Interest you never pay cuts your borrowing limit by ₩87M
The bank lends at 4.74% but assesses you at 7.74%. Those 3%p never touch your actual interest. They only cut the limit.
Conditions used in the video
- Annual income
- ₩50M
- Home value
- ₩800M
- LTV band
- regulated zone, no home owned, 40%
- DSR limit
- 40%
- Lending rate
- 4.74%
- Stress rate
- +3.0%p
- Loan term
- 30 years
Results
- Amount cap
- ₩600M
- LTV limit
- ₩320M
- DSR limit (assessed at 7.74%)
- ₩233M
- Final limit
- ₩233M
- Without the stress rate
- ₩320M
- Amount lost
- ₩87M
- Monthly payment as assessed
- ₩1.67M
- Monthly payment in reality
- ₩1.21M
At a glance
The amount cap, LTV and DSR are each computed and the smallest wins. Here DSR is the lowest and sets the limit.
- Amount cap₩600M
- LTV limit (40%)₩320M
- DSR limit (assessed at 7.74%)₩233M
lowest, so it becomes the limit
Assessed at the actual 4.74%, the limit would have been ₩320M. Raise the assessment rate to 7.74% and it becomes ₩233M.
- Without the stress rate₩320M
- Actual limit₩233M
- Amount lost₩87M
gone, though neither income nor rate changed
The bank assessed you as paying ₩1.67M a month; you actually pay ₩1.21M. That difference is what cuts the limit.
- As assessed (7.74%)₩1.67M
- In reality (4.74%)₩1.21M
- Difference₩450,000
Why it works this way
Your borrowing limit is the lowest of three constraints: the amount cap, LTV and DSR. On these conditions DSR is the lowest, so it sets the limit.
DSR is your annual repayments as a share of your income. On ₩50M of income at a 40% DSR, you are treated as able to repay ₩20M a year, or ₩1.67M a month. So far it is simple.
Start from income, find the affordable monthly payment, then work back to the principal it supports.
- Annual income₩50M
- DSR 40%₩20M a year
- Affordable monthly payment₩1.67M
- Worked back at 7.74%₩233M
Had that last box used 4.74%, it would read ₩320M. The first three boxes are unchanged. One box moves ₩87M.
The catch is in computing how much that ₩1.67M can borrow. The bank does not use the actual 4.74% but adds 3%p to it and uses 7.74%. That is the stress rate, meant to leave headroom in case rates rise.
Those 3%p never attach to the interest you actually pay. Not a won of it. Once the loan draws down you pay interest at the agreed 4.74%. The 3%p appear only while the limit is computed, then vanish.
The result looks odd. You were assessed as someone paying ₩1.67M a month, but borrowing the ₩233M limit at 4.74% means you actually pay ₩1.21M. You were assessed as if paying ₩450,000 more every month.
That ₩450,000 is what cuts the limit. Without the stress rate these conditions would have supported ₩320M. In reality it is ₩233M. ₩87M disappeared, and neither your income nor the rate changed.
None of this argues for scrapping the rule, since its purpose as a buffer against rising rates is clear enough. But if you do not know why your limit is that number, you cannot try changing the inputs. Note too that the stress rate is 1.5%p rather than 3.0%p for some regions and loan types.
The legal basis
Drawn from government announcements and the statutes themselves as primary sources, covering only the relevant part.
금융위원회 「주택시장 안정화 대책」 (the 10.15 measures)
In force 16 October 2025
A 3.0%p stress rate is added when computing DSR on mortgages in the capital area and regulated zones. Other household lending takes the 1.5%p stage-three baseline.
What this means
The added rate is used only in the DSR calculation and never reaches the interest you pay. Your monthly payment is unchanged; only what you may borrow shrinks.
금융위원회 「가계부채 관리 강화 방안」 (the 6.27 measures)
In force 28 June 2025
Mortgage terms in the capital area and regulated zones are capped at 30 years.
What this means
Lengthening the term lowers the monthly payment and so raises the DSR limit. With that route capped at 30 years, the stress rate is hard to work around.
Run it on your own numbers
The calculator opens with these conditions already filled in. Change the figures and your own case comes straight out.
Open the Mortgage Limit Calculator
Frequently asked
Do I actually pay the stress rate?
No. It is a notional rate added only when DSR is computed. Once the loan draws down you pay interest at the agreed rate. What it does do is shrink the amount you may borrow.
Why does the rule exist?
If rates rise, the repayment burden grows. Assessing you at a higher assumed rate means you are lent only what you could still carry after a rise. It protects both the borrower and the financial system.
Does the 3%p apply to every loan?
No. 3.0%p applies to mortgages in the capital area and regulated zones; other household lending takes the 1.5%p stage-three baseline. Check your region and loan type first.
How do I raise the limit?
DSR is what binds here, so cutting the annual repayments on existing loans or raising your income works most directly. Extending the term is unavailable because of the 30-year cap.
Which constraint binds in my case?
The calculator shows it. It marks which of the amount cap, LTV and DSR set your final limit. Knowing what is blocking you is what lets you try changing it.
Results are estimates based on the inputs and on the rules as at the stated date. They may differ from a lender's actual assessment, and the rules change often. Take professional advice before any decision that matters.