DSR stands for Debt Service Ratio — the share of your monthly income that goes toward debt payments. For a home loan, that's your mortgage payment (plus any existing loans you're already paying) divided by your income.
Simple on paper. The part that trips people up — and the part that makes online "loan amount ÷ years" calculators unreliable — is what goes on the bottom of that fraction.
Banks and Pag-IBIG don't compute DSR against your gross salary. They compute it against what you actually take home — after income tax, SSS, PhilHealth, and Pag-IBIG contributions are deducted. That difference is bigger than most people expect.
Example: someone earning ₱80,000/month gross, employed (not self-employed or OFW), takes home roughly ₱64,000–65,000/month after TRAIN Law income tax and mandatory contributions — about 19–20% gone before it ever reaches their pocket. A calculator that runs DSR against the ₱80,000 figure will show a healthier-looking ratio than what a bank actually applies.
Tax and mandatory-deduction treatment differs meaningfully by how you're employed, which changes your real net income and therefore your real DSR:
Standard TRAIN Law graduated income tax on annual taxable income, plus employee-share SSS (5%), PhilHealth (2.5%), and Pag-IBIG contributions.
Can elect the 8% flat tax on gross receipts above ₱250,000/year instead of graduated tax — often a meaningfully different number than an employee at the same income. SSS contributions are higher (15% of monthly salary credit, since there's no employer share to split it with). Banks typically require 2 years of ITR (BIR Form 1701) to verify this income, not just bank statements.
Foreign-sourced income is exempt from Philippine income tax entirely (NIRC Sec. 23(C)) — but that exemption is a Philippine tax rule, not a global one. An OFW working in Japan, Germany, or elsewhere still pays that country's own income tax before the money ever gets remitted. The number that matters for a real DSR calculation is take-home pay after the host country's tax, not the pre-tax foreign payslip figure.
As a general guideline across Philippine lenders:
Two more things worth knowing: first, existing loans count — car loans, personal loans, credit card minimums, even SSS/Pag-IBIG salary loans all get added to the numerator, since lenders pull your full credit history, not just the new mortgage payment. Second, if your rate reprices after a fixed period (common for both bank and Pag-IBIG loans), your DSR at the repriced rate matters too — a loan that looks fine in year 1 can tip into marginal territory the moment the fixed period ends.