How to Calculate LTV and DSR Mortgage Limits — Complete Guide to the Latest 2026 Regulations

Key Takeaways

• LTV: Loan limit relative to the home price (up to 50% for a single-home owner in regulated areas)
• DSR: Annual principal and interest repayment ratio relative to annual income (must stay at or below 40%)
• 2026 Stress DSR Phase 2 applies → effective limits are reduced further

What Are LTV, DSR, and DTI? A 3-Minute Overview of the Core Concepts

To take out a mortgage, you need to understand three key rules: LTV, DSR, and DTI.

LTV (Loan To Value) LTV is the ratio of the maximum loan amount to the home's value.

• LTV 50% → for a 1 billion won home, you can borrow up to 500 million won

DTI (Debt To Income) DTI is the ratio of annual principal and interest payments on all debt to annual income.

• DTI 40% → with annual income of 60 million won, annual principal and interest payments can be up to 24 million won

DSR (Debt Service Ratio) DSR is stricter than DTI. It includes principal and interest on all debt, not only mortgages but also credit loans, card loans, and more.

• DSR 40% → annual income of 60 million won × 40% = 24 million won in total annual principal and interest repayment capacity
• If you already have a credit loan, your mortgage limit is reduced accordingly

Latest 2026 Regulatory Status — Stress DSR

The Stress DSR, introduced in 2024, is stricter than the existing DSR. Even if current interest rates are low, the loan limit is calculated by assuming a higher-rate environment (the stress rate).

Stress DSR Phase 2 (2026 standard):

• Stress rate add-on: +1.5%p (adds 1.5% to the benchmark rate)
• Example: if the actual loan rate is 4%, the limit is calculated at 5.5%

As a result, even with the same income and same actual rate, real loan limits have fallen by 10-15%.

LTV Limits by Regulated Area (2026 Standard)

Practical Calculation Example: 1 billion won apartment, annual income of 80 million won, no-home owner, regulated area

• LTV limit: 1 billion won × 50% = 500 million won
• DSR limit: 80 million won × 40% = 32 million won/year → about 540 million won based on a 30-year term
• Actual limit: min(500 million won, 540 million won) = 500 million won

To calculate your loan limit yourself, try the LTV Calculator.

Strategies to Maximize Your DSR Limit

Strategy 1 — Pay Down Existing Debt First Clearing credit loans, overdraft lines, student loans, auto installments, and similar debt before applying creates more room under DSR and increases your mortgage limit.

Strategy 2 — Extend the Loan Term Even for the same loan amount, extending the term from 30 years to 40 years lowers annual principal and interest payments, reducing your DSR figure. However, total interest paid will be higher.

Strategy 3 — Use Combined Household Income Calculating DSR based on the combined income of both spouses can significantly raise the limit. However, the spouse will also become a joint guarantor.

Strategy 4 — Use Special Bogeumjari Loan Special Bogeumjari Loan, a government-supported product, receives relaxed DSR treatment. It is advantageous for low-income households and newlyweds.

To understand the full cost of buying real estate, including acquisition tax, also check the Acquisition Tax Calculator.

Interest Rate and Loan Repayment Simulation

In 2026, major banks' mortgage rates are around 3.5-5.5% per year. Even for the same 500 million won loan, the monthly repayment can vary greatly depending on the interest rate.

If the interest rate is 1%p higher, you will pay more than 100 million won in additional interest over 30 years. The choice between fixed and variable rates also requires careful consideration.

Rental yield can be checked with the Rental Yield Calculator.

Expert Key Summary

In 2026, effective mortgage limits have decreased further due to the application of Stress DSR Phase 2. The actual limit is the lower of LTV 50% (single-home owner in a regulated area) and DSR 40%. Before taking out a loan, you can maximize your limit by paying down existing debt, extending the term, and using combined spousal income. Checking government-supported products (Special Bogeumjari Loan, Didimdol Loan) first is the starting point for saving taxes and reducing costs.

FAQ

Q1. Does the 40% DSR apply the same way at all banks? In the first-tier financial sector (commercial banks), DSR 40% applies; in the second-tier financial sector (savings banks and capital companies), DSR 50% applies. However, second-tier lenders have higher interest rates.

Q2. I heard LTV rises to 80% when buying a first home. Is that true? Those eligible for the first-time homebuyer acquisition tax reduction may be allowed up to 80% LTV. However, the maximum loan cap is 600 million won, and the 40% DSR rule still applies in the same way.

Q3. What is the LTV in non-regulated areas? No-home owners and single-home owners in non-regulated areas may be allowed up to 70% LTV. This is 20%p higher than in regulated areas.

Q4. Does taking out a credit loan reduce my mortgage limit? Yes. Annual principal and interest payments on credit loans are included in DSR, reducing the available mortgage amount. If possible, take out a credit loan after mortgage approval.

Q5. Are jeonse loans also subject to DSR? In principle, jeonse loans are subject to DSR, but guarantee insurance products (HUG, SGI) are often excluded from DSR calculation. Check with your bank branch.

Q6. How can self-employed borrowers get a loan if income verification is difficult? Self-employed borrowers prove income using comprehensive income tax returns and VAT returns. If reported income is low, the limit decreases, so honest tax filing is more favorable for borrowing in the long run.