People shopping for a loan start with “how much do I need”. The branch starts somewhere else — “how much are we allowed to lend you” — and the answer is set by DSR. Korea’s Financial Services Commission defines it in one line: annual principal and interest on all household debt, divided by annual income.
1. Where is the line? 40% at banks, 50% at non-banks. The FSC’s own FAQ adds “the same in regulated areas” — designating an area does not tighten DSR. What tightens is LTV and the hard cap.
2. What eats the limit? The stress rate — and it is not a single number. For the second half of 2026: +3.00 points on capital-area and regulated-zone mortgages, +0.75 on regional mortgages, +1.50 on credit and other loans. All three are add-ons used only to compute DSR — you never actually pay them.
3. Why does the bank’s number differ? Because the regulation hands the method and the detailed criteria to the supervisor (art. 29-2(3)). That is exactly why the calculator below has a separate box for the assessed term.
The calculator returns your remaining headroom in won and, on the same inputs, the limit you would get with the stress rate switched off. The gap between those two numbers is what the rule removed.
| Item | Annual repayment | Of income |
|---|
“Assessed term” may not be the real term. The supervisory regulation hands the method of computing DSR and the detailed criteria to the Governor of the Financial Supervisory Service (art. 29-2(3)), and credit and other loans are converted to a set period rather than their contractual term. We opened that rulebook on 18 September 2026 — Banking Supervision Enforcement Rules, Table 18, chart 3, reproduced below. A credit loan that is not amortising counts over five years. We still leave it as a box you can change, because the figure turns on the product and the repayment type. If your bank quoted a term, use theirs. Some lending — jeonse loans, interim payments, policy microfinance — is treated differently in the DSR calculation, and none of those exceptions are modelled here. This is an estimate, not a credit decision.
The figures this calculator uses, and where they come from
| Item | Value | Source |
|---|---|---|
| Definition of DSR | Annual principal and interest on all household debt ÷ annual income | FSC, May 2026 |
| Ratio cap | 40% banks · 50% non-banks, same in regulated areas | FSC 15 Oct measures FAQ |
| Stress rate — capital-area / regulated-zone mortgage | 3.0% × 100% base ratio = +3.00 pts | FSC 15 Oct package · H2 2026 guidance |
| Stress rate — regional mortgage | 1.5% × 50% = +0.75 pts | same source |
| Stress rate — credit / other loans | 1.5% × 100% = +1.50 pts (balance above KRW 100m) | FSC, May 2025 |
| Repayment method | Equal total payments — the same amount each month | our assumption, our own calculation |
| Assessed term | An input — deliberately not hard-coded | rulebook, Table 18 chart 3 (read 18 Sep 2026) |
It is not counting interest alone. The numerator is principal and interest. Because repaid principal is in there, a short loan eats DSR even when the balance is small. How much the repayment method changes total interest is laid out in the loan repayment calculator.
The stress rate is not money you pay
Financial Services Commission on the stress DSR — “considering the possibility that repayment burden rises through the life of the loan if rates increase, an add-on rate is imposed when DSR is computed”.
A companion release from the same body adds, in brackets, “not charged on the actual loan rate”.
Those two lines are the whole of it. The rate is inflated only while the limit is being sized; the interest you actually pay is unchanged. So the accurate sentence is not “rates went up 1.5 points” but “the amount you may borrow went down”.
| Stress rate | Limit | Difference |
|---|---|---|
| 0% (comparison) | about KRW 221.0m | — |
| 0.75% — regional mortgage | about KRW 202.6m | −KRW 18.4m |
| 1.50% — credit / other loans | about KRW 186.4m | −KRW 34.6m |
| 3.00% — capital-area mortgage | about KRW 159.5m | −KRW 61.5m |
Income of KRW 50m, an existing credit loan of KRW 30m at 5.50% over five years, a new loan at 4.30% over 30 years — our own calculation. Buying in the capital area puts you on the bottom row, where 3.00 points remove KRW 61.5m; the same position outside it costs KRW 18.4m. In every case the number shrinks with no rise in rates and no fall in income.
The same run shows something else worth noticing. That KRW 30m credit loan consumes 13.8% of DSR. The balance is only 60% of annual income, but a five-year term pushes roughly KRW 6m of principal through the ratio every year. Of the 40% allowance, 13.8 points are gone and 26.2% — KRW 13.1m a year — is what remains. In DSR the heavy thing is not the balance but the term.
Passing DSR is not the only test
A mortgage in Korea meets three rulers at once. Article 29-2(1) of the Regulation on Supervision of Banking Business lists them side by side — loan-to-value (LTV), debt-to-income (DTI) and debt service ratio (DSR) — and says banks “shall comply”.
- LTV cuts against the price of the house. In a regulated area an ordinary borrower gets 40%.
- DTI divides mortgage principal and interest plus interest on everything else by income. It attaches to apartments in regulated areas.
- DSR divides principal and interest on every household loan by income. It does not change with the area.
On top of those sits a hard cap by house price — in regulated areas, KRW 600m up to a KRW 1.5bn house, KRW 400m from 1.5 to 2.5bn, and KRW 200m above that. No level of income gets past it. The real limit is the smallest of the four. Where this calculation sits in the buying sequence is set out in the order to check before buying.
Jeonse loans are not measured here
Jeonse loans are treated differently in the DSR calculation and are outside this calculator. What banks actually charge for them is measured in the jeonse loan rate article, and whether jeonse or monthly rent works out cheaper is in jeonse versus monthly rent.
Why the rule is shaped this way is in the DSR rules explained, and where people actually get the arithmetic wrong is in the common DSR mistakes.
What this calculator does not do
- It is not a credit decision. A bank also weighs how it recognises income, your credit standing, the appraised value and the product terms. This models the DSR axis only.
- It ignores the exceptions. Jeonse loans, interim payments, relocation loans and policy microfinance are handled differently.
- It does not «impose» an assessed term. Chart 3 of the rulebook is set out below, but the same “credit loan” splits between five years and the contractual term, so it stays an input.
- It ignores the reduced add-on for fixed-rate periods. Longer fixed periods attract a smaller share of the stress rate; this applies it in full, which is the conservative direction.
Questions that remain
Why do I have to pick a stress rate — isn't there just one?
There is not. The Commission's operating guidance for the second half of 2026 states the final rate as stress rate × base application ratio × loan-type ratio, and the first two terms split three ways: capital-area and regulated-zone mortgages are 3.0% at 100%, or +3.00 points; regional mortgages 1.5% at 50%, or +0.75; credit and other loans 1.5% at 100%, or +1.50. Hence the selector above. The “1.5%” that circulates online was the first-half-of-2025 figure and no longer fits a capital-area mortgage.
Do I actually pay that add-on?
No. The Commission's own document settles it in a bracket — “not charged on the actual loan rate”. The rate is inflated only while the limit is being computed; what you pay each month is your contract rate. So the accurate sentence is not “rates went up” but “the borrowable amount went down”. On the figures above, a capital-area mortgage loses KRW 61.5m of headroom to 3.00 points — with no rise in rates and no fall in income.
The bank quoted me a different limit.
Article 29-2(3) of the banking supervision regulation delegates the calculation method and the detailed criteria to the supervisor. That rulebook holds the assessed term used to convert credit and other loans, the list of loans treated differently, and how income is recognised — and we opened it on 18 September 2026, reproduced below. Knowing the figures, the assessed term stays an input: the same “credit loan” is the contractual term (5–10 years) when amortising and five years otherwise, so no single number fits. If a gap remains, it is most likely a box this calculator does not hold — an overdraft counted at its full limit (note 1), or a spouse's debt added with their income (para. 12-1(d)).
My credit loan is only KRW 30m — why does it cost me so much?
Because the numerator of DSR is principal and interest, not interest. Repaying KRW 30m at 5.50% over five years costs KRW 6.88m a year, most of it principal. That single loan consumes 13.8% of the DSR even though the balance is just 60% of annual income. Out of the 40% bank cap, 13.8% is gone and 26.2% remains — KRW 13.1m a year. What is heavy in a DSR is the term, not the balance.
If my DSR clears, does the loan come through?
Not by itself. Four separate rules cut a mortgage: LTV against the property value, DTI (mortgage principal and interest plus interest on everything else), DSR (principal and interest on everything), and a cap by property price band — in regulated areas KRW 600m up to KRW 1.5bn, KRW 400m from 1.5 to 2.5bn, KRW 200m above that. Your real limit is the smallest of the four, so no income clears the band cap. Jeonse loans are treated differently in the DSR calculation and are outside this tool.
Sources
- Korea Ministry of Government Legislation — administrative rule — Regulation on Supervision of Banking Business, article 29-2. Read directly for three things: LTV, DTI and DSR are set in appended table 6; the supervisor may adjust them by up to 10 percentage points; and the method of computation and detailed criteria are for the supervisor to set.
- Financial Services Commission — policy Q&A — FAQ on the 15 October housing market measures. Source for “DSR regulation (40% at banks, 50% at non-banks, the same in regulated areas)”, the 40% LTV in regulated areas, and the caps by house price.
- Financial Services Commission — press release — stage 3 stress DSR confirmed. Source for the 1 July 2025 start, the 1.50% stress rate, the temporary 0.75% for regional mortgages, the rule that credit loans attract it only above a KRW 100m balance, and the bracketed “not charged on the actual loan rate”.
- Financial Services Commission — “Stage 3 stress DSR — notice of amended administrative guidance” (FSC notice 2026-362, 18 June 2026), carrying the “stress DSR operating direction for H2 2026”, table 1. Source for 3.0% on capital-area and regulated-zone mortgages at a 100% base ratio, 1.5% at 50% for regional mortgages, 1.5% at 100% for everything else, and the formula “final rate = stress rate × base application ratio × loan-type ratio”. It runs 1 July to 31 December 2026 and matches the rate in force. The 3.0% is the figure raised from 1.5% by the 15 October package. These figures are set by administrative guidance, not a press release — which is why they are absent from the FSC’s press-release listing and sit instead in the financial regulation portal (better.fsc.go.kr), issued under article 9 of the Regulation on Financial Regulatory Operation.
- Financial Services Commission — press release — April 2026 household lending review. Where the definition “DSR = annual principal and interest on all household debt / annual income” was confirmed again in a 2026 document.
Chart 3, opened — the actual assessed terms
This article said in three places that we could not read the supervisor's rulebook. We opened it on 18 September 2026: Banking Supervision Enforcement Rules, Table 18, “Detailed risk-management criteria for housing-related secured loans”, chapter 3, chart 3 — how debt is counted for DSR (amended 7 March 2024).
| Loan | Repayment | Principal counted as |
|---|---|---|
| Mortgage (individual, completion) | Fully amortising | Actual repayments after amortisation starts |
| Mortgage (individual, completion) | Partly amortising | Actual repayments + balloon ÷ (term − grace) |
| Mortgage (individual, completion) | Bullet | Total ÷ term (max 10 years) |
| Interim-payment, relocation | Any | Total ÷ 25 years |
| Jeonse, deposit-secured, policy loans | Any | Excluded |
| Loan against a jeonse deposit | Any | Total ÷ 4 years |
| Credit loan | Amortising | Total ÷ contractual term (5 to 10 years) |
| Credit loan | Otherwise | Total ÷ 5 years |
| Non-housing property (not officetel) | Any | Total ÷ 8 years |
| Securities-backed | Any | Total ÷ 8 years |
| Other secured (guarantees etc.) | Any | Total ÷ 10 years |
| Card loan | Amortising | Total ÷ contractual term (max 5 years) |
| Card loan | Otherwise | Total ÷ contractual term (max 3 years) |
| Other (instalment, lease, cash advance, student, moneylender) | Any | Actual repayments over the next 12 months |
Four notes matter as much as the figures.
- An overdraft counts at its full limit (note 1) — “for a limit facility, the total is taken as the limit in computing principal and interest.” Untouched credit still counts as debt.
- “Amortising” is defined (note 3) — no grace period, equal monthly or quarterly instalments, and the amortised portion is at least 40% of the loan. Below that line it falls into the “otherwise” box (five years for a credit loan).
- An officetel loan with a grace period over one year is treated as bullet (note 4).
- Interest on a cash advance is computed on an average two-month usage period (note 8).
The term has a ceiling. Paragraph 12-2(g) of the same table (inserted 7 March 2024): the term used to count debt is the real term where repayment capacity is evidenced across the whole term, and otherwise may not exceed 40 years.
And stretching the term to raise the limit is itself written down as avoidance — paragraph 11(f): “a loan whose term is run excessively long without reasonable grounds in order to increase the amount available.” The same test applies to DSR (amended 7 March 2024).
Eleven loans that fall outside DSR
Paragraph 12(b) lists what the supervisor has recognised as excluded.
| Excluded | Note |
|---|---|
| Policy microfinance | Saehuimang Holssi, Bakkwodeurim, Saitdol, Jinggeomdari, student and youth Haetsal loans |
| Small loans up to KRW 3m | Out on size alone |
| Jeonse loans | Not loans against a jeonse deposit — those count, over four years |
| Reverse mortgages | — |
| Interest-subsidy loans under public agreements | — |
| Emergency loans in disaster areas | — |
| Policy loans against an insurance contract | — |
| Commercial vehicle finance | — |
| Deposit-secured loans | — |
| Instalment, lease and cash advances | Also named in chart 3's “other” row — the exclusion wins |
How income is recognised — paragraphs 12-1 and 12-2
- Documented income first; where that is impractical, imputed or declared income, following the Korea Housing Finance Corporation's Bogeumjari income-evidence method.
- A spouse's income may be added — but then the spouse's debts must be added too (amended 1 August 2022). You cannot borrow the income alone.
- Where two or more imputed or declared sources are used, income is capped at KRW 70m, and if the figures differ, the lowest applies.
- The table's own definition: annual principal and interest on financial-institution loans ÷ annual income × 100, computed from data pooled at the Korea Credit Information Services.
— Banking Supervision Enforcement Rules, Table 18, chapter 3: para. 11(f), para. 12(a) and (b), para. 12-1, para. 12-2(c), (d), (f) and (g), chart 3 and notes 1–8 (read 18 September 2026)
Older loans keep the older term — chart 3-1
The same table carries a chart 3-1 (amended 24 April 2023). Each time the rules tightened, deals already under way were left on the old basis — so an older loan is counted over a «longer» term, and a longer term means smaller annual instalments, which is the favourable direction for DSR.
| Loan | Cut-off | Principal counted as |
|---|---|---|
| Credit loan | on or before 30 Jun 2021 | Total ÷ 10 years |
| Credit loan | 1 Jul 2021 – 2 Jan 2022 | Total ÷ 7 years |
| Non-housing property | on or before 2 Jan 2022 | Total ÷ 10 years |
| Officetel | on or before 23 Apr 2023 | Total ÷ 8 years |
| Card loan | on or before 2 Jan 2022 | Actual repayments over the next 12 months |
The credit-loan term shortened twice: 10 → 7 → 5 years. The same KRW 30m counts as 3m a year if taken before July 2021, and 6m today (principal only, our arithmetic) — the loan is unchanged and its DSR weight has doubled.
Not everyone may use the old chart. Paragraph 12-2(f) narrows it: borrowers who by the cut-off had signed a purchase contract and evidenced payment of the deposit, had a loan application registered by the institution, or had been notified of a maturity extension — plus completion loans on projects whose tenant-recruitment notice had issued by then. And a pre-sale right «resold» after that date is excluded.
This calculator does not carry chart 3-1, because who qualifies turns on contracts and application records. If it applies to you, type the figure above into the assessed-term box.
Where to check further
- Which row of chart 3 your loan is on. The figures are copied above, but whether your credit loan meets the note-3 definition of amortising (no grace period · instalments of at least 40% of the total) has to be read off your agreement — ask your bank branch, or check your own terms on the FSS FINE portal.
- Whether you fall under the transitional chart 3-1. It turns on evidence of the deposit payment, the loan application record, a maturity-extension notice, and the tenant-recruitment announcement date — your bank decides.
- The stress rate after 2026. The figures above come from guidance running to 31 December 2026 — it is set half-year by half-year, so check the FSC press releases for the next one when the year turns.
- Which row your loan is on. Regulated-zone designations change — confirm the current status of the property with the Ministry of Land notice or your bank.
- Mixed and periodic-reset products. The table above stops at the base application ratio — a further loan-type ratio is multiplied in, and the closer a loan is to genuinely fixed, the less of the add-on applies. The breakdown is tabulated in the DSR rules explainer.
- How much of your income counts. Banks differ on what they recognise — asking your own bank what income they will count, and at what figure, comes before any of this.
Written as at August 2026. The stress rates are those in the operating guidance for the second half of 2026 (1 July – 31 December). The ratio caps and stress rates are read from Financial Services Commission documents, and the limit arithmetic is our own, on an equal-total-payment basis. The assessed terms are read from chart 3 of the rulebook and reproduced above; the transitional chart 3-1 and the exception list are not modelled. DSR rules change with each package of measures, so confirm with the bank immediately before you draw down. To see this alongside your other fixed costs, the calculator collection groups the tools by situation. This is general information, not financial advice.
