Buying Japan Real Estate as a Freelancer: Cracking the Bank Loan Code
Forget the sugar-coated daydreams – buying Tokyo property as a freelancer (in this context, it means file your taxes as a sole proprietor or 個人事業主) requires grit, not fairy tales. Your income may be a rollercoaster, but your mortgage doesn't need to be.
I've been living in Tokyo as a freelancer for 7.5 years at this point. I have the intention of applying for Permanent Residency (永住権) as soon as possible. I gave my attempt applying as a single debtor for a 40M JPY housing loan at a few banks. Banks have different requirements for freelancers (個人事業主) vs. salary-employees (正社員).
Here's your minimum requirements:
Prove a Steady Taxable Income of 3+ Years.
Salaried employees must only need to be at their current job for 1 year but freelancers by nature have less stable income.
Show them consistent, multi-year figures over 5million yen for at least three years, preferably from multiple clients. Salaried employees must only need to be at their current job for 1 year.
Remember Focus on 所得金額 (before taxes), not just 収入金額 (gross). It might be tempting to expense to oblivion now that you have the freedom to, but it's your taxable income they look at. Keep your tax accountant in the loop.
Visa Status: Your Passport to Property Power.
Permanent residency unlocks the best interest rates (less than 1%), but some lenders welcome working visas too, especially if you have the intention or have a pending application for for Permanent Residency.
I've had a Humanities & Engineer visa for about 7 years now and Prestia SMBC was willing to look at my application without PR. MUFG, when contacted by a realtor, was also willing to look at my application when mentioning down payment and my intention to apply for Permanent Residency.
Earn From Multiple Clients.
Don't be a one-trick pony, like mentioned in point #1. If you're a freelancer, multiple clients from multiple companies is a sign of financial stability.
This can be tricky if you're getting your jobs from an agency, and getting paid through them. It is desirable to have your own clients and bill them directly in this case.
Have Initial Capital.
Aim for at least 20% down payment (the more, the better) of the property value, but don't raid your savings to do it. State as much as possible on your application to improve your chances of getting approved.
Applications will also ask about your savings and gift money from family.
Be Open and Honest to your Accountant and Realtor.
You're not alone. While you're applying to the bank loan. Financial advisors speak loan and tax, real estate agents navigate the market, and fellow freelancers offer support. Make sure your tax accountant is on your side.
Bonus: Japanese Fluency – Your Golden Ticket. Basic Japanese builds trust, negotiation skills, and opens doors. Bonus points for becoming a polite pro – it can tip the scales in your favor.
List of Japanese banks I've inquired with:
Prestia SMBC Trust Bank - Rejected in combination of (1) being a freelancer (個人事業主), (2) my taxable income (所得金額) below 5 mil yen in 2021, (3) Having a single agency as my primary source of income.
Tokyo Star Bank - Rejected in combination for (1) being a freelancer (個人事業主) and (2) not having PR (永住権).
MUFG - Pending. Realtor reached out directly.
Sugura Bank - Pending.
SUUMO - Pending.
Writing this as a message to myself and anyone that needs it! I unfortunately did not pass this year's screening due to a low taxable income from 2021 in #1 and the agency issue in #3. I will be updating this as time comes.