Planning on buying a house in Japan?

In other articles, I’ve already explained that purchasing real estate in Japan as a foreigner is not only possible but is almost no different from buying real estate property as a Japanese.

So now that we know this, the next important question that comes to mind is where to get the funds to make this large purchase. If you have enough savings to make this purchase, then you are rich. But in most cases, people will need to resort to a home loan.

In this article, I will explain to you about home loans in Japan. What are the requirements? Is it possible to get a loan not having a permanent residency? I will answer these questions as well as introduce to you some options for loans in Japan.

*Please note that this article contains affiliate links.

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How do home mortgages work in Japan?

First of all, let me explain how home loans work in general in Japan. In order to obtain a home mortgage in japan, the following are the requirements. These requirements can vary depending on the bank, but this is pretty much how things are currently.

General requirements for getting a home loan

• Age: Somewhere between 20 years old and 65 -69 years old when first applying. This or being 75 – 80 years old when completing the payment.
• Years of continuous employment: At least 2 to 3 years, but this can vary. If you’re self-employed, then this is what will be discussed instead.
• Yearly income: At least 2,000,000 – 5,000,000 yen yearly income. This varies depending on the bank.
• Eligibility to get a group credit life insurance: This varies depending on the bank (the insurance premiums are often included in the loan interest). This is to avoid any problems when repayment due to health issues.
• Whether you have other loans: The yearly debt-to-income ratio needs to be somewhere between 25 and 35% of your yearly income. Therefore, if you have other pending loans, this can affect the loan screening.

The loan amount can vary largely depending on the bank, but usually, the limit is somewhere between 100,000,000 and 500,000,000 yen. In most cases, the loan will cover somewhat between 70 and 80% of the real estate purchase amount up to 90% of the assessed value of home equity by the bank. When paying back to the bank, the paying amount is set to be somewhere between 25 and 35% of your yearly income. And the period of lending is usually up to 35 years.

When it comes to loan interests, there are various types such as floating rate interest, fixed-rate interest (for a certain period of time), and fixed-rate interest (for the entire duration of the loan).

Repayment methods also vary from the principal and equal interest system of repayment to the capital equal system of repayment and Bonus repayment. There are also ways of prepayment which can differ depending on the bank you’re getting the loan from.

And although there are some exceptions, in most cases, you will need a guarantor (this is usually a credit guarantee company) as well as paying a guaranteed charge (usually included in the loan interest). However, there are some banks that don’t ask for either of these two things.

Lastly, when it comes to the handling fee, this is another part that can largely vary depending on the bank, but it can be somewhere between 30,000 and 100,000 yen.

What are the requirements for foreigners to get a loan?

Now that you know the basics of a home loan in Japan, the next step is to know if you’re eligible for getting one.

Just as I mentioned in the intro, purchasing real estate in Japan as a foreigner is not only possible but is almost no different from buying real estate property as a Japanese. Because of this, you might think it’s equally as easy to get a home loan from a bank. However, unfortunately, this is not the case. In many cases, the first requisite to obtain a home loan from a Japanese bank is to either be of Japanese nationality or to have permanent residency status. In the case that you actually have permanent residency status, then the rest of the process will be pretty much the same as any Japanese getting a home loan.

However, if you don’t have permanent residency status, then things get a little complicated. But it is not impossible. In the case that you don’t have permanent residency status, here are some examples of how you can get a home loan.]

• Have your Japanese spouse as a guarantor: There are some banks that will allow you to get a home loan even if you don’t have permanent residency status, as long as you have a Japanese spouse and your spouse is willing to be your guarantor. However, usually, in these cases, the other requisites and terms can vary from what I stated previously in this article. So, if you’re planning on getting a home loan using this method, be sure to check carefully the terms, especially the interest rates.
• Look for a bank from your home country: I don’t mean to say that you should go back to your country to look for a home loan there. What I’m saying here is that in the case that there’s a Japanese branch of a bank from your county, then there’s a good chance you can obtain a home loan from that bank. This is because this bank will have easier access to your past transactions in your home country as well as they can contact you should you have to go back to your country before completing your payment. One thing to be careful of is that in this case, the requisites and terms will usually be based on the country of origin.
• Prepare a large amount for a down payment: This is another way you could possibly get a home loan in Japan. Bank loan screening in Japan is really strict, but if you can manage to prepare a larger amount for the down payment, then you will have a better chance of getting that home loan. Preparing a large down payment will show the bank that you have financial stability as well as make it possible to cut short the payment period.

In the case that you don’t have permanent residency status, the prerequisites are pretty much the same as what I previously stated in this article. Adding to that, they will ask how long have you lived in Japan as well as the ability to communicate properly in Japanese. Although the banks that offer home loans for foreigners tend to have services in English, there are some cases where the service will be completely in Japanese. Therefore, Japanese comprehension is set as a prerequisite sometimes.

Banks that offer house mortgages for foreigners

The following are just some of the banks or financial institutions where you can get a home loan without having permanent residency status.

1. PRESTIA (SMBC Trust Bank Ltd.)

Types of loan interest that they offer are floating rate interest and fixed-rate interest for a certain period of time. The loan that they offer is between 10,000,000 and 500,000,000 yen, with a duration of 1 to 35 years.

Prerequisites for obtaining a loan in this bank include:

• Foreigner currently living in Japan.
• Being able to communicate in either English or Japanese.
• Being between 20 years old when applying, and under 80 years old when finishing paying.
• Eligibility to get a group credit life insurance.
• At least 5,000,000 yen yearly income (previous year).

▶Official Website: https://www.smbctb.co.jp

2. Shinsei Bank, Limited

Types of loan interest that they offer are floating rate interest, fixed-rate interest for a certain period of time, and fixed-rate interest for the entire life of the loan type. The loan that they offer is between 5,000,000 and 300,000,000 yen, with a duration of 5 to 35 years.

Prerequisites for obtaining a loan in this bank include:

• Foreigner currently living in Japan.
• Having a spouse that either is of Japanese nationality or has permanent residency status in Japan.
• Opening a PowerFlex account Shinsei Bank.
• Being between 20 and 65 years old when applying, and under 80 years old when finishing paying.
• Eligibility to get a group credit life insurance.
• At least 3,000,000 yen yearly income (previous 2 years).

▶Official Website: http://www.shinseibank.com

3. Saison Fundex Corporation

The type of loan interest that they offer is floating rate interest. The loan that they offer is between 1,000,000 and 500,000,000 yen, with a duration of 5 to 30 years.

Prerequisites for obtaining a loan in this bank include:

• Foreigner currently living in Japan.
• Being between 20 and 70 years old when applying, and under 85 years old when finishing paying.
• Proof of having a stable yearly income.

▶Official Website: https://www.fundex.co.jp/

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Living Japan offers useful services to make the purchase/renting experience as comfortable for you as possible.

You can inquire about properties listed on other real estate websites such as SUUMO and HOME’S. You can get everything done online (from room searching, room tours, and even contract procedures). Living Japan also offers to help you to set up utilities such as electricity, gas, and water.

Their website is available in English, Chinese, and Korean.

▶Official Website: https://www.livingjapan.com/

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I hope you enjoyed this article. If you want to know more about renting an apartment in Japan, go check the following articles for more info!

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