Table of ContentsDreaming of owning a home in Japan? As a foreign national, you may wonder about the possibility of obtaining a mortgage loan and turning your homeownership dreams into reality. In this article, we delve into the world of mortgage financing in Japan, specifically for those without permanent residency. We'll explore the challenges, shed light on the screening process, and provide practical measures to increase your chances of mortgage approval. Let's embark on this journey together and unlock the doors to your dream home in Japan!*Please note that the information provided here is for reference purposes only and should not replace professional financial advice.Call or email us here >>What is permanent residency? Can I get a mortgage without it?If you are a foreign national who has been living in Japan for a long time, you have probably heard the term "permanent residency”.Permanent residency is a right that allows foreign nationals to live in Japan for an unlimited period of time.Normally, when foreign nationals stay in Japan, the period of stay is set at one to five years, depending on the reason for their stay.However, if you obtain a permanent residence visa, you can live in Japan without worrying about the period of stay.Therefore, it is easier to be approved for a mortgage loan if you have a permanent residence visa.If you want to obtain a permanent residence visa, you need to meet the following three main criteria:Must be of good conductMust have assets or skills for financial independencePermanent residence is deemed to be in the best interest of Japan“Good conduct" refers to whether or not the applicant is obeying the rules of Japan and leading a peaceful life. This reflects the applicant's commitment to being a responsible member of the Japanese community.“Assets and skills for financial independence” refers to the applicant’s financial stability and whether they possess the necessary assets or skills to sustain an independent livelihood. This assessment ensures that you have the means to meet your financial obligations.The applicant's permanent residence must be recognized as “being in the best interests of Japan". This refers to whether or not the applicant's long-term residence in Japan will benefit Japan. Factors such as the duration of your residence, particularly a minimum of 5 years spent under work or residence status, are taken into account. Additionally, your history of tax compliance, without penalties or fines, demonstrates your commitment to contributing to the Japanese economy.In addition to these criteria, there are a variety of other criteria that must be met in order to obtain permanent resident status, and the screening process can be said to be very strict.Some may feel that applying for permanent residence in order to purchase a home is a high hurdle.However, please don’t despair. We will discuss other possible options available, offering insights and strategies to help you navigate the process with confidence.It IS possible to get a mortgage in Japan without permanent residency!As explained above, it is definitely easier to apply for and get a mortgage in Japan as a foreigner with permanent residency status. However, don’t let the lack of permanent residency deter you from your homeownership goals. Although the hurdles are higher and the screening process is much stricter, it IS possible to qualify for a mortgage loan without permanent residency.The mortgage loan screening processWhen it comes to obtaining a mortgage, several factors come into play, including age restrictions, health considerations, employment history, income, and years of residence. Let's delve into these essential criteria that lenders assess during the mortgage application process in Japan.Age Restrictions and Repayment CompletionMortgages often have age restrictions to ensure borrowers have sufficient time to repay the loan. For instance, Japanese borrowers are typically required to be between 20 and 70 years old when borrowing, with repayment completion by the age of 80. These age limits help lenders manage risk and ensure loan repayment feasibility.Employment History and Self-EmploymentStability in employment is a significant consideration for mortgage lenders. For salaried individuals, having a minimum of two years of employment with the same company is typically required. If you're self-employed, the number of years in business becomes a crucial factor.Income Assessment and Financial CapacityYour annual income plays a vital role in mortgage eligibility. Lenders examine whether your previous year's income exceeded at least 2 million yen. This assessment helps determine your financial capacity to repay the loan and manage associated costs.Years of Residence in JapanThe duration of your residence in Japan is also taken into account. Typically, lenders require a minimum of 2 to 3 years of residence to demonstrate stability and commitment to the local community.Additional Criteria and DocumentationBeyond the five primary criteria mentioned above, lenders may also evaluate other factors, such as existing debts, and require supporting documentation like a valid passport or residence card to verify eligibility.It's crucial to recognize that meeting these criteria is not a guarantee of mortgage approval, as each lender has their specific requirements. Working with a knowledgeable mortgage professional will provide tailored guidance to navigate the intricate details of mortgage eligibility and increase your chances of success.Why the screening process is so strictIt's natural to wonder why obtaining a mortgage without permanent residency in Japan can be more challenging. Let's delve into the three key reasons that contribute to a stricter screening process:Risk of Repayment Challenges upon DepartureForeign nationals in Japan have a fixed period of stay, and if they fail to renew or extend their period of stay, there is a significant risk of foreigners returning to their home country without fully repaying the mortgage loan. This situation poses a challenge for financial institutions in collecting the outstanding loan amount because, in essence, foreigners may be a potential flight risk.Difficulty in Obtaining GuaranteesFinancial institutions typically require guarantees when providing mortgage loans. However, foreign nationals often face difficulties in securing a guarantee from a guarantor company, which increases the risk for the lending institution. However, if the foreign national has a Japanese spouse, their spouse can potentially act as a guarantor, offering a potential solution to this challenge.Language Barrier and Contract UnderstandingMortgage contracts are written in Japanese, which can pose a hurdle for non-Japanese speakers. The risk arises when the borrower fails to fully comprehend the terms and conditions outlined in the contract. This linguistic barrier adds complexity to the screening process and increases the caution exercised by financial institutions.The combination of the aforementioned risks contributes to a higher risk profile for financial institutions when providing mortgage loans to foreign nationals. As a result, lenders adopt a more stringent screening process to mitigate potential losses and protect their interests.What measures can be taken to qualify for a mortgage loan without permanent residency?Here are three strategies to help you qualify for a mortgage loan in Japan without permanent residency:Strategy 1) Borrow from a financial institution with its head office in your home countryIn the previous section, we explained that one of the reasons for the difficulty in obtaining a mortgage is the risk of being returned to one's home country, but this concern is eliminated if the financial institution has its headquarters in one's home country.If the financial institution has its headquarters in the borrower's home country, there is a high possibility that the borrower will be able to obtain a mortgage loan without permanent residency because the borrower can request repayment of the loan even after the borrower returns to the home country.Since the borrower's loan delinquency history and credit score in the borrower's home country can also be examined, the loan may be available even without a guarantor.However, since the screening requirements vary from financial institution to financial institution, it is advisable to inquire first.Strategy 2）Depend on your Japanese spouseIf you have a Japanese spouse, you can ask your spouse to take out a mortgage loan. It will be easier for a Japanese national to be approved for a mortgage loan than for a foreign national.If you are not comfortable with your spouse's sole name, you can ask him or her to be a joint guarantor.However, if your spouse's income is low, you may not be able to obtain a mortgage loan. You should first inquire with the financial institution about the guarantor and income requirements.Strategy 3）Increase your down paymentBy making a larger down payment, financial institutions may trust you and make it easier for you to qualify for a mortgage loan.For example, if you have prepared a down payment of several million yen, your income is considered to be that much more stable, and financial institutions will feel more comfortable financing you.A larger down payment may also reduce your monthly loan repayments.First, try to save up enough personal funds before applying for a mortgage.In ConclusionIn conclusion, we have delved into the concept of permanent residency, explored the challenges associated with its screening process, and discussed strategies to successfully navigate the screening process for individuals looking to purchase a home in Japan.Permanent residency grants foreign nationals the invaluable right to reside in the country indefinitely, providing a sense of stability and security. While it is possible to obtain a mortgage loan without permanent residency, it is essential to acknowledge the inherent difficulties arising from the risks associated with potential repatriation and lack of collateral.Fortunately, there are strategies that can facilitate a smoother mortgage screening experience. One effective approach is to consider making a larger down payment, demonstrating a commitment to the investment and mitigating potential risks. Additionally, opting for a financial institution with its headquarters located in your home country can help establish a level of trust and familiarity, thus improving the chances of a successful screening process.By understanding the intricacies of permanent residency and the nuances of mortgage screening, individuals can make informed decisions and take the necessary steps to fulfill their dreams of owning a home in Japan. Remember, seeking expert advice and guidance throughout the process can further enhance your chances of a seamless transition.If you have any further questions or require assistance, please do not hesitate to reach out. We are here to support you every step of the way.