💡 Your jeonse loan limit is typically 60–80% of your deposit amount, but your income, the property’s assessed value, and the specific loan product you choose all determine where in that range you actually land.
How Banks Actually Calculate Your Loan Limit
Most people applying for a jeonse deposit loan assume the limit is just a straightforward percentage of their contract deposit. Broadly, that’s true — but the calculation is more layered than that, and getting it wrong can leave you short by tens of millions of won when you’re already holding a signed rental contract.
Here’s what’s actually happening behind the scenes. The bank isn’t just looking at your deposit amount. They’re looking at the property’s official assessed value (the “gongsichaga”), your debt-to-income ratio, your credit score, and whether the product you’re using is government-backed or commercial. All of these feed into your final loan limit.
One investor I know — mid-30s, stable income, decent credit — thought he’d cleared everything. The bank said 80% LTV. What he didn’t account for was that the property’s assessed value came in lower than the actual deposit in his contract. The 80% applied to the assessed value, not the contract figure. He had to cover the gap in cash. Not a fun discovery three days before signing day.
Worth understanding before you’re in that situation.
The Math Behind Your Maximum Loan Limit
Let’s walk through a realistic example. Say you’re signing a jeonse contract with a 300 million won deposit.
flowchart TD
A["Jeonse Contract Deposit: 300M won"] --> B["Bank assesses property value\nGongsichaga: ~280M won"]
B --> C["Apply LTV ratio: 80%\n280M × 0.80 = 224M won cap"]
C --> D["Check DTI: income-based ceiling\nExample result: 200M won max"]
D --> E["Final Loan Limit = lower figure\n= 200M won"]
E --> F["You cover remaining gap:\n100M won from own funds"]
The calculation runs through two filters: the loan-to-value (LTV) cap based on the property’s assessed value, and the debt-to-income (DTI) cap based on your annual income and existing obligations. Your actual limit is whichever figure is lower — and many borrowers are surprised to discover the income cap is the binding constraint, not the property value.
Here’s how that plays out across different deposit sizes:
*Estimated ranges account for income-based DTI caps. Actual limits vary by lender, product, and individual financial profile.
Notice that as the deposit gets larger, banks apply increasingly conservative LTV ratios. That’s deliberate risk management — not an oversight you can negotiate around. For higher-value properties, your own cash contribution needs to be proportionally larger.
💡 The LTV ratio applies to the property’s official assessed value — not your contract deposit. If these two numbers differ significantly, your borrowing capacity can be meaningfully lower than you expect.
Government Loan Programs vs. Private Bank Limits
Here’s where things get genuinely interesting for income-eligible applicants.
Government-backed jeonse loans — products channeled through Korea Housing Finance Corporation or Korea Land and Housing Corporation — can offer higher borrowing limits relative to the deposit, sometimes maintaining 80% LTV on properties that commercial banks would cap at 60–70%. The trade-off is stricter eligibility requirements on the front end: income caps, asset ceilings, and homeownership restrictions.
For a borrower in their 30s with household income under the program threshold, the math is compelling. Higher limit, lower rate, fixed repayment schedule. I’ve seen cases where switching from a commercial bank product to the right government program freed up an additional 20–30 million won in borrowing capacity — enough to unlock a meaningfully different tier of rental property.
One important distinction: government programs sometimes calculate limits against the deposit amount directly rather than the assessed value. If your property’s official assessed value lags the current market — which is common in rapidly appreciating neighborhoods — this can significantly increase what you can actually borrow.
What Reduces Your Limit (and What People Get Wrong)
A few things that consistently trip borrowers up:
Existing debt matters — a lot. Car loans, credit card balances, other installment obligations all reduce your DTI headroom. Most banks target a DTI of 40–50% for jeonse loan applicants, meaning your total debt service — including the new loan’s interest — shouldn’t exceed roughly 40–50% of your monthly income.
Income type matters, not just income level. Salaried employees with documented payslips get clean DTI calculations. Freelancers and self-employed applicants face more scrutiny and often land at the lower end of the limit range despite equivalent earnings. That’s a documentation and verification issue, not an income issue.
Funny enough, the factor most people worry about — a slightly lower credit score — has less impact on loan limit than on interest rate. Credit score primarily shifts your rate; the limit is driven by income and property value. Good to know before you spend three months obsessing over a 30-point score difference.
💡 Calculate your expected limit before signing any rental contract. Know your income-based DTI ceiling, verify the property’s assessed value, and budget for the cash gap — surprises here are expensive and time-pressured to solve.
Related Articles
- Jeonse Loan Rates: A Bank-by-Bank Comparison
- Jeonse Loan Eligibility: Who Can Apply
- Government Jeonse Loan Programs: Benefits and Conditions
Back to Complete Guide: Jeonse Loan Complete Guide: Rates, Limits, and Eligibility Compared
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