Minimum to bring when buying a house - your honest opinion based on experience

[seedofessence]

Hi all,

I am reaching out to you all to hear your opinion and advice based on experience.

Simply said …. I want to buy a house in Japan.
Before you go “oh god another one” , a bit of background.

I got PR , wife is Japanese and our kid is turning 5 this year , meaning elementary school will quickly follow and by that time I want to have bought something.

We currently rent (23man/month) and it’s a waste of money.
I got a good income > 1300man p/y base pay (bonus is company and personal performance based and can vary year on year)
I feel my income would allow a decent amount for loan HOWEVER I’m sorely lacking in cash savings.
Most of what i have is committed to 401k/pension and “not touchable” till I turn 65.

Nowadays I hear about loans including even the loan contract processing cost and what not so inwas wondering what I can include in a loan , what impact it would have on the loan and this way determine a minimum amount of money to bring along for the purchase.

Im looking at places around the 7000man ballpark figure , how much money do I need to put down as a minimum nowadays (including realtor cost) considering all the extra cost I can include in a loan , or should I avoid doing so?

I have no open loans (just paid off the last vehicle related one in December 2023) so I got that going for me.

Thanks in advance.

 

[revstockton]

@seedofessence

Im looking at places around the 7000man ballpark figure , how much money do I need to put down as a minimum nowadays (including realtor cost) considering all the extra cost I can include in a loan , or should I avoid doing so?

At your income level? You don't need to put down anything and can finance it all. Or you can put down some to lower your immediate payments / the term of the loan.

I was in a similarish position. Bought a used place fully financed and used what would have been a down payment to pay for some quality-of-living renovations to redo it to our liking.

(Edit of course you would need a few million yen available to cover interim costs until financing comes through)

 

[patriciaj]

@revstockton

Bought a used place fully financed and used what would have been a down payment to pay for some quality-of-living renovations to redo it to our liking.

I haven't done any loan financing etc yet, but I was under the impression (from just reading stuff, not an expert or anything) that it's difficult to get a full loan for a used place.

Is that correct or does that only apply to really old places and/or those on land that isn't worth much? (I guess the income/financial position of the people asking for the loan also plays a part)

We're considering looking for a used place roughly in the layout we want (preferably high ceilings) that mostly only needs superficial work done (ie stuff I could DIY) and then only get the traders in for stuff like electrical and plumbing.

(sorry for piggybacking off OP's thread)

 

[revstockton]

@patriciaj It can be more difficult to get full financing for a used place, especially if the bank does not deem the land and building to be reasonably worth the amount being paid.

I.e. a run-down place in the inaka with little chance of reselling is unlikely to be approved for a high-priced full-finance loan. But a place in reasonable condition in a reasonably desirable area would not face many issues.

(But then, the that also makes sense as the vast majority of the loan for a used property in a desirable area would be for purchasing the land, whereas the same loan amount where land is not valuable would probably be for the building -- which is a worse proposition for the bank.)

 

[patriciaj]

@revstockton Understood. I suppose that kinda means you end up being stuck paying a high price (in absolute terms, say 5000万ー6000万 or above; of course "high" is relative anyway but that's the amount I'll throw out) regardless of whether you go used or new since if you don't aim for properties in desirable areas in the first place (with more valuable land and thus a higher total price) you're less likely to get the full (or any) loan anyway.

 

[revstockton]

@patriciaj Hmm I think as long as the land has reasonable value and it is a new (or still reasonably valuable) house it is still quite possible to get a full loan. I think the biggest issue is getting a loan where the land and house are both basically worthless.

 

[daniel9v9]

@revstockton Yeah think about it this way, the back really had two questions:
1. Questions about you. Are you financially stable? Is your employer financially stable? Do you have a history of paying your bills? Huge debt payments? Job hopper? Move every 2 years? Etc.

1. Questions about the property:
   If this person displays and we have to foreclose and auction of the property, how much can we get for it? Can we cover most of the loan?

The not expensive the property, the more #2 matters, and it's usually the main criteria for investment loans anyway.
I've fully financed several properties without issues, but even if you would be willing to pay 50% more because the property is on the street you like or painted the color you like or has a pool, the bank won't be. Disclaimer: the places I fully financed were concrete.

 

[reasoned_man_of_faith]

@revstockton Even in the inaka where the property is on the bad side of the line (pre-83 earthquake rules) you can still get full finance because the property value is so little in the end. They aren't taking on so much risk. Down side is you will probably have to deal with a local institution and you're not getting .5-.8, but rather 1.5-2.