and within 24 months for an individually-titled property.
Getting the right deal on a new property doesn’t stop once you’ve handed over the money. Even top developers can sometimes miss little faults or problems in a property.
It’s up to you to ensure you get the most for your money by performing a detailed check and reporting on any defects or issues, because guess what?
Your brand new property actually comes with a warranty against defects after you’ve received the keys to your new home!
That’s right, it’s the defect liability period, where the developer is bound by law to repair any faulty workmanship discovered, but at no cost to the buyer..
The Notice of Vacant Possession precedes receiving your Certificate of Completion and Compliance (CCC).
This is a legally required document issued by the local authority to say your new property is safe and fit for human habitation.

The Pros And Cons Of Buying A New Property

So we’ve talked about the 10-step process of buying your new property, and making sure you get the best deal in the end.
But what are the pros and cons of buying a home that’s shiny and new, rather than picking a sub-sale property? Let’s finish up with an easy-reference guide.

Pros of New Property

Cons of New Property

That fresh new property feel!
Can be more expensive.
Financial incentives from developers such as rebates and legal fees.
Often have to wait 24-36 months for construction and handover.
Customisable design and fittings can create a more personal feel.
No lived-in experience or sales history to guide purchasing or investment decision.
Potential to select a specific unit which best fits your preferences.
Can be more challenging to compare house prices and value.
Strata Title and Individual Title legally required within a defined time period.
Potential (but low) risk of abandoned project.
Often includes more modern and state-of-the-art facilities.
No chance to meet the neighbours before you move in!
12-24 months of defect liability period to report any faults.

Common Home Buying Issues

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“Home Buying 101” isn’t taught in schools, so there are many problems that can occur along the way – especially for first-time buyers. Here are some examples of the most common home-buying issues and how to deal with them.

1) You can’t get your loan approved

The classic homebuying barrier. Loan rejection can be due to many reasons, and they can mostly be avoided by getting a pre-approval letter from banks beforehand.

2) You overestimate your financial capabilities

First-time homebuyers commonly underestimate how much it actually costs to own a home. Down payment and legal documents aside, don’t forget to factor in insurance, interests, renovations and general property upkeep.

3) You skimp on hiring a property agent

The maximum a real estate agent is legally allowed to charge you is 3% of the property purchase price. If you’re willing to fork that figure out, a good agent will be the powerhouse that helps you oversee the process from start to finish.

4) You don’t shop around enough

Be it the home loan, property agent, general location or the actual property itself – don’t get rushed into making on-the-spot decisions. Compare wisely so that you can settle on a final decision that gives you the most bang for your buck.
Relevant Guides:
Disclaimer: The information is provided for general information only. PropertyGuru International (Malaysia) Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

Buying a new house in Malaysia

Buying a house largely depends on how much financing you are qualified for. We recommend you use our Affordability calculator or Home Loan Calculator to know your eligibility. For professional advice, please reach out to property agents for more.

You can apply to one of the affordable housing schemes in Malaysia such as Rumah Selangorku, PPRT or PR1MA as listed in Step 1 (A) of the article above.

Some of the documents involved are the Letter of Offer (LOA), Sales and Purchase Agreement (SPA), Bank's Letter of Offer (LO), Facilities Agreement (FA), and Deed of Assignment (DOA).