"Buying a Home Like Paying Rent" Youth Future Bogeumjari Loan Launched... 'Marriage Penalty' Also Resolved [8/13 Real Estate Measures]

LTV Up to 80% and Preferential Rates for Non-Apartment Homes Priced under 400 Million Won

New Combined Jeonse and Monthly Rent Guarantee Product Introduced

“Marriage Penalty” for Newlyweds Also Eased

The government has strengthened efforts to restore the "housing ladder" for young people through this new round of measures. This is intended to help young people—who generally have lower incomes and face a high barrier to entering the property market—stabilize their housing situation and become homeowners. The core of the "Targeted Financial Support for Actual Demanders, Including Youth," announced on August 13 by the Financial Services Commission, is the "Three-Part Youth Housing Support Package," which customizes support by housing type, including self-ownership, semi-Jeonse, monthly rent, and Jeonse.

Youth living in non-apartment homes worth under 400 million won... Homeownership with 850,000 won monthly principal and interest

First, the government will introduce the new "Youth Future Bogeumjari Loan" in January next year. This loan will be available for those under the age of 39 who are buying a home for the first time in their lives. It will be provided on a temporary basis for two years, with an annual ceiling of 3 trillion won. Eligible properties are non-apartment housing units priced at or below 400 million won and with an exclusive area of 85 square meters or less. The government also plans to amend related laws in the second half of this year to include quasi-residential properties such as officetels in the support program.

Loan conditions will also be relaxed in line with the needs of the youth. The Youth Future Bogeumjari Loan will allow an LTV (loan-to-value ratio) of up to 80%. For first-time buyers in the Seoul metropolitan area and other regulatory zones, the limit will be 70%, while in other areas, it will be up to 80%. The interest rate is also set lower than that of the general Bogeumjari Loan. The current interest rate of the general Bogeumjari Loan is between 4.90% and 5.20%, but the Youth Future Bogeumjari Loan will apply a basic preferential rate, with additional discounts planned for residents in non-metropolitan areas, low-income groups, and households with newborns. The specific rate will be determined at a later date. In addition, even if a youth purchases a home using the Youth Future Bogeumjari Loan, they will still be eligible for future first-time homebuyer LTV benefits, unlike with standard first-time policy loans, where such benefits were previously unavailable.

The key feature of this program is "enabling home purchases at the level of monthly rent payments." For example, if a young person buys a non-apartment house worth 250 million won, applies an LTV of 80% to borrow 200 million won, and pays 3% interest over 30 years, the monthly principal and interest payment will be about 850,000 won. The idea is to allow youths to use what they would have spent on rent to instead pay down their principal and interest, thereby securing affordable housing first and using it as a stepping stone to upgrade to a bigger residence in the future as part of the "housing ladder."

Shin Jinchang, Executive Secretary at the Financial Services Commission, said, "The aim is to allow single, non-homeowner youths spending around 1 million won a month on housing to purchase small officetels or single-family homes worth under 400 million won, so that their principal and interest payments are lower than what they would have paid in rent. The intent is not for these homes to be their final destination, but rather a stepping stone to a bigger apartment or a larger home in the future."

Kim Yoonduk, Minister of Land, Infrastructure and Transport; Lee Eogwon, Chairman of the Financial Services Commission; Lim Gigun, Secretary for Government Policy Coordination; and Lee Hyungil, Vice Minister of Planning and Finance, are entering the Government Complex Seoul in Jongno-gu, Seoul on August 13 to announce the "Quick Housing Supply Plan for the Stability of Jeonse, Monthly Rent, and Sales Market and Comprehensive Financial Measures for Real Estate Market Stability." Photo by Jo Yongjun

Combined Jeonse and Monthly Rent Guarantee... Monthly rent loans to work like a revolving credit line

For young people living on semi-Jeonse or monthly rent contracts, the government will also launch the "Youth Jeonse-Monthly Rent Combined Guarantee" product in January next year. The annual supply will be 4.5 trillion won, with temporary interest subsidy support for youths in non-metropolitan or low-income brackets provided for two years.

Currently, monthly rent loans require borrowers to take out a lump sum loan that covers rent for a certain period, resulting in interest charges regardless of actual use. However, with the new product, borrowers will be able to access the loan "as needed," similar to a revolving credit line, thereby reducing unnecessary interest costs.

This program is available to non-homeowner youths under age 39 whose annual income is 70 million won or less. For newlywed couples, the requirement is met if either spouse earns 70 million won or less. The loan limit is up to 90% of the lease deposit, capped at 200 million won, with newlyweds or households with children allowed a higher limit of up to 300 million won. The guarantee rate is 100%.

The existing "Special Youth Jeonse Loan Guarantee" will also be expanded from October. Currently, it is limited to non-homeowner youths under age 34, but this will be extended to those under age 39. For newlywed couples, the income requirement will change so that if either spouse earns 70 million won or less, they will qualify, instead of the previous combined income requirement of 70 million won or less. Loan limits remain at 90% of the lease deposit, up to 200 million won, with newlywed couples and households with children eligible for up to 300 million won. The guarantee rate remains 100%.

Yonhap News Agency

"Marriage Penalty" removed... Even if you inherited property as a minor, you can still qualify as a first-time homebuyer

The government also encourages the use of the "Future Income Recognition Standard," which reflects young people’s potential for future income growth in the calculation of the debt service ratio (DSR). Non-homeowner youth workers who take out mortgage loans for the purpose of purchasing a home can reflect their future income in the DSR calculation, depending on their age and the loan maturity. According to the Financial Services Commission, the current utilization rate is only about 30%. Therefore, starting August 31, financial institutions will be required to notify borrowers of their eligibility and maximum loan amount under this program.

The so-called "marriage penalty" will also be eased starting in October. Under the current Bogeumjari Loan guidelines, single people must have an annual income of 70 million won or less, while newlywed couples must have a combined income of 85 million won or less. To address the issue of couples becoming ineligible for policy loans after marriage due to combined incomes, the government will now allow access to the Bogeumjari Loan if either the combined spousal income is 85 million won or less, or if one spouse individually earns 70 million won or less.

Requirements for first-time homebuyers will also be relaxed. Previously, anyone who had bought, inherited, or received a home as a gift in the past could not benefit from the first-time homebuyer LTV benefits. However, starting August 31, those who inherited a share of a property as a minor or under unavoidable circumstances may still be recognized as first-time homebuyers subject to review by the financial institution's loan review committee.

This content was produced with the assistance of AI translation services.