Can Foreigners Get Financing in Japan? A Practical Guide for STR Investors

The Japanese real estate market is highly open and attractive globally, with no legal restrictions on property purchases by foreigners. However, when it comes to actually buying a property, the biggest hurdle many foreign investors face is securing financing.

In this article, from the perspective of practitioners specializing in Short-Term Rental (STR / Minpaku and Hotel Business) investments in Japan, we explain the reality of financing conditions required by Japanese financial institutions for foreigners and provide specific strategies for investors without permanent residency to secure loans.

Three Types of Foreign Investors and Financing Possibilities

When Japanese financial institutions provide loans to foreigners, they place the highest importance on "settlement in Japan" and "certainty of debt recovery." Investors are broadly classified into the following three types, in order of their proximity to Japanese citizens, and the hurdles for financing differ completely for each.

1. Those with Permanent Residency

Foreigners who hold "Permanent Residency" in Japan are treated almost equally to Japanese citizens by financial institutions. They can utilize low-interest real estate investment loans provided by megabanks and regional banks, making the hurdle for financing the lowest.

However, if the purpose is STR investment, the validity of the business plan as an accommodation business is subject to screening, not just the real estate value. It is important to note that securing financing for STRs, which fall under the accommodation industry, is quite difficult even for Japanese citizens.

2. Those without Permanent Residency but Working Long-Term in Japan

Even without permanent residency, if you have a working visa or a business manager visa in Japan and have a stable income or business track record over several years, you may be able to receive financing from some financial institutions. For example, the Japan Finance Corporation (JFC) may provide loans to managers who establish a corporation in Japan and operate an STR as a business, after evaluating the validity of the business plan. For this group, having a clean track record of tax payments and social insurance contributions in Japan is an absolute requirement.

3. Those with No Ties to Japan

Investors living overseas who are about to enter the Japanese market, or foreigners with no track record of employment or residence in Japan, fall into this category. In fact, the vast majority of foreign investors considering STR investments in Japan belong to this group.

General Japanese banks, in principle, do not provide loans to this group due to the risk of debt recovery. However, the path to financing is not completely closed, and there are cases where funding becomes possible by utilizing "non-banks" (real estate collateral loan companies).

Comparison of Financing Institutions for "Those with No Ties to Japan"

We compare representative financial institutions that actually provide loans to foreign investors with no ties to Japan (overseas residents and non-residents). These financial institutions place more emphasis on the "collateral value of the real estate" and the "profitability of the business" rather than the investor's attributes (visa or residency history) when conducting their screening.

ABIC Co., Ltd.

Official Page: [https://www.abic-corp.jp/service/realestate-collateral/foreigner/](https://www.abic-corp.jp/service/realestate-collateral/foreigner/)

ABIC is one of the few financial institutions that explicitly states it provides financing for real estate purchases in Japan regardless of whether the applicant has permanent residency or a status of residence. According to their public case studies, they have a diverse track record of lending to foreign investors, including a 27 million JPY loan to a Korean corporate representative for purchasing a detached house for Minpaku in Katsushika Ward, Tokyo, and a 30 million JPY loan secured by a villa in Karuizawa, Nagano Prefecture.

We have not heard much about their track record for large-amount loans.

Maximum Loan Amount: 3 million to 2 billion JPY (subject to screening)

Interest Rate: 2.98% to 15.0% annually

Loan Period: 1 month to 30 years

Target Real Estate: Condominium units, whole apartment buildings, apartment complexes, income-producing buildings, and others

Contact: 0120-588-169 (Weekdays 9:00 - 18:00)

SBI Estate Finance (Shinsei Investment & Finance)

Official Page: [https://www.sbi-efinance.co.jp/loan/foreign-capital/](https://www.sbi-efinance.co.jp/loan/foreign-capital/)

The "Real Estate Purchase Loan for Domestic Corporations with Foreign Capital" provided by an SBI Group affiliate is a very strong option for non-resident foreign investors who do not live in Japan. When establishing a corporation (Kabushiki Kaisha or Godo Kaisha) in Japan to purchase real estate, you can proceed with the loan application in parallel with the corporate establishment procedures.

Key Features:

- Available even if non-resident in Japan

- English contracts are supported

- Guarantors are generally not required (if the representative, manager, or investor is a non-resident)

- Maximum loan period of 25 years

- Balloon payments (based on a 35-year repayment pace) are also supported

Loan Period: 3 to 25 years

L&F Asset Finance

Official Page: [https://www.lfaf.jp/realestateloan/minpaku.html](https://www.lfaf.jp/realestateloan/minpaku.html)

If you are considering large-scale Minpaku projects or business expansion through a corporation, L&F Asset Finance's "Minpaku Business Loan" can be utilized. The company has established a loan framework from 3 million JPY up to 1 billion JPY for Minpaku purposes, and the interest rate is relatively low among non-banks at 3.55% to 4.55% (3.55% for amounts of 50 million JPY or more).

Target Borrowers: Individuals, sole proprietors, corporations

Loan Amount: 3 million to 1 billion JPY

Repayment Period: Over 1 year to 35 years

Loan Administrative Fee: 1.65% of the loan amount

Features: Supports acquisition funds and renovation funds for real estate intended for Minpaku use. Existing real estate can also be used as joint collateral.

Saison Fundex

Official Page: [https://www.fundex.co.jp/from_overseas/](https://www.fundex.co.jp/from_overseas/)

Saison Fundex, a non-bank under the Saison Group, also provides loan products specifically tailored for foreign national customers. They have established a system to quickly and flexibly screen real estate investment loans and corporate real estate purchase loans even for individuals and corporations without permanent residency.

Products Offered:

- Real Estate Investment Loans

- Corporate Real Estate Purchase Loans

- Housing Loans

- Renovation Loans (Real Estate Collateral)

"Essential Conditions" for Securing Financing

For foreign investors with no ties to Japan to secure financing from non-banks, it is strongly required to meet the following conditions.

1. High Equity Ratio (50% or more)

To mitigate the financial institution's risk, preparing equity (down payment) of about 50% of the property price is the practical minimum line.

Even for Japanese citizens, an equity ratio of at least 30% is required for STRs.

2. Profitability as a Business (STR-Specific Condition)

In the case of STR investment, the precision of the revenue plan (business plan) as an accommodation business is questioned, not just the real estate value. A realistic and well-founded simulation of occupancy rates and room rates, premised on obtaining a Hotel Business License or submitting a notification under the Private Lodging Business Act, is necessary.

Conclusion

It is by no means easy for foreigners to receive financing for STR investments in Japan. Especially for investors with no ties to Japan, the doors of general banks are closed.

Furthermore, intermediary companies have little incentive to provide financing support for foreigners whose backgrounds are unclear and who may not even end up buying, so investments are basically made in cash.

However, as a company, we do provide financing support for existing clients who have already purchased properties through us, so please take that first step.