Q: Can foreigners buy a home in Japan?

A: Yes, they can. However, there are conditions, especially if you plan to use a mortgage.

You must have a permanent residence visa. Some lenders may offer loans to non-permanent residents, but terms may include higher interest rates.

A stable income in Japan significantly influences loan approvals. Employment with established companies or public institutions improves your chances.

Also, having a Japanese national spouse is a plus.

Q: What should I be aware of when buying a house in Japan, especially what is different from other countries?

A: What you should know is that the value of buildings decreases from year to year. Traditional Japanese houses are made of wood and have a depreciation period of 35 years. In reality, some properties can be lived in for 50 or more years, almost 100 years, but when it comes time to sell, the value of the building is often assessed at almost zero. The conditions are different from those in Europe and the U.S., where buildings have a long life and appreciate in value with good maintenance.

The same principle applies to reinforced concrete condominiums, which depreciate in value, although not as much as wooden houses. Most are rebuilt after 50 years of construction.

Q: What should I do if I want to buy a house?

A: There are basically two ways.

1. After searching online and finding a property you’re interested in, contact the agent handling it for a viewing. Most real estate information is in Japanese, but translation tools can help. Some agents speak English, but it’s wise to have a translator or bilingual friend during property visits.
2. Visit a real estate agent in your desired area or station, outline your preferences, and ask them to find suitable options for you. Engaging directly with agents can provide valuable insights and assistance in conveying your requirements effectively.

Q: Which is better, a single-family home or an apartment?

A: Both have advantages and disadvantages. Prioritize your living preferences to align with your budget and lifestyle. Consider proximity to stations, garden space, and pet accommodations when deciding between a detached house and an apartment.

Q: How much can I borrow based on my income?

A: A: Healthy mortgage amounts typically range up to five times your annual income, including taxes. While government employees and those with stable corporate jobs may be offered higher loan amounts, exceeding this limit is not advisable. If you are self-employed or a freelance worker, securing a mortgage may be more challenging, but there are strategies and options available to explore.

Q: What percentage down payment is required?

A: We recommend a down payment of 20% of the property price for favorable loan terms and financial security in case of unforeseen circumstances, even though some banks offer 100%. Oftentimes, you get a lower interest rate offered, when you pay more than 10 or 20 % down.  

Q: What other expenses should I budget for besides the property price?

A: Budget for mortgage fees, registration costs, real estate acquisition tax, and real estate commissions, typically amounting to 5-10% of the property price. These expenses are generally not covered by loans.

Q: How long should the mortgage be?

A: The maximum mortgage term is 35 years. Align your repayment plan with your retirement goals for financial stability in the long run. We usually suggest paying it off by the age of 65, ensuring a smoother and simpler retirement life thereafter.　

Q: What are the current mortgage interest rates?

A: Interest rates vary among lenders. Compare fixed and adjustable-rate mortgages to choose the most suitable option based on your financial objectives.

Mega Bank A:  Variable 0.345 – 0.425%      Fixed  1.59 – 1.81%

Net Bank B:     Variable 0.315 – 0.380%      Fixed 1.865 – 2.09%

                 *Some are fixed for a certain period (3, 5, 10 years, etc.) and then become variable.

Navigating Japan’s real estate market can be rewarding with the right information and guidance. For further inquiries or assistance with property purchases, contact us at counsel@al-pha.com. Happy house hunting!