Korea Housing Finance Corporation Expands PF Guarantee Ratio to 100%...Guarantee Fee Cut by Up to 40%

Full Guarantee Available Until End of 2027
Support for Construction Project Financing
Eased Guarantee Criteria for Sites with High-Value Housing and Officetels

Korea Housing Finance Corporation will increase the guarantee ratio for real estate project financing (PF) to up to 100% and reduce the guarantee fee by up to 40% in order to promote housing supply.

The corporation announced on the 31st that it will temporarily expand the guarantee ratio for PF projects and ease regulations related to business guarantees to support funding for PF sites. This measure follows the government's "Comprehensive Financial Plan for the Stability of the Real Estate Market" announced on August 13. The guarantee ratio for PF guarantees, Construction Cost Plus PF guarantees, and Construction Fund guarantees will be expanded from the current 90-95% to up to 100%. The policy will be in effect until the end of 2027.

If the guarantee ratio is raised to 100%, Korea Housing Finance Corporation expects that the credit risk borne by financial institutions providing loans will decrease, thereby facilitating the flow of funds to construction sites. In addition, project operators can expect improved conditions for raising funds, including loan screening and interest rates.

The guarantee requirements will also be eased for projects that include high-value housing units exceeding 1.2 billion won. In consideration of the fact that site acquisition and other business expenses are essential for housing supply, the full amount of funds for land and other project expenses in main PF projects will be guaranteed, regardless of the proportion of high-value homes.

The method for calculating the guarantee for mixed-use projects that include both housing and quasi-housing, such as officetels, will also be improved. Previously, only the floor area of residential units was considered, but going forward, the floor area of both residential and quasi-residential facilities will be included in calculating the guaranteed amount and related funds.

The guarantee fee reduction to alleviate the financial burden on project operators will also be expanded. The application period for the current 30% guarantee fee reduction, which was set to expire in April 2027, will be extended until the end of the year. For projects that begin construction early, an additional 10% reduction will be applied, providing a maximum reduction of 40%.

The revised policy will apply to guarantee applications submitted from this date onward. Kim Kyunghwan, president of Korea Housing Finance Corporation, stated, "We expect this policy improvement to enhance the funding environment for construction projects and support a smooth supply of housing," adding, "We will continue to closely monitor market conditions and proactively develop financial support measures for housing supply."

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