As the government decided to tighten jeonse loan regulations on single-home owners who bought dwellings in the Seoul metropolitan area and other regulated zones but do not actually live in them, it also said it will exclude those who have actually lived there even for a single day from the restrictions. Exceptions will also be recognized for unavoidable reasons such as a workplace transfer or caring for parents.
The government also decided to prepare separate total debt service ratio (DSR) screening standards so that borrowers whose income temporarily fell two to three years ago due to child care leave do not suffer disadvantages in their loan limit.
The Youth Future Bogeumjari Loan, which supports adults age 39 and under in purchasing dwellings, is being reviewed to apply an interest rate about 2 percentage points lower than the general Bogeumjari Loan.
The government released a Q&A summarizing key points, including restrictions on jeonse loans for nonresident single-home owners, the DSR, and the Youth Future Bogeumjari Loan, among the "Comprehensive financial measures for stabilizing the real estate market" announced on the 13th.
—Do the nonresident single-home owner rules apply even if someone cannot live in their owned dwellings due to a workplace transfer or caring for parents?
"If the owner or spouse has lived in the owned dwellings even for a single day, they are excluded from the restrictions. Therefore, if they lived in the owned dwellings and later moved elsewhere due to circumstances such as a workplace transfer or caring for parents, the restrictions do not apply. We plan to recognize as many nonresident reasons as possible and flexibly acknowledge unavoidable reasons through lenders' credit review committees."
—Among apartments in the Seoul metropolitan area and regulated zones, which dwellings are not subject to nonresident single-home owner loan restrictions?
"Dwellings for which a sale contract has already been signed are an exception. Day care centers under the "Child Care Act" are also recognized as exceptions. If a buyer first purchases unsold dwellings after completion, they are excluded from the restrictions. Private construction rental dwellings under the "Special Act on Private Rental Housing" are also excluded. Dwellings unavoidably acquired through inheritance or by participating in an auction to preserve claims are likewise recognized as exceptions.
Dwellings located in population-declining areas or population-decline interest areas announced by the Ministry of the Interior and Safety are also excluded if certain conditions are met. However, at the time of acquisition, the standard market price must be 900 million won or less in non-capital population-declining areas, and 400 million won or less in other areas. Dwellings located in the Seoul metropolitan area or in metropolitan cities are in principle excluded, but county areas within metropolitan cities are included. Among the Seoul metropolitan area, population-declining areas that are border regions under the "Special Act on Support for Border Areas" are also excluded. Cultural properties are also exceptions to the restrictions.
Restrictions also do not apply to dwellings that guarantor institutions for jeonse loans already exclude from the home-ownership count under their internal rules. Representative examples include dwellings of 20 square meters or less. In addition, where there are comparable reasons, lenders' credit review committees may individually determine and recognize exceptions."
—If income fell temporarily two to three years ago due to child care leave, will the loan limit be reduced because of the total debt service ratio (DSR)?
"We plan to establish separate standards so that borrowers whose income temporarily declined due to child care leave do not face unexpected cuts to their loan limit. Specific income screening standards will be prepared later through detailed financial-sector guidelines."
—What is the interest rate for the Youth Future Bogeumjari Loan?
"In line with the product's aim of "principal and interest payments at the level of monthly rent," we plan to apply a substantial preferential rate. We are tentatively reviewing lowering the rate by about 2 percentage points compared with the general Bogeumjari Loan by adding extra preferences for regions, low-income borrowers, and newborns to the base preferential rate. However, the specific rate has not yet been fixed. We plan to announce detailed rates after the 2027 budget is finalized."
—If someone buys a home with the Youth Future Bogeumjari Loan and later marries or has a child and purchases another home, will they be unable to receive the first-time LTV benefit?
"They can receive it. The intent is to avoid creating constraints when purchasing dwellings that match individual preferences in the future. The government also plans to review expanding the scope of eligible properties to apartments and more, taking into account how the Youth Future Bogeumjari Loan operates going forward and the state of the housing market."
—If someone purchases dwellings using the Youth Future Bogeumjari Loan, will first-time status be maintained for subscriptions or acquisition tax?
"The preferential loan-to-value (LTV) for first-time buyers is maintained, but first-time status under other systems such as subscriptions or acquisition tax is determined by each law. For subscriptions, the relevant provisions such as the "Rules on the Supply of Housing" apply. If one owns only one non-apartment unit with an exclusive area of 85 square meters or less and a publicly announced price of 300 million won or less, they are regarded as having no home. In the Seoul metropolitan area, the publicly announced price threshold is 500 million won or less. The government plans to hold additional consultations with relevant ministries so that users of the Youth Future Bogeumjari Loan can maintain first-time status in other areas such as acquisition tax beyond LTV."