Background
The Bank for International Settlements and others have long used the DSR to measure household debt burdens. South Korea adopted it as a bank-supervision metric in 2018. The older DTI rule only counted mortgage principal and interest, plus interest on other debt. That let buyers pile credit loans and overdrafts on top of a mortgage, a practice dubbed yeongkkeul ("scraping together every last won"). With household debt exceeding 100% of GDP, regulators phased in a per-borrower 40% DSR cap starting in July 2021.
How it's calculated
Add up a year's principal and interest on every loan: mortgages, credit loans, auto loans, card loans. Then divide by annual income. A ₩50 million earner can carry at most ₩20 million a year in debt service at a bank. Credit loans are treated as if repaid over five years, which eats into the limit. Since 2024 a "stress DSR" adds a buffer for future rate increases. Lenders also apply the collateral-based LTV cap, and the lower of the two limits is what you can actually borrow.
Raising your limit
Longer maturities lower annual repayments and therefore the DSR. Paying off existing credit or card loans first also helps. Documenting all income and choosing a fixed rate reduce the stress add-on. Some loans are excluded, including jeonse deposit loans, interim payments on new apartments, and government low-income loans. Still, it's wiser to borrow based on what you can comfortably repay than on the maximum allowed. Your credit score affects the rate too.
FAQ
- With a ₩60M salary and a 40% DSR, how much can I borrow?
- Up to ₩24 million a year in principal and interest—the actual loan depends on rate and term.
- Do jeonse loans count toward DSR?
- In principle they are currently excluded.
Sources reviewed: 2026-10-26
References
- 금융위원회. (2021). 「가계부채 관리 강화방안」.
- 금융위원회. (2024). 「스트레스 DSR 도입방안」.
- Bank for International Settlements. (2017). Debt service ratios for the private non-financial sector. BIS Quarterly Review.