While there are no restrictions on foreign ownership of property in Japan, securing finance can be challenging.

Some Japanese banks — including Prestia SMBC Trust Bank (formerly Citibank Japan), Shinsei Bank, and Tokyo Star Bank — offer English-language information on their websites and are aimed at foreigners living in Japan. Several other big banks, like the Bank of Tokyo Mitsubishi UFJ and Mizuho Bank also accept foreigners for mortgages but only offer information in Japanese.

Loan terms and income/employment eligibility requirements differ depending on the bank, but note that Shinsei requires applicants to have an existing account with the bank or to open one when they apply for a loan and that Tokyo Star Bank is one of the few banks that don’t require you to have a permanent residence status nor a Japanese spouse to be accepted for a housing loan.

Do I need to speak Japanese?

Banks may provide English translations of loan documents, however, the legally binding contracts for all banks will be in Japanese. 

Prestia SMBC does not require applicants to speak Japanese to apply for a loan but other banks may only sign loans with customers who they feel have a sufficient level of Japanese to comprehend the documents.

Do I need to be a permanent resident of Japan?

Many Japanese banks require foreign borrowers to be either permanent residents or married to Japanese nationals. For reference, permanent resident status may be granted to a foreigner after ten or more years of working and living in Japan. 

Prestia SMBC and Tokyo Star Bank lend to foreigners who do not have permanent residency, but they must still be citizens or residents of Japan. Shinsei also lends to foreigners who are not permanent residents, but they must have a spouse who is Japanese or a permanent resident. 

Many banks stipulate that the applicant must show “signs of staying long-term in Japan”, which can mean, depending on the bank, having a Japanese spouse, working for a Japanese company for at least three years or having children attend a school in Japan. Usually, three types of visas will be accepted: permanent resident, spouse of Japanese national or long-term working visa.

Foreign borrowers may also need to provide tax receipts of up to three years' work history in Japan. And depending on their financial situation, if they own property offshore, they may be able to secure lending against those offshore assets.

How much can I borrow?

The maximum amount you can borrow from most banks is JPY 100 million. 

Prestia SMBC stipulates that the property purchase price must be above JPY 10 million. The Bank of China has no limit, but stipulates that only 70% of the property can be financed, while most Japanese banks accept an 80% rate. Mitsui Sumitomo Trust and Finance offers up to JPY 300 million.

As a rule of thumb, most Japanese banks allow customers to borrow up to eight times their annual income.

Can I get a loan for an investment property?

Prestia SMBC grants loans for the purchase or construction of investment properties. Shinsei also loans for homes in which the applicant or their family will live, construction of a new house on land already owned, or for the refinancing of a mortgage from another financial institution. 

Tokyo Star Bank, which is a subsidiary of a Taiwanese Megabank, offers housing loans for all non-residents and investment property loans for Taiwanese and Chinese nationals.

The Bank of Taiwan, Shinhan Bank and the Bank of China are also represented in Japan and offer housing loans to non-nationals, however few details are found on their websites, so it is best to contact their Japan branches directly regarding available options.

In English:

More information about Prestia SMBC loans
More information about Shinsei Bank home loans
More information about Tokyo Star Bank Loans
 
In Japanese:
More information about MUFJ Bank loans
More information about Mizuho Bank loans
More information about Mitsui Sumitomo Trust Bank loans

For foreign borrowers living in Australia

If you are living in Australia, Japanese yen loans that use Australian property as security are available from most major Australian banks.

Overview of the loan process

There are usually four steps for a housing loan in Japan:
1.     Pre-application (事前審査 |  jizenshinsa)
2.     Home loan application (本審査 | honshinsa)
3.     Signing of documents
4.     Execution

During the pre-application or pre-qualification step, the financial institution determines if the applicant qualifies as a borrower. Information checked includes the applicant’s current place of employment and conditions, previous and present debts, as well as health condition. For the latter, many banks require the applicant to enroll in a group credit life insurance (団体信用生命保険 | dantai shinyo seimei hoken). The result of the pre-application is usually available within 2-3 days of the submission of all required documentation.

After, the actual home loan application can be submitted. The process usually takes around 14 working days, but can be up to one month. In addition to the applicant’s financial and health conditions, the bank now checks the property’s value, state and contract conditions before giving final approval for the loan. 

If the application is rejected at that stage, the applicant can either apply with a different financial institution or try reducing the desired loan amount. If no loan can be secured after a period of time stipulated in the property sales agreement, the contract will be canceled and the deposit paid to secure the property returned.

If the application is successful, the loan agreement is signed between the borrower and the financial institution and a starting date for the loan execution is decided at the time of signing — usually a week after. The loan amount is then transferred to the borrower’s account, which executes the home loan. In Japan, the buyer usually meets the property owner or representing real estate agent on the same day to execute the sales contract.

Sources: nisekoproperty.com, realestate.co.jp

This post was last updated in October 2018 by Mareike Dornhege

Further reading:

• Introduction to Japan Real Estate
• Buying property in Japan
• Japan property taxes
• Japanese real estate glossary