Find out How Much you Can Borrow before you start searching

In Japan, buying a home isn’t a case of “find the property, figure out the loan later.” Sellers and agents usually won’t take your offer seriously unless your financing is already in place. This makes mortgage pre-approval (事前審査 / Jizen Shinsa) one of the most important steps for both local and foreign buyers.

Why the caution? Quite simply, many buyers — especially foreigners — struggle to secure a loan. Japanese banks are conservative, and approval often depends on strict conditions. Financing is especially difficult for:

• Buyers without permanent residency or a long-term visa
• Those with unstable or short-term employment contracts
• Self-employed individuals without several years of verifiable Japanese tax returns
• Applicants with limited Japanese language ability or incomplete documentation
• Foreign investors hoping to finance rental or guesthouse properties through a personal mortgage

Because of these hurdles, sellers want reassurance that you already have bank backing. Pre-approval shows that a reputable lender has reviewed your case and is prepared to finance your purchase — making your offer credible and reducing the risk of a failed transaction.

Why Financing Comes First

Unlike some countries where you can make an offer and confirm financing afterwards, in Japan the reverse applies. You need to know exactly how much you can borrow before you negotiate. Without pre-approval:

• Sellers may reject your offer outright.
• Without contractual protections you can risk losing your deposit if financing falls through later.
• You’ll waste time viewing properties beyond your actual budget.

How Pre-Approval Works (事前審査)

Pre-approval is essentially a “soft yes” from the bank. The process looks like this:

1. Submit income proof, residence card, passport, and ID.
2. Bank checks your eligibility and credit standing.
3. No specific property is required, though some banks prefer it.
4. Results are usually returned in 3–10 business days.
5. If approved, you’ll receive notification of pre-approval.

This notification shows sellers you’re serious and financially ready to proceed.

How to Get Pre-Approved

• Direct Online Mortgage Portals: If you are comfortable searching and communicating in Japanese then you can start the pre-approval process from any of the major bank's online mortgage portals.
• Buyer’s agent: Experienced agents have trusted banking contacts and can package your application correctly.
• Banks offering bilingual mortgage services: Firms like Shinsei Bank and SMBC Prestia offer English support.
• Don't forget to check out the regional banks: Local banks and credit unions (Shinkin) can sometimes be more flexible, especially in rural areas, however they will usually require PR and/or a decent level of Japanese.

Types of Mortgage Interest Rates

When applying, you’ll need to choose how your interest rate is set:

• Fixed Rate (全期間固定金利): Stays the same for the entire loan. Predictable, but starts higher (around 1.0%–1.5%).
• Variable Rate (変動金利): Reviewed twice a year. Lower at first (0.3%–0.6%), but risk of increases later.
• Fixed for a Set Period (固定期間選択型): Locked for 3–10 years, then becomes variable.

Preferential Discounts (優遇金利)

Most banks reduce rates if you meet certain conditions:

• Have your salary paid into the bank’s account
• Bundle with the bank’s fire or life insurance
• Sign up for the bank’s credit card or services

These discounts can cut 0.3%–1.2% from the base rate.

Compulsory Insurance

Before loan disbursement, banks usually require:

• Fire insurance (火災保険) – mandatory for all mortgages.
• Group credit life insurance (団信 / Danshin) – pays off the loan if the borrower dies. Many policies also cover cancer, stroke, or heart disease.

These safeguards protect both you and the lender.

Loan Approval Flow at a Glance

1. Preliminary consultation
2. Pre-approval application (事前審査)
3. Property search and offer
4. Formal application (本審査)
5. Loan approval & contract signing
6. Loan disbursement (実行)
7. Repayments begin

Takeaway

Unless you are paying cash, getting pre-approved is the most important step you can take as a buyer in Japan. It makes your offer credible, sets your true budget, and protects you from costly mistakes.

This is the first of our two-part series on financing in Japan. For advanced details—like joint loan types, Flat 35, Danshin insurance, and international comparisons—download our free Japan Property Financing Guide (PDF).