How it is calculated
Monthly rate r = annual rate ÷ 12, number of payments n = years × 12 Equal payments (ganri kinto): payment = loan × r ÷ (1 − (1 + r)^−n) Equal principal (gankin kinto): principal each month = loan ÷ n, interest = balance × r Total interest = sum of payments − loan
- Equal payments: The same amount every month, which makes budgeting easy; most Japanese loans use it. Early payments are mostly interest.
- Equal principal: Higher payments at first, but the balance falls faster and total interest is lower. Only some banks offer it.
- Bonus repayments: Japanese loans can add extra payments in bonus months. This calculator covers monthly payments only.
Variable vs fixed rates
- Variable rate: Linked to banks’ short-term prime rate and usually reset twice a year. Most Japanese borrowers choose it, but they carry the risk of rising rates.
- 5-year and 125% rules: Many variable loans keep the payment unchanged for 5 years even if rates rise, and cap any increase at 125% of the previous payment. Meanwhile more of each payment goes to interest, so principal falls more slowly and a balance can remain at the end.
- Fixed rate (Flat 35): A fully fixed loan of up to 35 years offered by the Japan Housing Finance Agency with private lenders. The rate is higher than variable, but the payment never changes.
- Fixed-period loans: The rate is fixed for the first 3, 5 or 10 years, after which you choose variable or a new fixed period.
Example: ¥30 million over 35 years
| Terms | Monthly payment (¥) | Total interest (¥) |
|---|---|---|
| 1.5%, equal payments | 91,855 | 8,579,239 |
| 1.5%, equal principal (first → last month) | 108,929 → 71,518 | 7,893,750 |
| 2.0%, equal payments | 99,379 | 11,739,109 |
A 0.5-point higher rate adds about ¥7,500 a month and about ¥3.16 million of interest over 35 years. The rates are examples, not market quotes.
Things to watch: credit life insurance, tax credit, prepayment
- Group credit life insurance (danshin): Pays off the loan if the borrower dies or becomes severely disabled; most bank loans require it. Cancer or illness riders often add 0.1–0.3 points to the rate.
- Mortgage tax credit (move-in in 2026): 0.7% of the year-end balance is credited against income tax (and partly resident tax). It is extended to move-ins through 2030; new long-life and ZEH-level homes get 13 years, and energy-standard homes get 13 years for move-ins through 2027. For 2026 move-ins the National Tax Agency caps the annual credit at ¥315,000 for long-life homes, ¥245,000 for ZEH and ¥140,000 for energy-standard homes (higher for households with children or young couples); new homes that miss the energy standard generally do not qualify. Requirements include total income up to ¥20 million and at least 50 m² of floor area (40 m² if total income is ¥10 million or less).
- Prepayment (kuriage hensai): The term-shortening type keeps the payment and cuts the term, saving more interest; the payment-reducing type keeps the term and lowers the payment. If you are claiming the tax credit, a smaller balance also means a smaller credit.
- Costs: Arrangement fees (e.g. 2.2% of the loan), guarantee fees, stamp duty and fire insurance are extra.
Frequently asked questions
Does my payment rise as soon as a variable rate goes up?
Loans with the 5-year rule reset the payment only every 5 years, and the 125% rule limits the increase. Interest, however, rises immediately, slowing principal repayment. Some loans have no such rule, so check your contract.
Which is better, equal payments or equal principal?
At the same rate and term, equal principal costs less interest, but the early burden is higher — about ¥17,000 more in the first month in the example above. The right choice depends on your income outlook and savings.
When do I receive the mortgage tax credit?
In the first year through a tax return; from the second year employees can receive it through the year-end adjustment.