"Am I Eligible for First-Time Homebuyer LTV?"... Exception Guidelines Raising Limit from 40% to 70% to Be Announced This Month

LTV Can Rise from 40% to 70% in Seoul Metropolitan and Regulated Areas

Strict Review Standards by Banks Cause Confusion for Genuine Homebuyers

Financial Services Commission to Clarify Exception Criteria via FAQ

Financial authorities are set to introduce specific guidelines to ensure that banks can actively apply the "First-time Homebuyer LTV" system, which allows loan-to-value (LTV) ratios of up to 80% for mortgage loans.

A view of the villa village in downtown Seoul from Namsan, Seoul. 2025.06.27 Photo by Dongju Yoon

On September 20, an official from the Financial Services Commission stated, "We are preparing to compile and distribute, within this month, a Frequently Asked Questions (FAQ) document outlining the exception recognition standards for the first-time homebuyer LTV." This will serve as a de facto guideline, providing detailed criteria under which unavoidable circumstances may allow borrowers to benefit from the first-time homebuyer LTV.

Previously, the Financial Services Commission relaxed the eligibility requirements for the first-time homebuyer LTV through the August 13 real estate measures to boost financial support for genuine homebuyers. For example, cases in which a person acquired a share in a house as a minor through inheritance and then sold it—thus acquiring homeownership history irrespective of personal intent—may be recognized as exceptions.

The Financial Services Commission has stipulated that, if an exception is recognized after review by the bank’s internal loan review committee, the first-time homebuyer LTV benefits may be applied at a 70% ratio in the capital region and regulated areas, and up to 80% in non-regulated areas. Since the standard LTV for capital and regulated areas is 40%, being recognized as a first-time homebuyer could significantly affect the amount of loan one can obtain.

However, about three weeks after the system was implemented, there are concerns that banks remain cautious, resulting in a slow pace of reflecting the new standards in actual lending screenings. Banks appear reluctant to accept exceptions at their own discretion due to the risk of future scrutiny by financial authorities in the absence of clear criteria. With concerns rising that actual homebuyers seeking loans from banks may face difficulties securing funding, the Financial Services Commission aims to reduce uncertainty for banks by providing specific case-by-case standards.

The guidelines are expected to be developed based on banks’ questions collected by the Korea Federation of Banks, which will then be relayed to the financial authorities for answers. Reportedly, the collected queries include cases such as applying for a first-time home mortgage loan after selling an inherited share in a property, as well as cases where a pre-sale right did not lead to actual home acquisition due to business cancellation.

With the August 13 measures, the Financial Services Commission has maintained its stance on strengthening household loan management, while focusing on ensuring that necessary housing funds are supplied to young people and genuine homebuyers. Amid these changes, there has been a significant increase in first-time home purchases. Last month, among those acquiring collective housing such as apartments, villas, and officetels in Seoul, first-time buyers accounted for 9,343 registrations (53.8%), marking the highest level in six years since August 2020. This surge is attributed to rising home prices and instability in the rental market, which have driven non-homeowners to engage in so-called "panic buying."

This content was produced with the assistance of AI translation services.