Hi,

I'm going to give u some insider views from the banker's point of view.  Please do not take the comments below at face value. 

Most people think that it's the 1/3 rule of a thumb.  To a certain extent, it's not entirely true. 

If u take a 200,000 loan stretched over 30 years - your loan repayment is approx RM 1,200.  As such, using the 1/3 rule, you should earn approx RM 4,000 per month.  This is being VERY VERY VERY PRUDENT.  If you want to be safe - just take your min qualification as 4,000.

However, before your income is even taken into consideration - your loan application is "scored" via a statistical scorecard.  Local banks are mobilizing their scorecards in line with Basel 2.  For most foreign banks -their scoring is divided into:

(a) Demographic Score

(b) Bureau Score.

Demographic Score takes into account your age, occupation, gender, etc - the concept is similar to Insurance companies that take some of these factors to determine your premium computation.  Unfortunately, we are not all created equal.  E.g. a 30 year old white collar female would most likely score higher than a 40 year old blue collar male. 

Bureau Score takes into account your repayment conduct.  Banks use this scorecard as a weighted measure of your CCRIS conduct, how much vintage and loan facilities you have in your CCRIS, whether u have any special attention accounts / AKPK loans, your Margin of Financing,  etc etc.  Some banks also measure the quality of the collateral (the property) into this scorecard.

Both of your Bureau and Demographic Score must exceed the bank's cut-off score.  The moment that happens, then only will banks normally calculate your debt burden or loan repayment ratio.

Let me give u an example to dispel my critics that advocate the 1/3 rule.  If your score is fantastic - some banks are even willing to approve loan repayment ratios above 80%. 

For example, if Mr. X earns 10,000 - and has fantastic scores, and can substantiate rental income from his properties - his loan repayment can even be 8,000.  I've seen cases where the LRR is even more than 100%. 

In summary:

1.  To be prudent in your analysis - just believe in the 1/3 rule.

2.  If you're a savvy in terms of financing, and you know your banker very well - the 1/3 rule is just a guide.  It can go way way higher. 

Please do not take my comments above at face value and be gung ho.   Always clarify with your banker first....A good banker doesn't mind giving u candid & honest feedback.