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  • Writer's pictureAdam German

Japan home loan debt burden ratios explained

The Japan Housing Finance Agency (JHF) released the results of its April 2024 home loan usage survey on June 28th.  

NHK report on Japan's new currency redesign; not loan related but close enough.

The home loan survey targeted individuals aged 20 to 70 who took out housing loans between October 2023 and March 2024, with 1,500 valid responses received. 

The JHF administers the popular Flat 35 home loan program.

Key Findings 

  • Interest Rates: The most common loan interest rate was "0.5% or lower," reported by 34.3% of respondents, up from 28.8% in October 2023. 

  • Repayment Periods: "Over 30 years but within 35 years" was the most prevalent repayment period, accounting for 50.8% of respondents, nearly unchanged from the previous 50.7%. 

  • Loan-to-Value Ratio: The most frequently reported ratio was "over 90% but 100% or less," at 25.3%, up from 24.7%. 

  • Debt Burden Ratio: The most common burden ratio was "over 15% but within 20%," reported by 26.6%, up from 24.6%. 


What is the Debt Burden Ratio? 


The debt burden ratio (DBR) refers to debt amount relative to annual income. It is one of the key factors that financial institutions check during the review of a housing loan application.  

If the DBR exceeds the bank's standard levels, the repayment burden becomes heavier, increasing the risk of repayment difficulties.  

Consequently, the loan application may be rejected, or the loan amount may be reduced. 

Looking at Flat 35 Loan DBR standards: 

Annual Income

Acceptable DBR Standard

JPY 4 million and less

30% and under

JPY 4 million and above

35% and under

For example, if your annual income is 4 million yen, your acceptable DBR is 35% or less.  

This means that 4 million yen * 35% equals 1.4 million yen, which is the maximum annual repayment amount.  

Dividing this by 12 months, (1.4 million yen / 12 months) equals approximately 116,666 yen, which would be your maximum monthly repayment amount. 

According to the above, your maximum loan amount would be 1.4 million * 35 years (max loan term) which would equal 49 million yen assuming you have no other Japan-based debt (more on this below). 

For other Japan banks, each have their own slight differences but generally, the accepted max DBR standards are as follows: 

Annual Income

Acceptable DBR standard

JPY 1 million to 3 million

20% and under

JPY 3 million to 4.5 million

30% and under

JPY 4.5 million to 6 million

35% and under

JPY 6 million plus

40% and under

In this case, if your annual income is 4 million yen, the DBR standard is 30% or less, which is stricter than the Flat 35 standard.  

However, for individuals with an annual income of 6 million yen or more, the DBR standard is 40% or less, which is more lenient than the Flat 35 standard. 

One important point is that even though you might qualify for a DBR of 40% or less, the bank will also consider other Japan based debt you have to calculate a maximum borrowable amount.  

A simple example would be if you have car loan repayments that annually cost 1 million yen, then 40% of your annual income (your DBR) minus the 1 million for the car loan leaves what the bank would be willing to lend. 

Coping with Potential Interest Rate Hikes 

Among JHF respondents with variable rate home loans: 

  • 34.1% (up from 32.2%) said they could continue repayments due to having a repayment plan or financial reserves. 

  • 22.7% (down from 25.4%) considered partial pre-payments to reduce repayment amounts or lighten the interest burden. 

  • 11.5% (down from 14.3%) would fully repay the loan if the interest burden became too high.   

Respondents with fixed term loans said the following:  

  • 29.5% (up from 18.2%) were uncertain about their response.   

  • 24.2% (down from 25.5%) felt they could continue repayments due to having a repayment plan or financial reserves. 

  • 19.8% (down from 25.5%) considered partial prepayments to reduce repayment amounts or lighten the interest burden.   



R.E. Port News (for JHF report findings; Japanese only) 


SUUMO (for DBR explanation; Japanese only) 


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