If you’ve ever been told “DSR too high” and the banker won’t say much more, this is what they usually mean:
Your monthly obligations look too heavy compared to your income, so the bank worries you’ll have no breathing room after paying debts.
Let’s break it down clearly.
What is DSR in Malaysia?
DSR (Debt Service Ratio) is the percentage of your monthly net income that goes to paying your total monthly debt obligations. Banks use it as a quick affordability check to decide whether your repayments look sustainable.
If your DSR is tight, the bank’s concern is simple: one surprise expense and you might not cope.
How do banks calculate DSR?
DSR (%) = (Total monthly debt commitments ÷ Monthly net income) × 100.
The formula is easy. The difference happens because banks may treat income and commitments differently from how you calculate it yourself.
What counts as “monthly commitments” in DSR?
Most banks count recurring monthly debt obligations—especially instalment loans and credit card obligations—because they directly affect affordability. What’s included can vary by bank and product, but these are common:
| Item | Usually counted? | Notes |
|---|---|---|
| Home loan / mortgage | Yes | Fixed instalment is straightforward |
| Hire purchase (car) | Yes | Fixed instalment is straightforward |
| Personal loan | Yes | Fixed instalment is straightforward |
| PTPTN | Often | Depends on visibility + documentation |
| Credit cards | Often | Some banks apply an assumed monthly obligation rule |
| Other instalment plans | Often | Includes any ongoing structured repayment |
| Non-bank obligations (case-by-case) | Sometimes | Depends on lender policy and what’s declared/seen |
NYK note: The biggest “DSR surprise” is credit cards. Many borrowers assume “I pay full so it’s zero.” Banks may still count a monthly obligation based on policy.
What income do banks use for DSR?
Banks generally prefer stable, provable income and may be more cautious with variable income. That’s why two people with the same “average monthly income” can get very different outcomes.
Typically easiest to recognise:
- Basic salary
- Fixed allowances (when consistent and supported)
Often treated more cautiously (bank-dependent):
- Commission (may be averaged)
- Bonus (may be averaged or excluded)
- Self-employed income (needs consistency + stronger documents)
NYK note: If your income is variable, your documentation and consistency matter as much as the number.
Is there a “standard DSR limit” in Malaysia?
No single public “magic DSR number” applies across all Malaysian banks. Different banks can apply different internal limits depending on product type, income profile, and risk appetite.
So instead of hunting for “the highest DSR bank,” aim for this:
- commitments are accurate and explainable,
- income is clean and provable,
- buffer is comfortable (not just barely passing).
DSR example (self-check in 30 seconds)
Monthly net income: RM6,000
Monthly commitments:
- Car loan: RM800
- Home loan: RM1,600
- Personal loan: RM400
- Credit card assumed commitment: RM300
Total commitments = RM3,100
DSR = (3,100 ÷ 6,000) × 100 = 51.7%
If a new loan adds RM400/month:
New commitments = RM3,500
New DSR = (3,500 ÷ 6,000) × 100 = 58.3%
This is why DSR is such a common rejection reason: one extra instalment can flip the decision.
Why your DSR looks higher than you expected
DSR usually looks “mysteriously high” when the bank’s inputs differ from yours. Common causes:
- Credit card treatment (bank counts a monthly obligation even if you pay in full)
- Multiple cards (even unused cards can inflate exposure)
- Variable income discounted (commission/bonus averaged or treated conservatively)
- Recently added commitments (timing matters more than people realise)
- You missed an obligation (old instalment, overlooked facility)
How to lower DSR (the bank-friendly way)
Lowering DSR is either reducing commitments, increasing provable income, or structuring repayments in a way that genuinely reduces monthly burden—without creating new risk. Here are the clean moves:
1) Reduce commitments (fastest impact)
- Settle or reduce the instalment that is hurting your DSR the most
- Avoid stacking new commitments close to application time
- Reduce credit card exposure if your target bank counts it aggressively (especially multiple cards)
2) Make income easier to recognise (often overlooked)
- Ensure payslip + bank crediting looks consistent
- For commission/variable: build a clear 6–12 month pattern
- For self-employed: organise bank statements so cashflow is obvious and consistent
3) Apply strategically (don’t spray and pray)
- One strong application beats five random ones
- Too many checks in a short time can create friction
- Match the bank/product to your income type (fixed vs variable vs self-employed)
NYK note: The goal isn’t just “pass DSR.” The goal is to look stable, sustainable, and low-drama.
What NOT to do just to “pass DSR”
These moves can lower DSR on paper but hurt your overall approval story:
- Taking a new facility to cover another one when it doesn’t truly reduce monthly burden
- Hiding commitments (banks may still detect them)
- Mass-applying across multiple banks in panic
DSR checklist before you apply
Commitments
- List every instalment (home, car, personal, PTPTN, others)
- List every credit card (even those you rarely use)
- List any ongoing instalment plans you’re still paying
Income proof
- Latest 3 months payslips (if salaried)
- Latest 6 months bank statements
- Supporting documents for variable/self-employed income (if applicable)
Strategy
- Decide: repair affordability first, or apply now with a clean plan?
- Apply with the right bank/product for your income type
What to do next if you were rejected for “DSR too high”
If you want to stop guessing, do this in order:
- Confirm what the bank is counting as commitments (especially credit cards)
- Confirm what income they are recognising (especially commission/self-employed)
- Pick the fastest lever:
- reduce one big commitment, or
- make income more acceptable, or
- restructure only if it genuinely lowers monthly burden
If you want NYK to diagnose it quickly, send:
- your monthly net income breakdown (fixed + variable), and
- a full list of commitments (including credit cards)
We’ll tell you which lever moves your DSR fastest without messing up your approval story.
Conclusion
DSR isn’t your enemy. It’s a mirror.
When your DSR looks tight, the bank is basically saying: “You have no breathing room.”
Fix the breathing room—either by reducing real monthly commitments or making your income easier to recognise—and approvals become far more predictable 😎
