Gate one: the 70% LTV cap since 2024-10-16
From 2024-10-16 the HKMA unified the LTV cap on residential property at 70%, replacing the earlier structure of caps that varied by price band. This is the basic bank ceiling, and with nothing else arranged it means a minimum down payment of 30% of the price.
The common error is to keep using the pre-2024 price-banded caps. Because the policy changed, an old table produces a systematic error in a client's expectations of the down payment.
Gate two: the 50% DSR cap
The debt servicing ratio is capped at 50%: monthly mortgage payments plus other monthly debt repayments may not exceed half of monthly income. This gate looks at the income structure rather than the price, so the same flat supports very different borrowing amounts for different buyers.
Add the client's other monthly obligations, such as personal loans, card instalments and existing mortgages. The calculator treats this as its own input, because it is frequently the real reason a client with adequate income cannot borrow the target amount.
Gate three: the mortgage insurance ladder
Mortgage insurance allows eligible borrowers to go above 70%, subject to price and loan caps: at HK$10m or below, up to 90% for eligible borrowers and 80% otherwise; between HK$10m and HK$11.25m the same percentages apply with a HK$9m loan cap; between HK$11.25m and HK$15m the cap is 80%; between HK$15m and HK$17.15m it is 80% for eligible borrowers and 70% otherwise, with a HK$12m loan cap; above HK$17.15m the cap is 70%, and above HK$30m mortgage insurance is not available.
In the calculator, eligible means a first-time buyer who does not own residential property in Hong Kong, on a fixed salary and buying to live in. Commission-based income or corporate ownership falls on the more conservative side, and it is worth telling clients this before they plan around a higher LTV.
The stress test has been suspended since 2024-02-28
The stress test at an additional 2 percentage points of interest has been suspended since 2024-02-28. The calculator keeps the note because it remains one of the most frequently asked rules, with an answer that no longer matches pre-2024 material.
Note the distinction: a suspended stress test does not mean banks stop assessing repayment ability. Banks still apply the DSR cap and their own risk policy, so the approved amount can come in below the formula ceiling.
Three numbers to check a client's budget
Enter the price, monthly income and other monthly debt, and the calculator returns the maximum loan allowed by LTV and the maximum loan allowed by DSR, then takes the lower of the two as the borrowing amount and derives the minimum down payment and monthly payment. Taking the lower figure is the step most clients skip when they estimate on their own.
If a client wants to work backwards from an affordable monthly payment, the mortgage payment calculator does the same in reverse. The two results should agree; if they do not, the rate, term or debt inputs differ.