The Mortgage Insurance Programme explained

The standard maximum loan-to-value (LTV) ratio in Hong Kong is 70% for all residential properties, as set by the Hong Kong Monetary Authority (HKMA) with effect from 16 October 2024. If you want to borrow more than that—for example, 80% or 90% of the property's price—you cannot do so through a normal bank mortgage alone. That is where the Mortgage Insurance Programme (MIP) comes in. The MIP lets you borrow above the 70% ceiling by insuring the lender against the extra risk. Critically, the insurance covers the bank, not you. If you default, the insurer pays the bank the shortfall above 70%; you still owe the full debt. In exchange for that protection, you pay a premium, and the lender agrees to advance a loan that the HKMA rules would otherwise prohibit.

How the programme works

The Mortgage Insurance Programme is run by the Hong Kong Mortgage Corporation (HKMC) and, for certain products, by a few private insurers. The mechanism is straightforward:

You apply for a mortgage from a bank that participates in the scheme.
The bank approves the loan up to the standard 70% LTV under its normal underwriting.
For the portion above 70%—say, the extra 10% or 20%—the bank takes out an insurance policy from the HKMC (or a private insurer).
If you stop paying and the property is sold at a loss, the insurer covers the bank's loss on that top slice. The bank's risk is capped at 70% of the property value.
Because the bank's downside is limited, it can offer you a higher LTV than HKMA rules would otherwise allow.

You are the one paying the insurance premium. It is typically a one-off, upfront fee calculated as a percentage of the insured portion of the loan. The premium can often be added to the loan principal, meaning you do not pay it in cash at settlement but you do pay interest on it for the life of the mortgage. This "financing" of the premium is common but not automatic—check with your lender.

Property value caps

The programme does not cover every property. The HKMC and insurers impose maximum property values for eligibility. As of the latest publicly available information:

For properties up to HK$10 million: You can borrow up to 90% LTV (i.e., a 10% down payment), subject to the loan amount not exceeding HK$9 million.
For properties from HK$10 million to HK$12 million: The maximum LTV gradually scales down. For example, a HK$11 million property might cap at around 80–85% LTV, and the loan amount is capped at HK$9 million.
For properties above HK$12 million: The standard mortgage insurance programme generally does not apply. Some private mortgage insurance may be available for higher-value properties, but terms are less standardised and premiums are higher.

Important: These value caps and LTV limits can change. The HKMC reviews them periodically. You must confirm the current caps with your lender or on the HKMC website before committing. The figures above are based on the programme's structure as of 2024; verify them against the latest guidelines.

Stricter eligibility requirements

Borrowing above the 70% ceiling comes with tighter conditions. The programme is designed for genuine owner-occupiers and imposes tougher checks:

Self-use only: The property must be for your own residence. Buy-to-let, second homes, or properties occupied by a family member renting from you are not eligible.
Income-based lending only: The loan must be assessed on your debt servicing ratio (DSR), not on your net worth. As of 16 October 2024, the HKMA's DSR limit is 50% of your gross income for all property types. That means your total monthly debt payments (including the new mortgage) cannot exceed 50% of your income. The programme typically applies a stricter calculation: it assumes a higher interest rate (often the prevailing rate plus a margin, such as the HKMA's suspended stress test of 200 basis points, although that test is no longer mandated). The insurer sets its own affordability criteria.
No existing mortgage on another property: If you already own a flat or have guaranteed another mortgage, the programme usually excludes you, even though the HKMA removed the 10% LTV/DSR reduction for such borrowers under standard mortgages. The insurance programme applies its own rules—check with the lender.

You must also meet the bank's standard credit checks: stable income, clean credit history, and a property valuation that supports the price.

The premium: what you pay and how

The premium is calculated on the portion of the loan above 70% LTV. As a guide:

For a 90% LTV loan, the premium might be around 1.5% to 2.5% of the loan amount (not just the insured portion). It varies by loan-to-value ratio, loan tenor, and whether you choose a floating-rate or fixed-rate mortgage.
You can choose to pay it upfront in cash, or you can have it added to the loan (financed). If financed, the premium is rolled into the principal, and you pay interest on it over the full term. This can add tens of thousands of dollars in extra interest over 25–30 years.
A few lenders offer "zero premium" mortgage insurance, where the bank absorbs the cost in exchange for a higher interest rate. This is mathematically equivalent to funding the premium through the interest margin.

Ask for a premium breakdown in writing. The actual figures are set by the insurer and not publicly fixed; you must obtain a quote from a participating bank.

The honest trade-offs

Using the MIP lets you buy with a smaller down payment. That is the clear advantage. But the downsides are real and worth understanding before you commit:

Larger total debt. Borrowing 90% means you start with negative equity, effectively. Your loan is 90% of the purchase price, so a 10% drop in property value wipes out your entire equity. You are then "underwater" – owing more than the property is worth. If you then need to sell (job loss, relocation, etc.), you must make up the shortfall from savings.
The premium is real money. Including a 2% premium in a HK$9 million loan adds HK$180,000 to the principal. Over 30 years at 4% interest, that premium costs roughly HK$330,000 in total (principal plus interest). That is money you never see.
Stricter approval means fewer options. If your income is irregular or you already have a mortgage on another flat, you are unlikely to qualify. The programme is not flexible.
No rental income. If you later decide to rent the property out, you cannot maintain the insurance coverage. The bank may demand that you refinance to a standard 70% LTV mortgage or face penalties.
Limited to lower-value properties. Above HK$12 million, you cannot use the programme. For expensive flats, you need a 30% down payment (or more, if the bank's own risk appetite is lower than the HKMA cap).

In short, the MIP is a tool to get you onto the ladder sooner. It is not a free lunch. It works well for first-time buyers with stable salaries buying a modest flat, but it leaves you exposed if the market turns.

What to check next

Before you proceed:

Verify the current property value caps and LTV limits with your bank or the HKMC website. The rules have changed several times recently; do not rely on second-hand information.
Get a premium quote in writing. Ask whether the premium can be financed and at what interest rate the financed amount will be charged.
Run the numbers with a 10% price fall scenario. Work out how much equity you would have after a market downturn and whether you could cover a potential shortfall if forced to sell.
Confirm self-use eligibility. If you intend to occupy the flat as your primary residence, you meet the condition. If there is any doubt (e.g., you are buying for a parent), disclose it upfront—the insurer will investigate.
Compare with a standard 70% LTV mortgage. The monthly payment on a 70% loan will be lower, and you avoid the premium entirely. Only use the MIP if you genuinely cannot scrape together a 30% down payment.

The HKMA's residential mortgage guidelines are the authoritative source for the baseline LTV and DSR rules. For the insurance programme itself, the HKMC's terms and the lender's credit policy govern. Cross-check everything with your chosen bank.