South Korea Didimdol Loan limits reduced for Seoul metropolitan area

New regulations regarding the Didimdol Loan program have significantly reduced the maximum loan amounts for homebuyers in the Seoul metropolitan area. Due to the mandatory application of the ‘room deduction’ (bang-gong-je)—a measure where banks subtract a small-scale tenant deposit amount from the total loan to protect against potential auction losses—homebuyers in Seoul face a reduction of up to 55 million won in their loan limits.

In Gyeonggi and Incheon metropolitan areas, the deduction amount is approximately 48 million won. This change, implemented by the Ministry of Land, Infrastructure and Transport, means buyers must cover the difference with their own cash. Additionally, the government has restricted ‘post-collateral’ loans for new apartment residents who have not yet registered their property, forcing many to rely on high-interest credit loans or commercial bank products.

Exceptions to these rules include non-apartment housing like villas, properties in non-metropolitan areas, and specific programs such as the Newborn Special Loan. Data indicates the impact is already visible, with the total amount of Didimdol loans in the metropolitan area decreasing significantly following the implementation of these management measures.