02/05/2024
The DSR meaning can be put simply as "a method used by banks to calculate whether or not you can afford the loan youâre applying for".
In terms of a home loan, this formula essentially helps the bank estimate how much you can afford to fork out for your monthly installments. Below are the steps to calculate DSR.
STEP 1: IDENTIFY YOUR MONTHLY COMMITMENT
Commitments include car loans, credit cards, PTPTN, personal loans, etc. An easy way of keeping track of all these records is via CCRIS / CTOS report where all your monthly commitments and study loans are traceable and easily accessible.
STEP 2: IDENTIFY YOUR MONTHLY NET INCOME
As for income, banks will look at your net income after the deduction of all statutory deductions like zakat, EPF, SOCSO, and taxes. You may also add in your rental income (if any).
STEP 3: CALCULATE DEBT SERVICE RATIO (DSR)
Once you have identified both total commitment and income, DSR can be calculated with the following formula:
DSR =
(TOTAL MONTHLY COMMITMENT + NEW HOUSING LOAN) / (NET INCOME) X 100%
STEP 4: UNDERSTAND YOUR LOAN ELIGIBILITY
Different banks have different DSR guidelines. However, it is advisable DSR to be below 50%.
