New mortgage rules offer hope for newlyweds — but can they find a home under W600m in Seoul?

When two individuals each earning 40 million won ($28,300) a year get married, their combined household income reaches 80 million won — pushing them over the threshold for government-backed mortgage loans and stripping them of eligibility. The phenomenon has become so common it earned its own name: the "marriage penalty," a situation where tying the knot actually shuts the door on policy loans.

That is set to change in October. As part of its Aug. 13 real estate package, the government announced it would ease the income requirements for newlywed policy loans. Under current rules, single borrowers can access the Bogeumjari loan if their annual income is 70 million won or less, while newlywed couples — those within seven years of registering their marriage — qualify if their combined annual income does not exceed 85 million won.

Starting in October, the Aug. 13 measures will add a new pathway alongside the existing combined-income ceiling of 85 million won: couples will be able to apply for a Bogeumjari loan as long as at least one spouse earns 70 million won or less per year.

The Bogeumjari loan is a government-backed mortgage for homes priced at 600 million won or less. The borrowing limit is up to 360 million won — or 420 million won for first-time buyers and 400 million won for households with multiple children or victims of jeonse fraud. Borrowers can choose a repayment term of between 10 and 50 years.

Critics say the new structure creates a different kind of inequity — one that pushes out dual-income couples who split their earnings relatively evenly. Under the revised rules, eligibility hinges not on how much a household earns in total, but on how that income is divided between spouses.

The same combined income of 150 million won can yield opposite outcomes depending on how it is split. There is no separate cap on the other spouse's income. As long as one partner earns 70 million won or less, the other can earn any amount and the couple still qualifies.

Consider two couples with the same combined income of 150 million won: one where the split is 100 million won and 50 million won qualifies, while one where each earns 75 million won does not. In theory, a couple where one spouse earns 300 million won would still be eligible for a Bogeumjari loan as long as the other earns 60 million won or less.

Relieving the marriage penalty so that young dual-income couples who narrowly exceeded the combined threshold of 85 million won can now qualify is consistent with the policy's intent. Critics argue, however, that allowing even a couple with one very high earner to qualify — so long as the other spouse stays under 70 million won — runs counter to the original purpose of government-backed mortgages, which is to support ordinary households and genuine end-users. The rules could also be met by couples where one spouse is unemployed or on leave, opening the door to single-income households with substantial assets but no spousal income.

"Dual-income couples who each earn a similarly high salary are excluded from policy loans, but if just one spouse meets the 70-million-won income condition, the door to a Bogeumjari loan opens for virtually anyone," a financial industry official said.

Even as the income threshold has been raised — effectively without a ceiling — the price cap of 600 million won remains in place in the name of market stability. Some observers warn that this asymmetry could undermine the policy's own effectiveness.

In practice, homes priced at 600 million won or less have all but disappeared from Seoul. According to real estate data firm R114, as of the end of June, four of Seoul's 25 autonomous districts had apartment shares in that price range in the single digits — Seongdong-gu at 0.1 percent, Songpa-gu at 0.4 percent, Dongjak-gu at 0.7 percent and Gwangjin-gu at 0.7 percent. Not a single district in Seoul has an average sale price at or below 600 million won.

Expanding eligibility may do little good if almost no qualifying properties remain in Seoul, likely pushing demand into Gyeonggi Province, Incheon and other regions, or concentrating it on the dwindling supply of homes near the 600-million-won mark. If that happens, prices in that range could rise further — pushing properties beyond the Bogeumjari ceiling and repeating the very paradox the policy was meant to solve.