Take a buyer earning HK$60,000 a month with no existing loan repayments, looking at a 25 year mortgage at a 3.5 percent contract rate and a 50 percent debt-servicing ratio. The HKMA stress test adds about 2 percentage points, so the affordability check uses a stressed rate of 5.5 percent. At a 50 percent DSR the maximum monthly repayment is HK$30,000. Capitalising that payment over 300 months at the stressed 5.5 percent gives a maximum loan of roughly HK$4,885,297. Assuming a 70 percent loan-to-value, that loan supports a maximum property price of about HK$6,978,996. The stress test deliberately leaves headroom, so the repayment at the actual 3.5 percent contract rate would be comfortably below the HK$30,000 ceiling.
How it is calculated
Affordability starts from the debt-servicing ratio, the share of monthly income the HKMA lets go to all loan repayments, capped at around 50 percent for owner-occupiers. The tool multiplies your income by that ratio and subtracts any existing monthly debt to find the maximum repayment available for a new mortgage. It then stress tests by adding about 2 percentage points to your contract rate, because banks must confirm you could still cope if rates rose. Running that maximum repayment backwards through the annuity formula at the stressed rate over your chosen term gives the largest loan the repayment can support. Finally, dividing the loan by the assumed loan-to-value, here 70 percent, converts it into a maximum purchase price. Both the DSR and LTV inputs can be adjusted, since they vary by property value and whether it is your first home.
Frequently asked questions
What is the debt-servicing ratio limit in Hong Kong?
The HKMA caps the debt-servicing ratio, the share of monthly income that goes to all loan repayments, at around 50% for owner-occupiers, lower for second properties. Banks also stress test by adding around 2 percentage points to the current mortgage rate to confirm you could still cope if rates rose. This tool applies your chosen DSR and stress margin to estimate the maximum loan and price.
What loan-to-value ratio applies to Hong Kong residential properties?
The HKMA sets loan-to-value caps that vary by property price and whether the property is self-occupied. For properties valued up to HK$10 million, the cap is generally 70 percent for first-time owner-occupiers. Higher-value properties attract a lower LTV, and investment properties face stricter limits. Buyers should confirm the applicable cap with their lender before making an offer.
Does the Hong Kong Mortgage Corporation Mortgage Insurance Programme affect affordability?
The HKMC Mortgage Insurance Programme allows eligible buyers to borrow above the standard LTV cap, up to 90 percent for properties priced at HK$10 million or below, by paying a one-off insurance premium. This effectively lowers the required deposit but does not change the DSR or stress-test obligations. Applicants must meet income and property-type criteria set by the HKMC.
How does the HKMA stress test work in practice?
Banks are required to verify that the borrower can still service the mortgage if the interest rate rises by 2 percentage points above the contracted rate. The monthly repayment at this stressed rate must not exceed the applicable DSR limit. If the stressed repayment breaches the limit, the approved loan amount is reduced accordingly, which is why this calculator uses the stressed rate to derive the maximum loan.