You heard you could borrow 700 million won against a 1-billion-won apartment. Then you sit down at the bank counter, and they approve less than 400 million. This plays out daily in Korea's 2025-26 property market. Regulated-zone LTV is capped at 40%, and DSR Phase 3, effective July 2025, slapped a 1.5 percentage-point stress rate onto variable-rate loans in the capital region. The October 2025 measures pushed harder still: they raised the DSR stress floor to 3% and folded jeonse-loan interest—previously left out—into the DSR calculation. Here are the eight core terms that pop up at every turn of buying, selling, renting, and borrowing.

Official Land Price — a price built for taxes

The official land price is the benchmark price for land that the government surveys and announces every year. Plenty of people assume it equals the market price. It doesn't. It's an administrative figure used to levy property taxes, the comprehensive real estate tax, and assorted charges and compensation, so it's usually set below actual transaction prices. The Korea Real Estate Board and the Ministry of Land run the surveys and announcements.

The key thing is that this number ties straight to taxes. When the official land price rises, the holding tax on the same parcel climbs with it. Add the "realization rate"—how closely the government decides to align the official price with market prices each year—and the weight of the tax burden shifts again. That's why this figure is one of the most fought-over numbers in property policy. A parcel assessed at 3 million won per square meter often trades well above that in real deals.

Net Floor Area — the space inside your front door

Net floor area is the interior space your household actually uses once you open the front door. The "supply area" in sales brochures piles on shared portions like hallways, stairs, and elevators (the shared residential area). So two units both labeled "84㎡" can offer different living space. The most common slip is taking the big brochure number as your actual living space.

The ratio of net floor area to supply area is called the "net usage ratio." The higher it is, the roomier the interior for the same supply area. Apartments usually run high on this ratio; officetels run low. That's exactly why comparing labeled areas alone is a quick way to get short-changed. Of two units both at 84㎡ supply area, the one with the larger net floor area is the bigger home in practice.

Jeonse Ratio — the same number, opportunity to one side, alarm to the other

The jeonse ratio is the jeonse deposit as a share of the home's sale price. If a home selling for 500 million won carries a 400-million-won jeonse deposit, the ratio is 80%. A high ratio means the gap between sale price and jeonse price is small—add a little cash and you can buy the home, which links it straight to gap investing.

But push the ratio too high and the signal flips. If prices dip even slightly, or the next tenant can't be found in time, the owner may be unable to return the full deposit even after selling—"underwater jeonse" becomes real. A home at 80% turns precarious for full deposit return on just a 20% price drop. Tenants watch this number to protect their deposit; buyers watch the same number to gauge risk. Regional statistics are compiled and published by the Korea Real Estate Board.

✍️ Operator's note — A high jeonse ratio sounds like "buy a home with little cash," but honestly that's the landlord's view; for the tenant it's the opposite signal. A listing above 90% is structured so your deposit becomes a hostage at the first price wobble. Pulling the registry and checking senior claims before moving in is basically the standard play here.

Housing Subscription — parking money in an account won't win it

Housing subscription is the system for applying in advance to buy a newly built apartment, with occupants chosen by lottery or points. It's easy to believe anyone who just parks money in a subscription account will win, but at popular complexes the competition is brutal and "points" decide who's in. Points are tallied from time spent without homeownership, number of dependents, and length of account enrollment—so people who stayed homeowner-free longer and opened the account early hold the edge.

There are two methods. A points-based system ranks by score; a lottery system draws at random—and which applies depends on size and region. Special supply programs run alongside, giving newlyweds and multi-child households separate chances. And contrary to the common belief, winning isn't profit. The outcome rides on the sale price, surrounding market prices, and conditions at move-in. If the sale price tops nearby market prices, you can lose money even after winning.

Cap Rate — the yardstick that lines up yield in one figure

The cap rate is a property's annual net operating income (NOI—rent minus operating costs) divided by its sale price. A commercial property selling for 1 billion won that throws off 50 million won in annual NOI has a 5% cap rate. It lets you set properties of different locations and types on the same baseline and weigh their profitability.

This is where it's easy to trip. The idea that a higher cap rate always means a better investment. A high cap rate means the price is cheap—and behind that cheapness there's often a bigger risk hiding, like vacancy or a weak location. The cap rate also leaves out loan interest, so the moment you add leverage, your felt return shifts again. That's why working investors compare against the average cap rate for the same area and type to judge whether a price holds up.

The three rules that set your loan limit: LTV, DTI, DSR

How much you can borrow to buy a home isn't decided by one thing—three rules act at once. LTV is collateral-based (home price); DTI and DSR are income-based (repayment capacity). And the tightest of the three sets your actual limit.

LTV — the ceiling that home price sets

LTV (Loan to Value) is the loan as a share of home price. At 70% LTV you can borrow up to 700 million won on a 1-billion-won home, filling the remaining 300 million from your own funds. It sets the ceiling on how much one person can borrow, and it doubles as a safety device that limits the bank's loss exposure if prices fall.

The lower the ratio, the more of your own money goes in and the safer it is; the higher it climbs, the greater the leverage of buying a large asset with little equity. The Korean government has kept adjusting LTV caps by region and housing type, and in 2025-26 the regulated-zone LTV was tightened to 40%. One common slip: thinking LTV guarantees a limit regardless of income. In fact it applies right alongside income rules like DTI and DSR, and the tighter of the two decides the limit.

DTI — an income standard built around housing debt

DTI (Debt to Income) is annual principal-and-interest repayment as a share of annual income. Under a 40% DTI rule, someone earning 100 million won a year can't carry mortgage repayments above 40 million won a year. Basing limits on home price (LTV) alone lets under-earners overborrow. So DTI is the device that checks actual repayment capacity to head off excessive loans.

Here too the misread is common: that DTI sums all debt. It doesn't. Traditional DTI adds only the interest of other loans on top of mortgage principal-and-interest, which makes it looser than DSR, which folds in the principal of credit loans too. Korea's financial authorities have run LTV, DTI, and DSR as one bundle to manage total household debt.

DSR — the meanest rule, summing every debt

DSR (Debt Service Ratio) combines the principal and interest of every debt you hold—mortgage, credit loans, auto installments, card loans—and stacks it against income. It's the tightest of the three. Where DTI mostly eyes housing debt, DSR takes in the full repayment burden a person carries. The point is to stop borrowers from hiding their total burden by taking small amounts across many lenders.

With DSR Phase 3 effective July 2025, a 1.5 percentage-point stress rate attaches to capital-region loans. The limit gets calculated assuming a rate higher than the actual one, trimming how much you can borrow on the same income. The October 2025 measures raised the DSR stress floor to 3% and pulled previously excluded jeonse-loan interest into DSR. Under a 40% DSR rule, even a high earner gets shut out of further loans if credit loans and installments have already stacked up.

✍️ Operator's note — The real lock on aggressive borrowing is DSR, not LTV. People calculate "40% LTV means up to 400 million," but once a 40% DSR plus a 1.5pp stress rate plus jeonse-loan interest all stack up, that 400 million shrinks into the low 200-millions—that's the 2025-26 reality. The home-price limit is just a ceiling; what actually lands in your account is decided by your income and existing debt. Calculate your own DSR before the loan consultation, in that order.

Caveats and limits

Every one of these terms swings in value with timing and policy. The official-price realization rate, LTV and DSR caps, and subscription point weights change frequently by government policy, so always confirm the latest standards before signing or borrowing. Figures like 1.5pp, 3%, and 40% reflect 2025-26 rules and may change afterward.

Indicators like cap rate and jeonse ratio are, in the end, averages—they can't explain the risk of an individual listing. At the same jeonse ratio, risk varies wildly by location, supply, and contract structure; at a high cap rate, real income collapses once vacancy drags on. Numbers are only a starting point. They don't replace checking the registry, market prices, and contract terms yourself.

Memorizing real estate terms is one thing; having a feel for the numbers is another. Play PriceGuess's Daily price guess or Higher-Lower games—estimating various prices and ratios over and over—and an instinct slowly settles in for what 40% LTV actually amounts to, or how risky an 80% jeonse ratio really is. The terms become the lens through which you read the games' price data.