Of Korea's three lending ratios — LTV, DTI and DSR — the one that actually sets a mortgage limit is usually DSR. Each measures something different, all are calculated, and the smallest result becomes the limit. In regulated zones a fourth gate sits on top: an absolute cap tied to the property's price band. Run the same borrower through every formula and which gate closes first turns out to depend on income.
What each ratio looks at: the house, the income, the other debts
LTV (loan-to-value) looks at the house. It caps borrowing as a share of the collateral's price, and income never enters the calculation. DTI and DSR both look at income. What separates them is how much of your other debt they count.
According to Toss Feed's explainer, DTI counts both principal and interest on the mortgage itself, but only the interest on other loans such as credit lines. DSR counts the full principal and interest of every loan — credit loans, overdraft accounts, car installments, card loans. The headline percentage may be the same 40%, but the numerator is not.
| Item | LTV | DTI | DSR |
|---|---|---|---|
| Base value | Property price | Annual income | Annual income |
| Mortgage counted as | Loan principal | Principal + interest | Principal + interest |
| Other debts counted as | Not counted | Interest only | Full principal + interest |
| Bank-sector cap | 40% in regulated zones | 40–60% by region | 40% |
The DSR ceiling is 40% at banks and 50% at non-bank lenders. Since 1 July 2025, a stress rate is added on top.
Why the same 40% produces limits more than KRW 100m apart
Here is what the difference in scope costs, in one case. A borrower earning KRW 70 million a year holds a KRW 50 million credit loan at 6% amortizing over five years, and applies for a 30-year mortgage. The assessment rate is held at 7% for both calculations (a 4% actual rate plus a 3 percentage-point stress rate) and the ratio at 40%, so only the scope differs.
First-year interest on the KRW 50 million credit loan is KRW 3 million, but the level five-year payment comes to roughly KRW 11.6 million a year. That KRW 8.6 million gap comes straight out of mortgage capacity.
| Line | Under DTI 40% (KRW 10k) | Under DSR 40% (KRW 10k) |
|---|---|---|
| Allowed annual repayment (70m × 40%) | 2,800 | 2,800 |
| Credit loan counted | 300 (interest only) | 1,160 (principal + interest) |
| Remaining mortgage capacity | 2,500 | 1,640 |
| Mortgage limit (30 years, 7% assessment rate) | KRW 313m | KRW 205m |
A gap of KRW 108 million. That is why clearing a credit loan first raises a mortgage limit — what DTI counted as interest alone, DSR counts as principal too. The annuity factor used here is KRW 7.98 million per year per KRW 100 million borrowed, at 30 years and 7%.
LTV asks what the house is worth. DSR asks what you are already paying off.
LTV 40%, the KRW 600m cap, DSR 40% — which closes first?
Regulated zones have four gates, not three. The lending demand management measures announced by the Financial Services Commission on 15 October 2025 cut regulated-zone mortgage LTV from 70% to 40% for buyers with no home and for one-home buyers selling their existing property, then layered an absolute cap by price band on top: KRW 600 million for homes up to KRW 1.5 billion, KRW 400 million from KRW 1.5–2.5 billion, and KRW 200 million above that. It took effect on 16 October, covering all of Seoul and twelve municipalities in Gyeonggi Province.
Below, a borrower with no home and no other debt is run through all three limits at a 30-year term and a 7% assessment rate (4% actual plus 3 percentage points of stress), with the smallest taken as the result.
| Property price | Annual income | LTV 40% limit | Price-band cap | DSR 40% limit | Final limit | Binding gate |
|---|---|---|---|---|---|---|
| KRW 1.0bn | KRW 50m | KRW 400m | KRW 600m | KRW 251m | KRW 251m | DSR |
| KRW 1.0bn | KRW 100m | KRW 400m | KRW 600m | KRW 501m | KRW 400m | LTV |
| KRW 1.5bn | KRW 100m | KRW 600m | KRW 600m | KRW 501m | KRW 501m | DSR |
| KRW 2.0bn | KRW 100m | KRW 800m | KRW 400m | KRW 501m | KRW 400m | Price-band cap |
| KRW 3.0bn | KRW 150m | KRW 1.2bn | KRW 200m | KRW 752m | KRW 200m | Price-band cap |
A pattern emerges. With a cheaper home and lower income, DSR binds first. With a cheaper home and high income, LTV binds. And once the price passes KRW 1.5 billion, the absolute cap shuts the door no matter how high the income — the KRW 752 million of DSR capacity on a KRW 3 billion home is irrelevant when the cap is KRW 200 million.
Why the assessment rate is 7%
Using a rate higher than the actual one to compute DSR capacity is the point of the stress DSR. The third-stage framework confirmed by the FSC on 20 May 2025 set the stress rate at 1.50% and extended coverage to effectively every household loan subject to DSR. It took effect on 1 July 2025, with credit loans charged only on balances above KRW 100 million. Regional mortgages outside the capital area kept the second-stage 0.75% on a temporary basis.
That floor rose again in the October measures. The minimum stress rate on capital-area and regulated-zone mortgages moved from 1.5% to 3.0%, and from 29 October the interest portion of jeonse (lump-sum deposit lease) loans taken by one-home households in those areas began counting toward DSR. How much a 1.5 percentage-point stress rate removes from a limit is worked out separately in the piece calculating the third-stage stress DSR.
The earlier household debt measures of 27 June 2025 remain in force as well. They introduced the KRW 600 million ceiling on capital-area mortgages, cut first-time-buyer LTV from 80% to 70%, capped mortgage terms at 30 years, and imposed a six-month move-in obligation. The 30-year term used in the table above comes from that rule.
The 2026 backdrop
The 2026 household debt management plan announced on 1 April 2026 set this year's growth target for household lending at 1.5%, below the 1.7% recorded in 2025 and less than half the projected nominal growth rate. It also targets bringing household debt down to around 80% of GDP by 2030 and reducing policy loans from roughly 30% of the total to about 20%.
The same plan extended LTV rules to online investment-linked finance providers — 40% in regulated zones, 70% elsewhere — along with the same price-band caps, effective 2 April. The route of topping up a bank-constrained limit at another type of lender has narrowed, in line with the overall volume target. The planned reduction in policy lending also bears directly on the products compared in the piece on Didimdol and Bogeumjari loan conditions.
What to check
- Have you calculated all three? The real limit is the smallest of the LTV figure, the price-band cap and the DSR figure. Computing only one will mislead.
- Did you count principal on existing debt? DSR includes principal on credit loans, overdrafts and car installments. In the case above that alone moved the limit by KRW 108 million.
- Did you add the stress rate? The floor for capital-area and regulated-zone mortgages is 3.0 percentage points. A limit computed at the actual rate will not match reality.
- Is the price near the KRW 1.5 billion line? Crossing it drops the cap from KRW 600 million to KRW 400 million — KRW 200 million disappears at the boundary.
- Is the property in a designated zone? Regulated zones cover all of Seoul and twelve Gyeonggi municipalities, with different rules outside. Confirm the current designation before contracting.
- The 30-year term cap and six-month move-in obligation — both are assumptions behind the limit calculation and obligations after signing. Check them together.
Sources
- Lending demand management measures for housing market stabilization (FSC, 15 Oct 2025)
- Third-stage stress DSR implementation plan (FSC, 20 May 2025)
- Household debt management measures centered on the capital area (FSC, 27 Jun 2025)
- 2026 household debt management plan (Korea Policy Briefing)
- Three things to know before borrowing: LTV, DTI, DSR (Toss Feed)