The figure, released by Hung at the seminar “Effective Financial Leverage - Young People Owning Homes,” organized by Thanh Tra Newspaper on June 26, showed that the house price-to-income ratio in Vietnam is among the highest.

Most young urban couples have an average income of VND20-30 million/month and very few of them can buy a house without financial support from family or preferential credit programs.

The Ministery of Construction (MOC) representative said that real estate supply is limited and housing prices are high compared to the affordability of the majority of people. Housing projects are facing slow investment preparation procedures and project implementation, while businesses are facing difficulties in credit capital, bond issuance and payment, and sales.

Hung acknowledged that banks are willing to provide home loans, but commercial loan interest rates remain high, and loan terms are not long enough to meet demand.

“Evidence shows that only when there are low-interest loan packages (5-6 percent) fixed for the initial period do young people feel confident to borrow for a home. They need long-term loans of 20-30 years to reduce monthly repayment pressure,” he said.

Advice on buying

Nguyen Tri Hieu, a respected financial expert, recommended limiting the maximum loan ratio to 80 percent of the house value. This helps keep the leverage ratio at a safe level, minimizing risks when the market or interest rates fluctuate.

“Don’t rush to buy a house if you can’t afford repayments,” Hieu said.

“Young people should ensure that total monthly debt payments (principal + interest) do not exceed 50 percent of net income to avoid financial pressure. This is the Debt-to-Income ratio (monthly debt payments to monthly income). The 50 percent threshold is accepted by many international financial institutions, allowing borrowers to maintain funds for essential expenses,” he said.

According to the expert, buyers should prioritize fixed-rate loan packages for as long as possible, ideally 3-5 years or more, to ensure stable cash flow planning and avoid risks from sudden interest rate spikes.

Additionally, it is necessary to maintain an emergency fund equivalent to 6-12 months of debt payments to cover unexpected events like job loss or income reduction, ensuring borrowers can meet repayment obligations without selling assets.

Another key point, according to Hieu, is that borrowers must carefully calculate their repayment capacity before deciding to take a bank loan for a home. Specifically, buyers are advised to create a detailed income-expenditure balance sheet, simulating income and interest rate scenarios, and avoid FOMO-driven decisions (fear of missing out) that lead to borrowing beyond one’s means.

“Using financial leverage is a double-edged sword. Without proper control, borrowers can easily fall into a debt spiral or be forced to sell their house when the market fluctuates or income drops,” Hieu said.

Ha Thu Giang, Director of the Department of Credit for Economic Sectors under the State Bank of Vietnam (SBV), noted that there are currently nine banks participating in the 145,000 billion VND credit program, with interest rates 1.5-2 percent lower than the normal lending interest rate. 

The latest lending interest rate is 5.9 percent/year, and rates are decreasing along with the general trend.

“For young people under 35, banks offer preferential rates: 2 percent lower for the first five years and 1 percent lower for 10 years compared to the average medium- and long-term rates of major banks,” Giang said.

Solutions for social housing 

Hung stated that localities need to reach social housing development targets under the Prime Minister’s Decision No 444 and develop worker dormitories for industrial zones and housing for armed forces.

Additionally, long-term rental and rent-to-own models should be developed, alongside financial support for buyers to enhance affordability and reduce cost burdens.

Hung also suggested another feasible solution: adjust personal income tax policies, increase dependent exemptions for those with families and young children, and allow deductions of a portion of first-home loan interest from taxable income. 

“This acts as indirect support, easing the monthly financial burden for young people borrowing to buy a home,” Hung said.

Hong Khanh