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How Does Having Permanent Residency Affect Foreigners’ Housing Loans?
2025.09.04
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When purchasing real estate in Japan, most people take out a housing loan from a financial institution to fund the purchase. In this article, we explain how foreigners can obtain a housing loan in Japan, focusing on the differences in loan terms and considerations depending on whether they hold permanent residency or not.
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Housing Loans and Screening for Foreigners with Permanent Residency
For foreigners living in Japan, having permanent residency is a significant advantage when applying for a housing loan. Most financial institutions allow foreigners with permanent residency to apply for loans under almost the same conditions as Japanese nationals.
In fact, many financial institutions set the requirement that “applicants must be Japanese nationals or hold permanent residency.” Therefore, for foreigners wishing to purchase property in Japan, acquiring permanent residency can be considered a shortcut to securing a housing loan.
Screening Criteria and Key Points
The main screening criteria for foreigners with permanent residency are as follows:
・Stable income
・A certain minimum number of years of continuous employment
・No issues with credit history
・Good health, with eligibility to join group credit life insurance
As a general requirement, a minimum annual income of 3 million yen is often required. Additionally, a unique condition for foreigners is the ability to communicate in Japanese. While some financial institutions offer services in foreign languages, the options are limited.
Since important explanations must be given at the time of loan contract signing, a level of Japanese proficiency sufficient for understanding these explanations and everyday conversations is essential.
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How to Obtain Permanent Residency
Permanent residency is one of the residency statuses available for foreigners who wish to stay long-term in Japan. With permanent residency, there is no limit on the period of stay, and you are allowed to work in any job or industry without restrictions.
In principle, permanent residency is granted to those who have lived in Japan for more than 10 years, and applicants must meet the following three conditions:
・Good conduct and character
・Sufficient assets or skills to maintain an independent livelihood
・The applicant’s permanent residency must be deemed to be in Japan’s national interest
In some cases, such as when married to a Japanese national or possessing exceptional skills, applicants may be granted permanent residency without meeting the 10-year residency requirement.
Although the requirements are strict, obtaining permanent residency is highly recommended for foreigners considering a housing loan.
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How Foreigners Without Permanent Residency Can Get a Housing Loan
While having permanent residency makes the process smoother, it is still possible for foreigners without permanent residency to obtain a housing loan, although the conditions are more stringent.
Using a Bank from Your Home Country
If your home country’s bank has a branch in Japan, it may be easier to secure a housing loan. This is because the bank can easily verify your credit history and track repayments even if you return to your home country during the repayment period.
However, note that the interest rate may follow your home country’s lending rates instead of Japanese rates.
Prepare a Larger Down Payment
Financial institutions want to minimize the risk of non-repayment. The larger the loan amount, the stricter the screening process becomes.
Conversely, if you prepare a larger down payment and borrow less, you reduce the lender’s risk and increase your chances of passing the screening—especially if you can demonstrate stable income. This is a key strategy regardless of whether or not you have permanent residency.
Have a Japanese Spouse Act as a Guarantor
Some financial institutions allow foreigners without permanent residency to take out housing loans if their spouse—who is either Japanese or a foreigner with permanent residency—acts as a joint guarantor.
Although still limited, some lenders now offer housing loans without requiring a Japanese or permanent resident guarantor. However, these loans often come with stricter conditions related to income, age, health, and employment history, as well as higher interest rates.
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