Rather than starting from a property's price, affordability works better in the opposite direction: start from your income and monthly budget, then work out the price range that fits.
Debt Service Ratio (DSR)
Banks assess your loan application primarily using DSR — your total monthly debt commitments (including the new home loan) as a percentage of your net monthly income:
Most banks look for a DSR at or below roughly 60-70%, though the exact cap varies by bank, income level and existing credit exposure. "Commitments" includes your existing car loans, credit cards (usually counted at a percentage of the limit even if unused), personal loans, and other outstanding financing — not just the new home loan.
Loan-to-value (LTV) limits
How much of the property price a bank will lend against depends partly on how many home loans you already have:
| Loan number | Typical max LTV |
|---|---|
| First home loan | Up to 90% |
| Second home loan | Up to 80-90% |
| Third home loan onward | Often 70% or lower |
This means your required cash down payment grows for each additional property you finance.
A simple budget-first estimate
A common rule of thumb: keep your total home loan instalment at or below roughly a third of your net monthly income, leaving room for other commitments and living costs. From there:
This is illustrative — your actual loan eligibility depends on the bank's full assessment (DSR, credit history, employment type, existing commitments), not just this simplified estimate.
Common questions
What counts toward my DSR besides the new home loan?
Car loans, personal loans, credit card commitments (usually assessed even on unused limits), existing home loans, and sometimes PTPTN education loan repayments.
Does a higher income always mean a higher loan eligibility?
Generally yes, but banks weigh income stability and type too — salaried employees, self-employed individuals and commission-based earners are often assessed differently, even at the same income level.
Can I improve my affordability before applying?
Paying down or closing existing credit card and loan commitments before applying can meaningfully lower your DSR and increase what a bank is willing to lend.