To avoid excessive lending that could lead to a housing bubble, the government has introduced a stress test. For instance, if a buyer a whose income is mainly derived from Hong Kong needs to borrow 80 percent or less for a  flat, and if he or she has no other mortgage, then the monthly installment should not exceed 50 per cent of income (or debt-to-income ratio). The bank stress test will require the monthly payment not to exceed 60 per cent of the borrower’s monthly income, especially if mortgage rates rise by 3 percent.

If applicants apply for additional mortgage financing and their overall mortgage limit exceeds the normal maximum mortgage limit allowed by the Hong Kong Monetary Authority by 20 per cent. If the loan-to-value ratio exceeds 80 per cent, the debt-to-income ratio will be reduced to 45 per cent. The stress test level will also be reduced to 55 per cent.

If you want to know your own affordability level, you can go to the ability calculator for a preliminary assessment.