Some foreigners living in Japan may want to take out a housing loan in Japan to buy a home. With a housing loan, you might be able to afford a property that you couldn’t purchase with just your own funds.
This article explains the requirements for foreigners to get a housing loan in Japan, introduces financial institutions that offer housing loans to foreigners, and covers the types of loans and key points to watch out for. If you’re considering a housing loan, read this article to the end for useful information.
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Table of Contents
Profile of Writer
Meiki Sugiyama
Real Estate Transaction Specialist;
After gaining 12 years of experience in the real estate industry as a sales department manager and store manager, transitioned to become a web writer specializing in this field.
Extensive expertise in property sales, rental brokerage, new home sales, rental management, and property valuation, etc. Recognizing the complexity of the Japanese real estate industry, his focus is on delivering and sharing insights to make it more accessible to those who are not specialists in this field.
If you are interested in learning 5 essential considerations before buying a house, you might find this article helpful.
Chapter1: Overview of Housing Loans in Japan
This section explains the basics of housing loans in Japan and common lending requirements.
Housing Loan Trends in Japan
In Japan, most people choose housing loans with variable interest rates. A survey by the Japan Housing Finance Agency in April 2024 showed that from October 2023 to March 2024;
- 76.9% of borrowers picked variable rates
- 15.1% chose fixed rates for a specific period
- 8.0% went with fully fixed rates
In the United States, things are different. Most people there prefer 30-year fixed-rate mortgages. According to a survey by the Mortgage Bankers Association (MBA);
- 91.4% of borrowers chose fixed rates
- Only 8.6% opted for variable rates
Source: Japan Housing Finance Agency, NLI Research Institute
Types of Housing Loans in Japan
In Japan, there are various types of housing loans offered by different financial institutions and plans.
The main options for housing loans include Flat 35 and loans from private financial institutions. Flat 35 is a housing loan operated by the Japan Housing Finance Agency (JHF), known for offering fully fixed interest rates that do not change throughout the repayment period.
On the other hand, private financial institutions provide a range of interest rate options such as variable rates, 5-year fixed rates, 10-year fixed rates, and 35-year fixed rates. Each institution has different criteria and terms for lending.
The four main types of interest rates for housing loans are:
- Variable interest rate (変動金利型, hendō kinri-gata): The interest rate changes periodically based on market conditions.
- Fully fixed interest rate (全期間固定金利型, zen-kikan kotei kinri-gata): The interest rate remains the same throughout the entire repayment period.
- Fixed interest rate for a selected period (期間選択固定金利型, kikan sentaku kotei kinri-gata): The rate is fixed for a specific period, after which it may change.
- Interest rate mix (金利ミックス型, kinri mikkusu-gata): A combination of the above types, allowing you to split the loan into different rate structures. For example, with a ¥40 million loan, you could opt for ¥10 million at a variable rate and ¥30 million at a fully fixed rate.
Since each financial institution and interest rate type has its own features, it’s essential to research and choose the housing loan that best suits your needs.
Trends in Housing Loan Interest Rates
In Japan, housing loan interest rates have remained low since the bubble burst in the early 1990s. At that time, variable rates exceeded 8.0%, but now some financial institutions offer variable interest rate housing loans at below 0.5%.
Additionally, the interest rates for Flat 35 (全期間固定金利型, zen-kikan kotei kinri-gata), which offers fully fixed rates, have been declining. However, in recent years, rates have been rising due to the end of the Bank of Japan’s monetary easing policy. Despite this, from a long-term perspective, interest rates can still be considered low.
Source: Diamond Inc
Common Loan Requirements for Financial Institutions in Japan
In Japan, financial institutions have specific requirements for housing loans. While these can vary, here are the main ones:
- Age: You must be at least 20 years old when applying and under 80 years old when you finish repaying the loan.
- Residency: You need to be a Japanese citizen or a foreigner with permanent residency.
- Insurance: You must be eligible for group credit life insurance (団体信用生命保険, dantai shin’yō seimei hoken), which covers the loan if you die or become severely disabled.
- Income and Job: You need to have a certain income and be employed as a full-time or contract worker.
- Repayment Ratio: Your annual loan repayments should not exceed a certain percentage of your income.
Group credit life insurance (団体信用生命保険, dantai shin’yō seimei hoken) is needed by most institutions. This insurance will cover your loan payments if something happens to you. If you are not in good health and cannot get this insurance, you might not be able to get a loan.
The repayment ratio (返済負担率, hensai futan-ritsu) is how much of your income goes towards loan repayments. If this ratio is too high, your loan application might be denied. Generally, a safe repayment ratio is 20% to 25%, but this can differ by institution.
Chapter 2: Requirements for Foreigners to Get a Housing Loan in Japan
When foreigners apply for a housing loan in Japan, the requirements differ based on whether they have permanent residency. Here’s a breakdown:
For Those with Permanent Residency
Foreigners with permanent residency can apply for a housing loan under the same conditions as Japanese citizens. They will be evaluated based on the standard loan requirements mentioned earlier. However, lenders will check if you intend to live in Japan long-term, as there may be concerns about returning to your home country if conditions change there.
Additionally, confirming your intention to stay in Japan is necessary. If you cannot communicate effectively in Japanese, it might be challenging to pass the loan evaluation.
For Those Without Permanent Residency
Foreigners without permanent residency face stricter requirements. In addition to the general loan requirements, you may need to meet these conditions:
- A Japanese national or a spouse with permanent residency or special permanent residency status must be a co-signer.
- Prepare a certain amount of your own funds.
- Have a sufficient remaining period on your visa.
- Hold a visa without work restrictions (such as “Spouse of a Japanese national,” “Spouse of a permanent resident,” or “Long-Term Resident”).
The requirements for foreigners applying for housing loans in Japan vary depending on whether you have permanent residency. If you do not have permanent residency, it’s essential to consult with financial institutions to confirm the specific requirements.
Chapter 3: Can Foreigners Without Permanent Residency Get a Housing Loan?
Yes, foreigners without permanent residency can still get a housing loan in Japan. However, some financial institutions might refuse to provide a loan, and additional requirements may apply.
Don’t give up on getting a housing loan just because you don’t have permanent residency. Instead, focus on whether you meet the requirements and what steps you need to take to fulfill them. Taking these steps can help improve your chances of securing a loan.
Chapter 4: Financial Institutions Handling Housing Loans for Foreigners
Here are some financial institutions in Japan that offer housing loans to foreigners:
| Financial Institution | Main Loan Requirements | URL |
|---|---|---|
|
Saison Fundex |
Age: 20–70 years old at application, loan must be repaid by age 85.
Income: Must have a stable income. |
|
|
CHUGOKU Bank |
Citizenship/Residency: Japanese citizens or Chinese nationals with legal residency in Japan.
For Chinese Nationals without Residency: Typically, a down payment of 50% or more is required, and the loan term is usually up to 15 years. |
|
|
The Tokyo Star Bank |
Residency: Must live in Japan.
Language: Must understand Japanese (reading and writing).
Employment: Must have been employed full-time in Japan for at least 1 year.
Income: Must have a gross annual income of 4 million yen or more.
|
|
|
SMBC |
Residency: Must live in Japan.
Language: Must be able to communicate in Japanese or English.
Age: Must be at least 18 years old at the time of borrowing and must repay the loan by the age of 80.
Insurance: Must be able to join the specified group credit life insurance.
Income: Must have an annual income of 5 million yen or more (7 million yen or more for real estate investment loans) and have a stable income. |
|
|
MUFG |
Age: Must be 18 years old or older at the time of borrowing and under 70 years old. The loan must be repaid by the time you turn 80.
Insurance: Must be able to join the specified group credit life insurance.
Citizenship/Residency: Must be a Japanese citizen or a foreign national with permanent residency. |
|
|
Shinsei Investment & Finance |
Self-Employed, Business Owners, Must have a residence card and live in Japan |
|
|
SBI Sumishin Net Bank |
Residency: Permanent resident or special permanent resident.
Age: 18–65 years old at borrowing; under 80 years old at final repayment.
Income: Must have stable income.
Insurance: Must join the specified group credit life insurance. |
|
|
Aeon Bank |
Income: Must be stable and continuous.
Residency: Must have work-permitted residence status.
Language: Must understand Japanese (reading and writing).
Down Payment: Use at least 20% of the property price as personal funds.
Insurance: Must join the specified group credit life insurance.
Employment: Salary workers must be employed for 6 months; business owners and self-employed must have been in business for 3 years.
Income: Salary workers and business owners need an annual income of at least 1 million yen; self-employed need an annual income of at least 1 million yen. |
Chapter 5: Concerns and Precautions for Foreigners Applying for Housing Loans
Bank Account: You must open an account with the financial institution providing the loan, as this account will be used for repayments. Some banks may have restrictions for foreigners.
Account Opening Requirements:
- Must have stayed in Japan for over 6 months for work or study.
- Must have a resident record.
- Must have a history of regular employment in Japan.
Identification Documents:
- Residence card or Special Permanent Resident Certificate.
- Driver’s license, My Number Card, or a copy of the resident record.
Make sure to check each financial institution’s website for specific requirements and acceptable identification documents before applying for a housing loan.
Chapter 6: Summary
This article explains the requirements and precautions for foreigners applying for housing loans in Japan.
To obtain a housing loan in Japan, foreigners need to have permanent residency or, if not, a guarantor who meets certain conditions. Although it’s possible to get a loan without permanent residency, the requirements are stricter compared to those with permanent residency.
Securing a housing loan as a foreigner can be challenging, but it’s not impossible. Use this article as a guide when applying for a housing loan and work towards making your dream home in Japan a reality.
