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How to Calculate Your DSR?

To increase the possibility of getting your loan approved, it is important to understand the major obstacle to it - Debt Service Ratio. Loan officers can be very strict when it comes to scrutinizing these factors. One of the first things your bank will look at it is your Debt Service Ratio (DSR).

Debt Service ratio help to recognize either you are in a healthy or unhealthy financial position.


DSR is telling the bank “whether or not you can afford the loan you are applying for” with two main components:

DSR = Total Commitment/ Net Income

In terms of a home loan, this formula essentially helps the bank estimate how much you can afford to fork out for your monthly instalments.

So, what exactly defines a commitment? In the context of your DSR, it means all bank and non-bank debt. Bank debt includes your car loan, credit card bills, and personal loans. Non-bank debt on the other hand, consists of monthly repayments such as PTPTN.

As for income, that banks will look at your net income after the deduction of EPF, SOCSO and taxes.


Lender and banks love to see if you are capable to repay your home loan monthly repayment, if it seems like you’ll have a tough time scraping by just to pay them back, it’s highly likely they’re not going to approve your loan.