LPPSA Loan: All You Need to Know

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See also: What is PPAM?

LPPSA loans may be an unfamiliar term to some while others may have heard of it but have no idea how to utilise them. However, you might want to give it a try if you meet the eligibility criteria, as they are a convenient way for government employees to obtain a housing loan 

Many Malaysians, especially the younger segment, want a house to call their own. Securing a housing loan can be a long and daunting process for most people, and older applicants may find it doubly challenging due to banks’ reluctance to lend to borrowers nearing retirement. But with LPPSA, there is no need to worry as it’s relatively easy to obtain financing. 

Read on below to find out everything you need to know about LPPSA loans.

What is an LPPSA Loan?

LPPSA stands for “Lembaga Pembiayaan Perumahan Sektor Awam”. LPPSA is a statutory body tasked with administering housing loans for civil servants in the public sector. There are seven types of LPPSA loans to cater to different financing needs. Every loan applicant must fill up an application form to initiate the loan application process. Eligibility reviews for LPPSA loans are conducted based on the applicant’s salary statement, without considering any external commitments such as other outstanding bank loans.

Hence, LPPSA’s loan eligibility criteria is relatively lenient compared to other loan providers, allowing them to qualify for a loan via LPPSA where they would not have qualified for a typical private sector loan otherwise. More information regarding LPPSA loans can be found on LPPSA’s very own official website: http://www.lppsa.gov.my. 

Who can apply for an LPPSA Loan?


First and foremost, you must be a Malaysian citizen to apply for an LPPSA loan. Second, you must be a permanent officer currently serving as any of the following positions: 

  • Member of the federal administration
  • Member of Parliament (MP)
  • Judge
  • Working in a statutory body
  • Serving in a local authority (PBT)
  • Serving in a state government
  • Member of the state administration
  • Member of the state legislature
  • Member of the civil service
  • Police officer
  • Member of the military

Third, you must have served for at least one (1) year and have been confirmed in your position. Lastly, you must not be declared bankrupt, suspended from work, or subject to any disciplinary action resulting in dismissal from work. If you meet these requirements, then you are eligible for the loan.

LPPSA loan eligibility

Purchasing through LPPSA is not available for all developments. This scheme typically serves government-owned and residential-titled developments.

In contrast, LPPSA loans are not available for commercial properties. Therefore, it would be useful to firstly check with the developer of the property to ensure that your desired home is officially registered under the LPPSA scheme.

7 types of loans by LPPSA


This scheme covers various types of housing loans, as listed below:

(Note : Strata Title is generally for properties in a multi-storey building and the land usually belongs to the owners of the property. Individual Title is generally for landed properties. It is issued when you are the only owner of the plot of land.)

Fully constructed homes

If the property has been mortgaged to a bank/institution, the balance of the seller’s debt must be within the limit’s eligibility of the applicant for the following six(6) months. Purchases of real estate from sellers who still have not acquired Individual / Strata Title yet, is only allowed with the condition that the purchase of property must be made in the secondary market.

Building homes on privately owned land

Construction of the house can only begin after financing is approved. Houses should be built within privately owned land. The applicant can be the full property owner or co-owner between immediate family members. The house should follow the current financing guidelines. The costs of building site preparations are not covered under the loan and there must be no existing building on the land.

Homes under construction

For houses that are still under construction, the purchase can be made from the contractor of the real estate and has Individual Title. The purchase must record the Developer License as well as Sale Permit in Sale and Purchase Agreement. Moreover, buying a residential apartment compartment with separate parking lot is allowed provided the Sales and Purchase Agreement must be separate and the application required to be submitted simultaneously. In addition, if the land is in the category of Agricultural Land, it is required to change the land conditions to Building. In order for that to happen, the developer must submit a copy of the approval letter regarding the change of land conditions as well as a copy of premium payment receipt that has been certified by the lawyer who’s in charge during the application process.

Purchase of land to build a home

Purchases are only allowed if the land has Individual Titles and is ready for home construction. The purchasing amount must not exceed 50 percent of the maximum eligibility amount.

Home financing settlement with financial institutions (refinancing)

Banks/financial institutions must have fully settled the payment to developers/sellers. Secondly, Individual/Strata title must be in the name of the applicant and has been pledged to banks/financial institutions. If the property only has a Master Title, the Sales and Purchase Agreement must be in the name of the applicant as a buyer. In addition, this facility cannot be used for taking transfer of bank/financial institution financing debt balance on previously financed real estate through Treasury/Board financing. For taking over the financing debt of banks/financial institutions to buy land, the balance of the debt must not exceed the lower half of the qualifying amount or JPPH’s valuation. 

Building homes on land purchased via LPPSA financing facilities

Applications can be started submitting after APG on building for type 4 or type 5 financing has been activated. Building plans approved by the Local Authority and approval period should be still effective.

Renovation of existing homes

The following are the conditions for home renovations:

Renovation financing is only allowed if it involves enlarging the building and there must be no arrears of financing repayments.

Moreover, the husband/wife of the customer is also allowed to apply for financing for home renovation with few conditions.

Applications can be submitted after the withdrawal of financing money has reached 100 percent for financing Type 1 and 5. While for financing Types 2, 3, and 6, applications can be submitted starting from the date of issue of the payment voucher.

 In addition, the salary deduction for the first financing must has been executed and there must be  no arrears. Applicants will also need a copy of the building plan approved by the Local Authority which the period of approval is still active as well as a copy of the plan approval letter from local authorities.

The cost of home remodelling work needs to be evaluated by JPPH. If the Individual / Strata Title has been issued for cases of assignment of rights, home renovation work is only allowed after the property is mortgaged to the institution.

Home remodelling work can only be started after getting a letter of approval for financing and not allowed to make changes to the original plan and custom work specifications. The building plan prepared by the architect is necessary to get approval from local authorities. 

How does LPPSA loan work?

LPPSA Loan: All You Need to Know 1

So, how do you apply for LPPSA? Let us sum up for you:

Loan amount:

  • For a first home loan: Should not exceed 60% of your current salary & fixed allowance
  • For a second home loan: Should not exceed 50% of your current salary & fixed allowance.

Debt Commitment

  • Does not exceed 80% of the net income
  • At least 20% of your gross income

*You could also calculate your home loan eligibility on the LPPSA website to avoid your application from being rejected.

Rules of LPPSA loan


Financing Application – Only allowed for one (1) lot/unit of property at a time.

Purchasing – Directly from the Developer for properties categorised as “Under Construction” or “Completed”.

Second Property – First financing must be fully paid off. Applicants applying for their second LPPSA loan are not eligible for Type 7 financing.

Purchasing Contra Property – This happens when the current owner is looking into selling his unit and buying another one and wants both transactions to be executed at the same time. For this 100% payment must have been issued and also the property must have been pledged to the LPPSA.

Purchasing Auction Property 

  • Individual/Strata Property Properties
  • Fully completed residential house
  • Apply within 14 days after a successful auction bid

Developer Term – Construction Projects exceeds if minimum completed buildings by developer:

  • 4 houses in Peninsula
  • 8 houses in Sabah / Sarawak
  • Include Housing Development License and Advertising Permit still in force

Purchasing Real Estate in the Secondary Market (No Individual / Strata Title yet) – Developed by Developer and has been 100% ready. Financing money is withdrawn after the transfer of rights to the LPPSA is completed.

Purchasing Real Estate in the Secondary Market (Individual / Strata Title) – Individual Title has been issued in the name of the developer/landlord but ownership has not been transferred. 

Purchase of Individual / Strata Titles Property – Applicant need to get permission to transfer/mortgage from the State Authority upon purchase of individual or strata titles property.

Co-Financing –  Co-financing can be done either with husband/wife/father/mother/children.

Take Over Financing –  Take over financing includes leaving services, divorce and property handed over or transferred on a court order.

Refer to http://www.lppsa.gov.my/en/peraturan-am-lppsa/ for more on general rules of LPPSA loan.

Benefits of LPPSA loan


Why should you apply for LPPSA instead of the standard bank loan? Well, as a civil servant, you can rejoice as the process of applying for a house loan is easier for you compared to that for private workers/employees under a contract. 

So, not only are you able to apply for a full loan, but you can also borrow for a longer period (up to 90 years of age) at LPPSA. What’s even better: the interest rate would also be fixed at 4% compared to bank loans with floating interest rates based on BLR. Normally, the longer the loan tenure period, the higher the interest rate over the years. However, under LPPSA, not only will you enjoy lower monthly repayment fees until you reach 90 years old, the interest rate will remain unchanged during the loan period!

LPPSA loan payment methods

The payment can be easily made via the following:

CIMB CLICKS & MAYBANK2U                 

Refer to the online payment user manual of CIMB Clicks and MAYBANK2u in http://www.lppsa.gov.my/ for payment through online banking transfer.


LPPSA Loan: All You Need to Know 2

JomPay is a payment platform, where you can use many different banks to pay. It allows customers to pay bills conveniently and securely via Internet banking platforms such as Maybank2u, CIMBClicks, PBe and others.

MyFinancing App

Good news! If you are the sort of person who enjoys financial efficiency right at your fingertips, LPPSA has developed a mobile “MyFinancing” app to enable easy and quick access to your finance account. With this app, you can check your: 

  • Latest application status
  • Financing account information/status 
  • Enquiry information 
  • Withdrawal payment information
  • Financial balance
  • Amount of monthly installment 
  • Amount of outstanding payment 

LPPSA loan is the incentive given by the government to the public servants. If you are part of it, you would not want to miss this! Start to plan financially by fulfilling the application criteria and determining the maximum amount you can borrow. Bear in mind that you should also ensure your desired property is eligible for an LPPSA loan.


Private sector workers can get loans from MBSB banks, while civil servants will receive loans from LPPSA. Through this scheme, civil servants will be able to reduce their monthly commitment by sharing the amount of the financing repayment. As a government employee, you should take advantage of this opportunity. You have the advantage of utilizing a home loan, so don’t miss out on the chance to own your dream home!

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