How to Get a Housing Loan as a Foreigner in Korea

Home is where the heart is, but let’s be honest with ourselves. Is it really? We all want the perfect location, quality, size, and accommodations for our time here in Korea but when you actually do find that perfect house, many of us plummet into a series of endless financial worries. However short or long your stay here may be, don’t worry. Korea’s bank and housing system offers options that help locals, and even foreigners, to apply and get housing loans under the right conditions to literally, make yourself at home.

Korea’s Housing System

Before making a stop at the bank to get that housing loan for your new place, it’s best to know how Korean housing property is systemized. Korea landowners rent out or lease their property to tenants by three different methods: monthly rent, “jeonse” (전세), and “half-jeonse” (반전세). Let’s first dive into the most commonly understood method -- monthly rent.

Monthly Rent (월세)

The monthly rent process works just as the name suggests -- you pay rent every month. Yet within this method, there are two types of monthly rents. The first is what Americans commonly understand as a rent, where a short-term contract (about six months or by a month-to-month basis) is agreed upon between a landowner and tenant. This is also common in Korea but the exact number of months must be agreed upon. Landowners who are willing to rent out property for a short amount of time usually agree on six months, but then again, it could be on a case-by-case basis and could possibly be negotiated. The second is more of a lease, where the property is rented out by the tenant for the span of one or two years and may be extended on negotiation. A key deposit money is required for monthly rents and may differ for the size, location, and quality of the house. For example, some places request a key deposit of 3,000,000 won for a studio with 800,000 won monthly rent where some places request a deposit of 5,000,000 for 500,000 won. Depending on your landowner and before signing your contract, this key deposit fee and monthly rent may be negotiable. However, note that the deposit is much lower than that of the jeonse or half-jeonse. The former would be a more preferable option for those who seek to live in Korea for a year or less.

“Jeonse” (전세) or Key Money Deposit Lease

Jeonse (전세) is a concept that is unfamiliar to many foreigners who live in Korea for the first time. It’s where the tenant is on a lease for a minimum of two years solely on a key deposit payment. The sum is quite large, ranging from the upper ten million won range to the hundred millions of won (roughly equivalent to $70,000 - a couple hundred thousand dollar range depending on location, size, and quality of the house). The tenant would only pay the landowner utility fees that accommodate the house during this time. Because this may be financially burdening for many in Korea, many choose to turn to the bank for a helping hand. If you choose this route, then you would pay for the monthly housing utilities and interest from getting a loan from the bank. This option would be suitable for those who are certain of living in Korea for the next few years.

Half-Jeonse “Ban Jeonse” (반전세) or Half Key Money Deposit Lease

There is a middle ground between monthly rents and jeonse housings. “Ban Jeonse” (반전세) or half-jeonse is where a tenant lives on the property on a lease contract of a year or two. This could be on a case-by-case basis. The difference that comes with the half-jeonse is that the key deposit money is lower than that of jeonse but higher than the monthly rent’s deposit. For example, it would be about 10 million won or 10.5 million won for a monthly rent of 500,000 won or so. The concept is to higher the deposit money and in return, pay a lower monthly rent without leasing on a jeonse basis. This still may require many to turn to the bank. If so, then be mindful that you must pay monthly rent, utility fees, and the loan interest every month. This would also be a preferable option for those who seek to live in Korea for two years or more.

Visiting the Bank for Housing Loans

Luckily, Korea has specific housing loan packages for foreigners at each bank. If you don’t use any one of these banks, don’t worry. You can open a bank account at one of these options or visit your bank for more information on housing loan packages. Be sure that you ask for housing loan packages instead of regular loans, as qualifications and benefits may differ. Also, make sure that your landowner accepts housing loans (전세자금대출) before taking any action.

There are many banks out there, but here are two commonly used banks that do offer loans to foreigners in Korea. 

Kookmin Bank (국민은행)

The “KB Welcome Plus Jeonse Loan” is a KB (Kookmin Bank) package that gives up to 200 million won for at least three months to up to two years and can be extended by two-year increments for up to a total of ten years. This package is open to foreigners that meet the following qualifications.

• Your alien registration card must show proof that you are lawfully allowed to stay in Korea for the next 3 months or more and at least 19 years of age.

• You have signed a housing contract through a real estate company and have placed at least the 5% down payment deposit for the house you wish to receive a loan in.

• You or your spouse (fiance included) must not own any property or have only one property on hold.

• Visa eligibility for housing loans: A-1, A-2, A-3, D-1, D-2, D-3, D-5, D-6, D-7, D-8, D-9, D-10, E-1, E-2, E-3, E-4, E-5, E-7, F-1, F-2, F-4, F-5, F-6, H-2

• Have worked in Korea for at least three months

You can apply for this package a week before the first day of what is stated in your housing contract. When visiting the bank, please be sure to bring the following items:

• Your alien registration card that confirms your validity of staying in Korea for the next three months or longer

• Residential lease contract that has a confirmed seal

• Receipt of advanced payment made to hold your house

• Documentation confirming your employment and current income in Korea

• Certification of alien residency - This can be issued at the nearest community center in your housing district (주민센터)

• Marriage certificate (this is only for those who are getting married or are already married)

• Any additional documentation will be requested on a case-by-case basis.

The interest rate that you will pay each month depends on every individual’s credit. For more information, please visit the nearest Kookmin Bank or click here.

Shinhan Bank (신한은행)

Shinhan Bank’s “The Dream” Housing Loan package (신한 더드림 전세대출 - 외국인) lends up to 200 million won to foreigners who are eligible for bank guarantees when applying to the loan. Bank guarantees are able to be applied for by these visa types: Visa eligibility for housing loans: A-1, A-2, A-3, D-1, D-2, D-3, D-5, D-6, D-7, D-8, D-9, D-10, E-1, E-2, E-3, E-4, E-5, E-7, F-1, F-2, F-4, F-5, F-6, H-2. The duration of this housing loan is from 3 months to up to 36 months and can be renewed later on upon agreement.

The documents that you will need for this package are the following:

• Your alien registration card that confirms your validity of staying in Korea for the next three months or longer

• Residential lease contract that has a confirmed seal

• Receipt of advanced payment made to hold your house

• Documentation confirming your employment and current income in Korea

• Certification of alien residency - This can be issued at the nearest community center in your housing district (주민센터)

• Marriage certificate (this is only for those who are getting married or are already married)

• Any additional documentation will be requested on a case-by-case basis.

For more information, please visit the nearest Shinhan bank or click here.

Other Banks

Other banks, such as Hana Bank (하나은행) and Woori Bank (우리은행) also have housing loan packages for foreigners but are not listed on their website. However, if you visit their banks in person and request for consultation, there are packages that are very similar to Kookmin Bank and Shinhan Bank’s housing loans. Be sure to visit a few weeks prior to your new contract date to ensure that you have the right documents prepared to apply for your housing loan. If you are planning a consultation, always be sure to bring the aforementioned documents so that you can have a more accurate idea of what you would be paying for the monthly interest rate. 

The housing loan packages between the banks are small and only differ in the amount of interest rate that is paid per month. This is not a set rate for each individual as credits are counted by everyone’s unique situation.