Complete Mortgage Guide — Japan

How Mortgages Work in Japan

The Bank of Japan’s monetary policy has maintained ultra-low interest rates for decades, making Japanese mortgage rates among the lowest in the world. Variable rates are influenced by the BoJ’s short-term rate (tanki prime rate), while fixed rates are influenced by long-term government bond yields (JGB). The BoJ’s yield curve control (YCC) policy has kept long-term rates suppressed, though recent policy adjustments have allowed more flexibility

Use our mortgage calculator to see how different rates and terms affect your monthly repayments.

Types of Mortgages Available

The main types are hendō kinri (variable rate — typically 0.3-0.7%, adjusting semi-annually but with a payment cap that limits increases to 125% of the previous payment), kotei kinri (fixed rate — for 2, 3, 5, 10, 15, 20, or 35 years), and the Flat 35 programme (a government-backed 35-year fully fixed rate product). Variable rates are most popular due to exceptionally low levels. The Flat 35 is administered by the Japan Housing Finance Agency (JHF) and offered through participating banks, providing the ultimate payment certainty

Read our mortgage types comparison for a detailed side-by-side analysis of each product.

How Much Can You Borrow?

The henpen ritsu (repayment ratio) typically cannot exceed 30-35% of gross annual income, depending on the lender and income level. Banks also consider the borrower’s age, employment status, and company size. The danshi hoken (group credit life insurance) is typically included free by the lender, covering the outstanding balance if the borrower dies — this is a unique Japanese market feature

The maximum loan-to-value in Japan is Up to 100% through the Flat 35 programme, though rates are slightly higher above 90% LTV. Banks typically lend 80-100% for primary residences. The deposit culture is less demanding than in many Western countries — zero-deposit mortgages are genuinely available through the Flat 35 and some bank products. Loan terms extend up to Up to 35 years, with 35-year terms common for first-time buyers. The Flat 35 programme specifically offers 35-year fully fixed rates. Maximum borrower age at completion is typically 80, meaning a 45-year-old can still get a 35-year term.

The Application Process

Apply through a bank or Flat 35 provider. Provide juminhyō (resident certificate), inkan shōmeisho (seal registration certificate), gensen chōshūhyō (withholding tax certificate — last 2-3 years for salaried workers), and property documents including the purchase contract. The lender conducts a property appraisal. Pre-screening (jizen shinsa) takes 1-3 days, while formal approval (honshinsa) takes 1-3 weeks. A judicial scrivener (shihō shoshi) handles the mortgage registration at the Legal Affairs Bureau

Costs and Fees

Mortgage registration tax (tōki hiyō) of approximately 0.1-0.4% of the loan amount. Loan guarantee fee (hoshō ryō) of approximately 2% of the loan amount (for bank loans — some lenders waive this but charge a higher rate). The Flat 35 does not charge a guarantee fee. Fire insurance (kasai hoken) for the property is mandatory. Danshi hoken (group credit life insurance) is typically included at no extra charge by most lenders, covering the outstanding balance upon the borrower’s death

What Makes Japan’s Mortgage Market Unique

Japan’s mortgage market is exceptional for its ultra-low rates and the free group credit life insurance (danshi hoken) included with most mortgages. The Flat 35 programme provides 35-year fully fixed rates that would be unimaginably low by international standards. Building depreciation is also unique — wooden houses depreciate to zero value after about 22 years for tax purposes, which affects how banks value properties for lending but also creates opportunities to buy land-value properties and rebuild

Refinancing Your Mortgage

Karikae (refinancing) is straightforward and increasingly common as borrowers seek to optimise rates. There are no prepayment penalties for variable-rate mortgages at most banks. Fixed-rate loans may carry a small penalty. The main costs are the new mortgage’s registration tax, guarantee fees, and judicial scrivener fees. Online banks like SBI Sumishin often offer the lowest rates for refinancing. Compare the total savings over the remaining term against the switching costs

Read our refinancing guide for a step-by-step walkthrough.

Government Schemes and Support

The jūtaku rōn genzei (housing loan tax deduction) allows deducting 0.7% of the remaining loan balance from income tax annually — for 13 years on new homes and 10 years on existing homes. Maximum loan balances eligible depend on the property’s environmental certification level. The Flat 35S programme offers a rate discount (typically 0.25% for the first 5-10 years) for properties meeting enhanced quality standards. ZEH (Net Zero Energy House) certified homes receive additional rate discounts

Check our government grants guide for the latest programmes and eligibility details.

Tips for Getting the Best Deal

Consider variable rate carefully — Japanese variable rates have been stable below 1% for years, but the BoJ’s evolving monetary policy means rates could eventually rise. The Flat 35 provides unmatched certainty for risk-averse borrowers. Always compare banks plus online lenders like SBI Sumishin, which consistently offer the lowest rates. The free danshi hoken (credit life insurance) included by most lenders is a significant benefit worth factoring into comparisons with any external insurance you might consider

Next Steps

Use our mortgage calculator to model different scenarios, read our property buying guide for the full purchase process, or browse Japan FAQs for quick answers.