Japan Property Blog

How can a foreigner get a home mortgage or real estate investment loan in Japan?

Home Mortgage Loans

Home Mortgage Loans

In some countries, there are often restrictions such as prohibiting foreigners from owning land, but in Japan, there are no restrictions on foreigners purchasing Japanese real estate. Taxes on real estate are levied in the same way as Japanese nationals, while there are no taxes levied only on foreigners. Even if you are a foreign national, even if you do not have permanent residency, and even if you do not have any type of visa, you can still purchase real estate in Japan.
Therefore, with the increase in the number of foreigners working in Japan, there are more and more cases of non-Japanese nationals purchasing homes in Japan.

When a foreign national applies for a home mortgage loan in Japan, the bank checks various personal information including annual income and length of employment. Of all the information, the most important is whether or not the applicant has permanent residency in Japan.

The reason for this is that it will be difficult to collect the mortgage loan if the applicant returns to his or her own country or region without permission, but conversely, if the applicant has a permanent residence visa in Japan, it is safe to assume that he or she will be able to get a mortgage loan with almost the same standards as a Japanese national.

What should I do if I don't have permanent residency?

As mentioned above, most banks require foreigners to have permanent residency in Japan for applying a home mortgage loan, but more and more financial institutions are becoming more flexible than before in dealing with borrowing conditions without permanent resident status, such as living in Japan as a Japanese spouse or already having lived in Japan for a period of time equivalent to permanent resident status.

However, if you want to apply for a home mortgage loan without a permanent residency in Japan, the screening process seems to be more difficult, and there are some points to consider as follows:

  • Years of residence in Japan: Do you have resided in Japan more than 5 years?
  • Minimum annual income: 2 to 5 million yen or more
  • Amount of down payment: At least 20% of the property price, or more depending on your workplace and your annual income.
  • A spouse who is a Japanese national or has a permanent residency in Japan must be the guarantor.
  • Japanese language ability: Are you able to communicate in Japanese without problems and understand the contents of the contract?

If you do not have permanent residency and cannot get a home mortgage loan from a Japanese bank, you can consult with a foreign non-bank or your home country bank which has a Japanese branch. However, the interest rates are usually higher than those of Japanese financial institutions, and a larger down payment is usually required.

Real Estate Investment Loans 

Compared to Hong Kong, Singapore, and Taipei, where real estate prices have skyrocketed, real estate investment in Japan offers relatively good yields of 4-10% even in urban areas, and is undervalued from a global perspective, so the inflow of funds from overseas investors has continued to increase in recent years. In the first nine months of 2020, real estate investment in the Tokyo metropolitan area totaled $19.4 billion, ranking first in the world.

If you are purchasing real estate for investment purposes, you will need to consider a real estate investment loan, as home mortgage loans are not available.
As with home mortgage loans, many Japanese financial institutions require that you have permanent residency in Japan as a condition for a loan, but this does not mean that you can never get a real estate investment loan if you do not have permanent residency.
If you are a foreigner living in Japan, there are a small number of financial institutions that will give you a loan even if you do not have a permanent residency, as long as you meet the following conditions: you must be able to provide your own funds, you must have lived in Japan for a certain period of time, and you must have a certain number of years of employment and annual income. The screening conditions vary from financial institution to financial institution, so we recommend that you contact them directly.

What if I don't have permanent residency and I don't live in Japan?

In most cases, foreign investors who do not have permanent residency and do not reside in Japan purchase real estate in bulk in cash. There are some foreign financial institutions that offer real estate investment loans. Besides, if you have a corporation established for real estate investment in Japan, you may be able to use a real estate secured business loan.

Financial institutions that offer real estate investment loans

The Tokyo Star Bank, Ltd.

Loan products for customers of Japanese corporations established by foreign investors and Japanese corporations established by foreign nationals with resident status in Japan for the purpose of real estate investment in Japan.
https://www.tokyostarbank.co.jp/hojin/solution/industry/inbound/

Shinsei Investment & Finance Ltd.

Personal loans only for non-residents of Japan who hold a passport issued by the Hong Kong Special Administrative Region Government or Japan and currently reside in Hong Kong.
https://www.shinsei-if.com/en/real-estate/overseas.html

ORIX Bank Corporation

No permanent residency in Japan required. Foreign nationals residing in Japan with an annual income of 7 million or more for the previous year. There are conditions for the property such as structure, area, building age, and use.
http://www.orixbank.co.jp

PRESTIA (SMBC Trust Bank)

No permanent residency in Japan required. Foreign nationals residing in Japan with an annual income of 7 million or more for the previous year. No guarantor required. There are conditions for the property such as structure, area, building age, and use.
https://www.smbctb.co.jp

United Overseas Limited Bank

Foreign investors.
http://www.uob.com.sg

Bank of China Ltd.

Chinese nationals with residence status in Japan.
http://www.bankofchina.com

Bank of Communications Co., Ltd.

Foreign nationals with resident status in Japan, with an annual income of 4 million yen or more.
http://www.bankcomm.jp/CN

Alice Asami

Hello, I'm Alice from Taiwan who translated this article. Currently, I live in Yokohama City, Kanagawa Prefecture, next to Tokyo. If you are interested in buying real estate in the Yokohama, Kawasaki, Miura, Kamakura, and Zushi areas, which are popular with foreigners, whether they are for residential use, investment use, or second house, please contact us. Also, since I have a license as a “National Government Licensed Guide Interpreter” in Japan, I can arrange investment / sightseeing / cultural experience tours for those who want to understand this area when purchasing real estate. Please feel free to contact us.
LINE ID: @rcu0766x
Facebook: https://www.facebook.com/alicehou0405japan

Aug 21, 2021

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