LTV, DTI, DSR and Stress DSR Explained: How Korean Mortgage Limits Work

The short version: you must pass two gates

In Korea, the maximum size of a home-secured loan (a mortgage, called 주담대 locally) is calculated twice: once from the value of the home (LTV) and once from your income (DSR). The bank then gives you the smaller of the two numbers. A pricey home does not help if your income is too low, and a high income does not help if you hit the loan-to-value ratio or the Seoul-area cap. Stress DSR simply narrows the income gate a little further.

So the most useful question is not "how much can I borrow?" but "which limit is stopping me: LTV, the regional cap, or DSR?" The examples below walk through that order step by step. One note for foreign residents: commercial mortgages for foreigners follow the same ratios, but banks may ask for extra documents such as proof of residence status and Korean income records, so ask early.

The four terms, defined properly

LTV (loan-to-value)

LTV = loan amount ÷ home value. It sets what percentage of the home's value you can borrow. The "value" is the collateral value the lender recognizes (a market quote or an appraisal), which may be lower than your purchase price. If the recognized value is lower, your LTV-based amount shrinks too.

DTI (debt-to-income)

DTI = (yearly principal and interest on the mortgage + yearly interest only on other loans) ÷ annual income. Because other loans count only their interest, DTI is looser than DSR. Most bank mortgages today are screened with DSR, while DTI still appears in some government loan programs.

DSR (debt service ratio)

DSR = yearly principal and interest on all loans ÷ annual income. It counts your mortgage plus credit loans, overdraft lines, car installments and card loans. The basic framework applies a 40% cap at banks and 50% at non-bank lenders to borrowers whose total loans exceed ₩100 million.

Stress DSR

Stress DSR assumes rates could rise in the future. When the lender calculates your limit, it adds a "stress rate" to your real interest rate and checks whether you could still afford the payments. Your real interest does not change; only the amount you can borrow goes down. The size of the add-on depends on the region (Seoul area or regulated area), the rate type (variable, mixed, periodic reset or fixed), and the current phase of the policy. The K Real Estate mortgage calculator adds 1.5 percentage points by default.

Calculator defaults as of October 2026

The ₩600 million cap in the Seoul metropolitan area (Seoul, Gyeonggi and Incheon) was introduced by the June 2025 household debt measures. Later measures may set lower caps for expensive homes, so ask your bank which cap applies to the price range you are looking at.

Example 1: an ₩800M apartment outside regulated areas, ₩70M income

Assumptions: home price ₩800 million, non-regulated area, annual income ₩70 million, no other debt, interest rate 4.0%, 30-year amortizing loan (equal monthly payments).

1. LTV gate: ₩800M × 70% = ₩560 million (below the ₩600M cap, so unchanged).
2. Stress DSR gate: 40% of income is ₩28 million a year, or about ₩2.33 million a month. Treating that as payments on a 30-year loan at 4.0% + 1.5 = 5.5%, the largest loan it supports is about ₩410.95 million.
3. Final limit: the smaller figure, about ₩410.95 million. For this buyer, DSR is the binding limit.

The real monthly payment, at the actual 4.0% rate, is about ₩1.96 million. Real DSR is about 33.6%, while DSR at the stressed rate is exactly 40%. Your own cash needed is about ₩389 million plus acquisition tax, brokerage fees and moving costs. Estimate the tax with the tax calculator.

What if you already have loans?

Suppose the same buyer already pays ₩6 million a year on a credit loan and a car installment. The DSR room falls to ₩28M − ₩6M = ₩22M, and the mortgage limit drops to about ₩322.89 million. A ₩6 million-a-year loan cut the mortgage limit by roughly ₩88 million.

What if income is ₩50M?

Change only the income to ₩50 million and the limit becomes about ₩293.54 million. A ₩20 million drop in income reduced the limit by more than ₩117 million. Where DSR is binding, your limit moves almost in proportion to your income.

Example 2: a ₩1B apartment in a regulated Seoul-area district, ₩100M income

Assumptions: home price ₩1 billion, regulated area in the Seoul region, annual income ₩100 million, no other debt, 4.0%, 30 years.

Even with the first-time buyer's 70% LTV, the loan first hits the ₩600M regional cap, and at this income it then hits DSR, so the buyer cannot use the full ₩600M. With ₩150 million of income, the DSR limit grows to about ₩880.61 million and the ₩600M cap becomes the final limit. Same apartment, different answer, depending on which of the three limits binds.

What moves your limit, and how to raise it

• Loan term: for a ₩500M home, ₩60M income and 4.0%, the DSR limit is about ₩352.24M over 30 years and about ₩387.77M over 40 years. Longer terms cost much more interest, though: on a ₩350M loan, total interest is about ₩251.54M over 30 years and about ₩352.14M over 40 years.
• Pay down other debt: credit loans, installments and card loans reduce DSR room directly. An overdraft line may count at its full limit even if unused, so shrinking or closing it before closing day can help.
• Income documents: salary is proven with a withholding tax receipt, business income with an income certificate. If you cannot document income and the bank estimates it from health insurance premiums, it is usually lower than your real income. Couples should ask whether combined income is accepted.
• Rate type: the stress add-on hits variable rates hardest and longer fixed periods the least. If your limit is tight, compare limits for mixed, periodic-reset and fixed products.
• Government loans: policy mortgages such as Didimdol and Bogeumjari may be screened differently from regular bank mortgages. Read our Didimdol vs Bogeumjari comparison and check eligibility in Find government support.

Five common mistakes

1. Assuming the purchase price is the collateral value. A lower recognized value lowers your LTV amount.
2. Paying the deposit before checking the loan. If the loan falls short, you may lose your down payment. Get a pre-consultation before signing.
3. Confusing the stress rate with your real rate. The add-on is only for limit calculation. Equally, being able to afford the monthly payment does not guarantee the limit.
4. Taking on new debt right before closing. A single car installment or card loan can lower your limit.
5. Not checking regulated-area status. Designations change. Confirm the status on the contract date through announcements from the Ministry of Land, Infrastructure and Transport.

Check your own numbers

Enter the home price, annual income, yearly payments on existing loans, rate and term in the mortgage calculator, then tick regulated area, Seoul area or first-time buyer. You will see the LTV limit, stress DSR limit, final loan amount, monthly payment and a yearly balance table. Results are estimates; the lender makes the final decision. If your income or debts are complicated, consider talking to an expert.