2026 LTV and DSR Easing — A Practical Calculation of Borrowing Capacity

Key answer: From 2026, borrowing of KRW 400 million may be possible based on 80% LTV and 40% DSR.

What Are LTV and DSR?

LTV (Loan to Value) refers to the loan amount as a percentage of the home's value, while DSR (Debt Service Ratio) is the ratio of annual principal and interest repayments to annual income. A mortgage can be approved only when both indicators stay within regulatory limits.

LTV Rules Changing in 2026

Starting in January 2026, first-time homebuyers are allowed an LTV of up to 80% even in overheated speculation zones. Previously, the maximum in these areas was 50%, but the rule has been eased to support genuine end users.

The standard LTV in adjustment areas remains 80%, while areas outside regulated zones can allow up to 90%. However, a separate LTV applies to the portion of a home's market value exceeding KRW 900 million, so the actual borrowing capacity is reduced for higher-priced homes.

Actual Borrowing Capacity Based on 40% DSR

For annual income of KRW 60 million, applying a 40% DSR gives an annual principal-and-interest repayment limit of KRW 24 million (KRW 2 million per month). At a 4.5% interest rate over a 30-year term, the reverse calculation gives a borrowing capacity of about KRW 395 million.

Estimated borrowing capacity by annual income (4.5% interest rate, 30-year term):

• Annual income KRW 40 million -> about KRW 264 million
• Annual income KRW 60 million -> about KRW 395 million
• Annual income KRW 80 million -> about KRW 527 million
• Annual income KRW 100 million -> about KRW 659 million

If stage 2 stress DSR applies (additional interest rate of 1.2-1.5 percentage points), the actual borrowing capacity falls by about 10-15% from the amounts above.

Actual Loan Amount Simulation

For a first-time purchase of a KRW 500 million apartment: applying 80% LTV allows a loan of up to KRW 400 million. However, if annual income is KRW 60 million under the 40% DSR standard, the amount is about KRW 395 million, so the practical loan limit is approximately KRW 395 million.

Acquisition tax can be checked separately with the Real Estate Acquisition Tax Calculator.

FAQ

Q1. Which standard is applied first, LTV or DSR?

A: Both standards are applied at the same time, and the lower amount becomes the actual loan limit.

Q2. What is stress DSR?

A: It is a method of calculating DSR by applying an additional interest rate that reflects the possibility of future rate increases. This reduces the practical borrowing capacity.

Q3. Are there conditions for receiving the first-time homebuyer LTV of 80%?

A: All household members must be non-homeowners, and there may be limits on the combined annual income of a married couple. Conditions vary by financial institution.

Q4. What is the LTV for homes over KRW 900 million?

A: Different LTV ratios apply to the portion up to KRW 900 million and the portion above that amount. The excess portion has a lower LTV.

Q5. How can I find the exact amount I can borrow?

A: You need to visit a bank or request a mortgage review. Income, debt, credit rating, and other factors are considered together.

Q6. Are personal credit loans included when calculating DSR?

A: Yes. The annual principal and interest payments on all financial debts, including personal credit loans and auto installment loans, are included in the DSR calculation.

Expert Tips: How to Increase Your Loan Within the DSR Limit

Maximize income documentation: DSR is calculated based on recognized income. In addition to earned income, interest income, dividend income, rental income, and other sources can also be documented. Applying combined spousal income can significantly increase the loan limit, so a jointly titled loan may be worth considering.

Reduce existing debt: DSR calculations include credit card revolving balances, overdraft accounts, and auto installment loans. Paying down small debts from three months before applying for a mortgage can create more DSR room.

Extend the loan term: Even for the same amount, choosing a 30-year repayment term instead of 20 years lowers annual principal and interest payments and therefore reduces DSR. Selecting a 30-year product can increase borrowing capacity by about 30%.

Detailed Borrowing Capacity Table by Annual Income and Interest Rate

Based on 40% DSR, 30-year maturity, and equal principal-and-interest repayment:

When stage 2 stress DSR applies (additional interest rate of 1.5 percentage points), each amount falls to about 85-90% of the listed figure.

💡 Practical Insight

Other blogs simply list the LTV and DSR formulas, but the variable that matters in actual banking practice is the detail of "existing debt" included in DSR calculation. According to 2024 household credit statistics from the Bank of Korea, borrowers in their 30s had an average personal credit loan balance of about KRW 42 million, and this debt alone can reduce the mortgage limit for a household with annual income of KRW 60 million by about KRW 50 million to KRW 70 million. Based on the author's comparison of KB, Shinhan, and Hana in Q4 2025, even under the same LTV and DSR conditions, loan limits differed by up to KRW 43 million depending on each bank's method for recognizing income. In particular, the recognized ratio for rental income and dividend income varies from 50% to 100% by bank. Also, first-time homebuyer LTV of 80% is only an "application eligibility" standard; in practice, borrowers are often blocked by the 40% DSR rule. There are frequent cases where buyers expect a KRW 400 million limit, sign a contract for a KRW 500 million property, and then need an additional KRW 100 million in capital. Therefore, you should confirm a preliminary approval limit with your main bank before signing a purchase contract, and under the 2026 rules with stage 2 stress DSR applied, it is safer to make a conservative estimate by discounting the table figures by 12-15%.

Related Calculation Tools

• Mortgage Calculator — Instantly calculate borrowing capacity by entering annual income, interest rate, and term
• Real Estate Acquisition Tax Calculator — See total purchase costs (loan + acquisition tax) at a glance
• Mortgage Rate Comparison Guide — Latest rate comparison for KB, Shinhan, and Hana

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Reference: Ministry of Land, Infrastructure and Transport Real Estate Statistics