Hi, I am Takeshi Hirano, the REDS agent. Are you having a hard time in financing to purchase a property in Japan? Well, here is the key! We might be able to support you on that issue. Even a foreign national without PR (Permanent Residency) has a chance to obtain a housing loan from a bank. Today, we are going to elaborate more on that!

Searching for a housing loan to borrow

If a foreign national wishes to utilize a housing loan in Japan, generally, it is necessary to have permanent residency (or the spouse to be a Japanese national). However, some banks may consider providing housing loans to individuals with a certain level of residential stability in Japan, meeting specific annual income requirements and length of employment, even without permanent residency. The available options depend on the individual’s circumstances. 

Applying for pre-screening

Once you have identified the property you wish to purchase, the next step after obtaining a housing loan is the pre-screening process. Typically, the evaluation of a housing loan by financial institutions occurs in two stages: preliminary screening (pre-screening) and main screening.

Both stages involve an assessment of the property to be purchased and the borrower, but the pre-screening is usually more simplified. The documents required for pre-screening include personal identification documents such as a driver’s license, income-related documents such as withholding tax statements, as well as property brochures or flyers. From the stage of applying for pre-screening, a REDS agent will assist you, so you can rest assured.

Things you need for pre-screening process

Personal identification documents:

• Driver’s license
• Residence card 
• Health insurance card
• Passport

Income-related documents: For employees:

• Withholding tax statements
• Salary slips

For self-employed individuals:

• Copies of tax returns (for the past three years)

Property confirmation documents:

• Sales floor plan
• Brochures
• Flyers

Notification of pre-screening results

The typical duration for pre-screening is usually around one week. However, in some cases, results can be obtained within 2 to 3 days. During this process, you can gain a rough estimate of the interest rate and the amount you can borrow.

Applying for main-screening

During the main-screening, both the borrower and the property undergo a more detailed evaluation, necessitating a greater number of documents. In addition to personal identification documents such as a driver’s license, documents like a resident certificate and a certificate of seal impression (inkan shomeisho) are also required for personal identification. These documents are typically issued at local government offices, but please be aware of any time restrictions, such as issuance within three months.

For income-related documents, you’ll need documents such as the local tax assessment notice and a tax certificate. Additionally, if you’re a corporate representative, submission of corporate financial statements may also be required. Regarding property confirmation documents, copies of the sales contract, construction contract, and a registration certificate for land and buildings are necessary.

Things you need for main-screening process

Personal identification documents:

• Driver’s license
• Residence card
• Health insurance card
• Passport
• Resident certificate
• Certificate of seal impression (inkan shomeisho)

Income-related documents: For employees:

• Withholding tax statements
• Local tax assessment notice

For self-employed individuals:

• Copies of tax returns (for the past 3 years)
• Income tax payment certificates
• Business tax payment certificates (for the past 3 years)

For corporate representatives:

• Corporate financial statements
• Corporate tax payment certificates (for the past 3 years)

Property confirmation documents:

• Sales floor plan
• Brochures
• Flyers
• Copy of the sales contract
• Important matter explanation (disclosure statement) document
• Copy of the construction contract
• Registration certificate for land and buildings

Notification of main-screening results

The typical duration for the main-screening is usually around 10 days to 2 weeks. In some cases, it may take a little longer.

Entering into a housing loan agreement

Once the main-screening is successfully passed, you will proceed to enter into a housing loan contract (a loan agreement for money lending) with the financial institution. At this point, details such as the interest type and repayment period of the housing loan will be determined. While it is common for the interest rate to be applied based on the execution of the loan, some financial institutions may decide the rate at the time of the housing loan contract.

Housing loan contracts are typically conducted at the counter of the financial institution on weekdays, so you may need to take time off from work to complete the procedures. There are usually no additional documents required to be submitted at the time of contract signing, but a personal seal (inkan) or officially registered seal (Jitsuin) to the financial institution may be necessary.

Executing the housing loan funding

Once the housing loan contract is completed, all that remains is for the loan to be executed, and the borrowed funds to be transferred to the designated account (seller’s account). However, the execution of the housing loan typically occurs simultaneously with the handover of the property. This is known as “simultaneous settlement.” The execution of the housing loan and the handover of the property are commonly conducted at the financial institution on weekdays. Since procedures are conducted on weekdays, it may be necessary to take a day off from work on that day.

On the day of the execution of the housing loan and the handover of the property, ownership registration procedures are also conducted. This involves registering the ownership rights of the purchaser for the land and building, as well as registering the mortgage rights of the financial institution. Registration takes place at the registry office (legal affairs bureau), but typically, a judicial scrivener (Shiho-shoshi) designated by the financial institution will handle the actual procedures, and the purchaser will only need to sign and affix their seal on the necessary documents.

In conclusion

This roughly outlines the process from applying for a housing loan to its execution. If you’re using a housing loan for the first time, you may have questions or concerns. In such cases, please don’t hesitate to consult with a REDS agent. We’re here to provide full support to ensure your real estate transactions with a housing loan proceed smoothly.

【REDS】Real Estate Distribution System (REDS) Japan

Takeshi Hirano (Mr.)

mailto: ta.hirano@red-sys.jp