Buying residential property in Japan presents several compelling advantages. With historically low interest rates, you can enjoy affordable mortgage payments, allowing you to channel more funds into building equity. Japan’s real estate market, particularly in urban areas like Tokyo, has demonstrated a steady appreciation in property values, making it a potentially lucrative long-term investment. Home ownership provides stability, security, and the opportunity to personalize your living space. Additionally, owning property can hedge against inflation and enhance your overall financial portfolio, making it a smart choice for expatriates and locals.

Investment properties, primarily acquired for income generation and wealth accumulation through capital gains, are especially popular in cities like Tokyo. By renting out your property, you can cover mortgage payments and create additional cash flow, contributing to wealth growth as rental income rises and property values appreciate. Investment properties may also offer tax benefits, such as deductions for mortgage interest and property taxes, further enhancing your overall return.

Moreover, real estate is a tangible asset that provides stability in a diversified investment portfolio, helping mitigate risks during uncertain economic times. Please read our article on reasons to invest in Tokyo real estate for more information.

Our property team is here to assist you throughout the entire process—from the initial financial planning stage of establishing a budget to advising on the best types of properties for your situation, identifying ideal neighborhoods, finding the right property, and closing the deal. Please see our article on the property purchasing process in Japan to learn more.

How Do Residential Loans Work in Japan?

• Eligibility Requirements: To qualify for the best loans and terms, you must be employed in Japan and receive your salary from a Japan-based company. Having permanent residency or a Japanese spouse significantly boosts your chances of approval. Japanese banks assess the borrower more than the property, seeking assurance that you can continue making payments and are unlikely to leave the country.
• Loan Amounts: Typically, banks will lend between 7 to 8 times your annual salary. Working for a reputable, established company enhances your credibility. If you’re a business owner, you may be viewed as a slightly higher risk than salaried employees.
• Interest Rates: As of 2024, mega banks offer residential loans with attractive terms, including zero down payment options and floating interest rates around 0.5%. While fixed-interest loans are available at higher rates, most borrowers prefer floating rates.
• Down Payment Considerations: If you do not hold permanent residency or are not married to a Japanese national, you can still qualify for loans at about 0.5% interest but typically need a significant down payment of around 20%. However, if you’ve worked in Japan for at least five years, there may be opportunities for a 10% down payment on a case-by-case basis.
• Non-Resident Loans: Securing a loan is more challenging if you don’t reside in Japan. You will likely need to deposit 40-50%, with higher interest rates averaging around 3%.

What About Investment Loans?

Investment loans are considered higher risk compared to residential loans. Permanent residency is usually necessary to qualify, allowing for a 0%, 10%, or 20% down payment with interest rates between 2-3%. If you don’t have permanent residency but are married to a Japanese national, you may still secure a loan with a 30% down payment, assessed on a case-by-case basis.