Debt Service Ratio (DSR)

Debt Service Ratio (DSR) is the ratio of an individual’s debt as compared to their net income.  Normally DSR is useful to measure the ability of an individual to settle or pay their debt obligations. Before you could get loan approval, it is a normal practice that a bank officer will calculate your DSR to evaluate your ability to pay back the loan installment on the given time frame.  

Different banks normally will require different DSR percentage. Some banks require the applicant to have below 60% DSR while the other banks will require different percentage for example below 70%. Nowadays, different range of income will have different DSR pencentage requirement.  Generally, 60% DSR is widely accepted by majority of commercial banks as a good DSR.  Meaning, those individuals who applying for the loan must get the DSR score of 60% and below in order to get their loans approved.

Therefore, it is essential to carry out a self DSR evaluation before we proceed with submitting the loan application form to any banks or financial institutions. The below Debt Service Ratio Calculator willl help us to conduct a self DSR evaluation.