Many first-time buyers looking at homes in Taichung already have a car loan or a personal loan, and they ask whether that will sink the mortgage. The short answer: it affects it. Existing monthly payments count towards your payment-to-income ratio, and unpaid unsecured balances count towards the DBR 22 limit. Too much and the bank cuts the loan ratio, adds to the rate, or declines. But having a loan does not stop you buying. It means calculate first and tidy up first.
Three numbers to remember
- 22 times: the cap on unsecured debt set by the Financial Supervisory Commission (FSC), measured against monthly income; the mortgage itself is not counted.
- 40 to 50%: the usual payment-to-income threshold, all monthly payments divided by monthly income; each bank differs.
- 6 months: do not take on new loans before applying; enquiries and new debt show up.
(Based on the FSC’s DBR 22 rulings, Joint Credit Information Center (JCIC, 聯徵中心) explanations and bank practice; updated 20 September 2026.)
How banks look at existing loans: two ratios
Banks check two ratios. DBR 22 governs your unsecured balance; the payment-to-income ratio governs your monthly burden. A car loan or personal loan hits at least one of them.
| Ratio | How it is calculated | Nature | How car and personal loans count |
|---|---|---|---|
| DBR 22 | Total unsecured debt across all financial institutions (credit cards, cash cards, personal loans) ÷ average monthly income; should not exceed 22 times | FSC ruling | Personal loan balance counts in full; a secured car loan counts only the balance above the car’s appraised value; the mortgage is excluded |
| Payment-to-income | (Mortgage payment + other loan payments) ÷ monthly income; common threshold 40 to 50%, some banks up to 60% | Market practice, not law | Car loan, personal loan and card instalment payments all count |
(Based on FSC rulings of 7 January 2008 and 15 December 2009; thresholds vary by bank; updated 20 September 2026.) In practice banks do not lend right up to the 22-times cap. Banks also run a stress test, recalculating your payment at the expected rate plus 1%, so leave room in the payment-to-income ratio.
What the credit report shows: is a car loan secured or unsecured?
The JCIC credit report lists every bank loan with its contract amount, balance, monthly payment and any arrears, your credit card usage, and who has recently pulled your file. How a car loan counts depends on who issued it and whether it is secured.
| Existing debt | On the credit report? | Where it counts |
|---|---|---|
| Bank personal loan | Yes | Full balance in DBR, payment in payment-to-income |
| Bank car loan with registered security | Yes | Balance minus car value in DBR; payment in payment-to-income |
| Bank car loan without security | Yes | Treated as a personal loan |
| Finance company car loan | Usually not (not a JCIC member) | Visible as bank debits; must be declared on the application |
| Credit card revolving balance and instalments | Yes | Revolving balance in DBR; instalment payment in payment-to-income |
| Student loan | Yes | Policy loan, excluded from DBR, but payment still counts in payment-to-income |
(General rules; the lending bank decides each case; updated 20 September 2026.)
Our view: A finance company car loan that “does not show on the credit report” is not one you can leave out. The bank reviews 6 to 12 months of bank statements and will ask about any fixed monthly debit. Omitting a debt on the application form counts as a false application if found, which does far more damage than declaring it up front.
How long before applying should you stop borrowing, and what to repay first
Take on no new loans or cards in the 6 months before a mortgage application. If you repay early, start with the debt that has the highest rate, the heaviest payment and counts in DBR, usually credit card revolving balances, then personal loans.
- No new borrowing. Every application leaves an enquiry record, which the JCIC says banks read as a sign of recent funding need. Revolving credit use stays on the record for about 1 year.
- Repay revolving and personal loans first. Card revolving has the highest rate and counts in full; personal loan balances also count in full. A car loan is secured, usually cheaper, and can be assessed as balance minus car value, so it comes last.
- Pull your own report. Apply to the JCIC for a personal credit report (free once a year) and check the balances, forgotten instalments and any guarantees.
Should you clear the whole car loan to raise the loan ratio? Calculate first whether that leaves enough for your down payment.
After approval, before disbursement: can I take a personal loan for the down payment?
No. Approval is not disbursement. The bank pulls your credit report again before releasing funds, and a new personal loan in between can trigger a fresh review, a lower ratio or a cancelled approval. The central bank’s own Q&A requires lenders to re-check the borrower’s loans before disbursement. Borrowing the down payment also turns it into another monthly payment, which blows the payment-to-income ratio at once. If you are genuinely short, adjust the target price instead.
For foreign nationals: The Chinese page suggests using the New Youth Housing Loan 3.0 (新青安3.0), with its 80% ratio and 40-year term, to lower the threshold. That programme is for ROC citizens with household registration (戶籍) and generally does not apply otherwise. Ask us what a standard bank will offer instead.
Worked example: how much mortgage is left with a car loan and a personal loan
Household monthly income NT$100,000, car loan payment NT$15,000, personal loan payment NT$10,000, bank threshold 50%. The mortgage payment is capped at NT$25,000, which at 30 years and 2.5% supports a loan of about NT$6,300,000. Repay the personal loan first and the cap rises to NT$35,000, about NT$8,900,000.
| Scenario | Existing payments | Mortgage payment cap (50%) | Approximate loan (30 years, 2.5%) |
|---|---|---|---|
| Both loans remain | NT$25,000 | NT$25,000 | About NT$6,300,000 |
| Personal loan repaid | NT$15,000 | NT$35,000 | About NT$8,900,000 |
| Both repaid | NT$0 | NT$50,000 | About NT$12,600,000 |
(Each NT$1,000,000 over 30 years at 2.5%, equal monthly payments, costs about NT$3,951 a month. The 50% threshold is an assumption; actual results depend on the bank and its stress test. Updated 20 September 2026.) The mortgage calculator on our Chinese page has an affordability tab that returns your payment-to-income ratio and loan capacity; the interactive calculator is on our Chinese page (link).
FAQ
Can I get a mortgage with a car loan?
Yes. A car loan does not disqualify you; it reduces how much you can borrow. Its payment counts in the payment-to-income ratio, and only the balance above the car’s value counts in DBR. Work out the ratio first and consider early repayment only if it is short.
Must I clear my personal loan before buying?
Not necessarily, but a personal loan counts in full in DBR and its payment counts in the ratio, so it is the most worthwhile debt to clear. Check first that repaying it does not leave your own funds short.
Can I take a personal loan for the down payment after the mortgage is approved?
Not advisable. The bank pulls your credit report again before disbursement, and a new loan triggers a fresh review that can cut the ratio or cancel the approval.
Can the bank see a finance company car loan?
It usually does not appear on the JCIC report, but the monthly debit shows in your bank statements, and the application form asks you to declare debts. Concealing it counts as a false application.
Calculate the burden, then decide what to repay
Car and personal loans are not an obstacle to buying. Applying without doing the sums is. Bring your credit report and your monthly payment figures and we will run the numbers against actual prices in Taichung. See the buying hub or contact us.