"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

The financial authorities will issue specific guidelines to enable banks to actively apply the "First-Time LTV" system, which allows a loan-to-value (LTV) ratio of up to 80% for first-time homebuyers.

Seoul downtown villa area viewed from Namsan, Seoul. 2025.06.27 Photo by Dongju Yoon

On September 20, an official from the Financial Services Commission stated, "We plan to compile exception recognition standards related to the First-Time LTV and distribute them as a Frequently Asked Questions (FAQ) document within this month." This effectively provides detailed guidelines outlining the specific criteria under which unavoidable circumstances will allow applicants to benefit from the First-Time LTV ratio.

Earlier, through its August 13 real estate policy package, the Financial Services Commission eased the requirements for applying the First-Time LTV, aiming to boost financial support for real homebuyers. Exceptions could include cases where individuals came to own a share of a home—such as through inheritance as a minor—and later sold it, thus reflecting ownership history not due to their own intent.

The Financial Services Commission determined that, if exceptions are deemed valid through the Bank Credit Screening Committee's review, benefits under the First-Time LTV system can be applied up to 70% in the Seoul metropolitan area and other regulated regions, and up to 80% in non-regulated regions. Since the standard LTV in metropolitan and regulated areas is currently 40%, whether one qualifies as a first-time homebuyer can have a significant impact on the available loan amount.

However, despite roughly three weeks having passed since implementation, there are concerns that banks are slow to reflect this in practice, maintaining a cautious stance. This is reportedly due to concerns among banks about being held responsible by financial authorities if they recognize exceptions without clear criteria. As a result, prospective homebuyers who need loans for home purchases may face challenges in securing funds. In response to these concerns, the Financial Services Commission is moving to reduce banks' uncertainty by providing detailed, case-specific standards.

The guidelines are expected to be established in a process where the Korea Federation of Banks collects questions from banks and submits them to the authorities, who will then provide answers. The collected inquiries reportedly include cases such as applying for a first-time mortgage after selling inherited shares of a home, or situations in which a pre-sale purchase agreement did not result in actual home acquisition due to project cancellation.

Through the August 13 policy, the Financial Services Commission aims to maintain a stringent approach to household loan management while ensuring that young people and genuine homebuyers can still access the necessary housing finance. Meanwhile, the number of first-time home purchases has surged significantly. Last month, the number of registrations by first-time buyers for apartment, villa, or officetel units in Seoul reached 9,343, accounting for 53.8%—the highest level in six years since August 2020. This trend is attributed to rising home prices and instability in the monthly and annual rental markets, which has fueled so-called "panic buying" among those without homes.

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