Why DSR and LTV Matter
When buying a home or getting a lease loan in Korea, DSR (Debt Service Ratio) and LTV (Loan to Value) are the most important factors determining your loan limit. Understanding these two metrics lets you calculate how much you can borrow in advance.
Understanding LTV (Loan to Value)
LTV is the maximum loan amount as a percentage of the property value.
LTV = (Loan Amount ÷ Property Value) × 100%
| Zone | Area | LTV Limit | Notes |
|---|---|---|---|
| Speculative Overheated | Most of Seoul | 40% | 20% for portion over 900M |
| Adjustment Zone | Some Gyeonggi | 50% | - |
| Non-regulated | Other areas | 70% | - |
| First-time buyer | All areas | 80% | Under 600M + income conditions |
LTV Calculation Example
Buying a 1B KRW apartment in Seoul (speculative overheated zone):
- Up to 900M: 900M × 40% = 360M
- Over 900M: (1B - 900M) × 20% = 20M
- Maximum LTV-based loan: 380M KRW
Understanding DSR (Debt Service Ratio)
DSR is the ratio of annual loan repayments (all loans) to annual income.
DSR = (Annual Repayments for All Loans ÷ Annual Income) × 100%
DSR Calculation Example
Annual income 60M KRW, existing credit loan payment 300K/month:
DSR 40% annual repayment capacity: 60M × 40% = 24M KRW
Existing credit loan annual repayment: 300K × 12 = 3.6M
Additional annual repayment capacity: 24M - 3.6M = 20.4M
Monthly: ~1.7M KRW → ~380M KRW loan possible (30yr, 3.5%)