When purchasing investment properties intended for vacation rentals (Minpaku), one of the most critical factors in decision-making is: “How much financing can I obtain relative to the property price?” For investors who aim to minimize their upfront capital outlay and make efficient use of their available funds, understanding the loan-to-value (LTV) ratio is essential.
Based on interviews with several financial institutions in Japan, it is clear that, as of July 2025, banks remain cautious toward financing Minpaku properties. A common trend among lenders is that they evaluate the property as if it were a conventional rental investment, often resulting in lower than expected loan amounts.
Why Are Minpaku Properties Difficult to Finance?
Financial institutions tend to be cautious for two main reasons:
- Lack of Established Valuation Methodologies
Banks generally lack the expertise and standardized methods necessary to assess Minpaku-specific operations. As a result, appraisals are often based on the assumption that the property will be used as a standard long-term rental, not a short-term lodging facility. - Discrepancy Between Valuation and Price
The asking price for Minpaku properties is often set based on anticipated high income from vacation rental operations. However, this price frequently exceeds the property’s value as a regular rental asset, making banks more skeptical of the revenue projections.
For example, in today’s Tokyo real estate market, the average expected yield from standard residential rental leases is around 3%. In contrast, Minpaku operations may offer returns of up to 15%. However, financial institutions may question sustainability and perceive this income volatility as a risk, and therefore offer more conservative loan terms.
How Much Can You Actually Borrow?
Based on interviews conducted with multiple institutions in July 2025, the following lenders explicitly confirmed their willingness to finance Minpaku properties:
L&F Asset Finance
- Loan-to-value (LTV): approx. 50%
- Interest rate: 3.30%–4.30%
- Permanent residency visa is not required
Saison Fundex
- LTV: approx. 60–70%
- Interest rate: 4.65%–5.55%
- LTV may increase depending on collateral
- Permanent residency visa is not required
AG Business Support
- LTV: up to 80%
- Interest rate: 4.99%–5.89%
- Loans available only as business financing
ASAX
- LTV: up to 80%
- Interest rate: 1.95%–7.80%
- Corporate structure required (loan is to the corporation)
Suruga Bank
- May consider financing newly built properties (case-by-case)
- Permanent residency visa is required
Note: Loan conditions vary significantly depending on the property, along with the borrower’s finances and residency status.
Which Bank Should You Target?
At this point, no single bank stands out as the clear “go-to” lender for Minpaku properties. Since financial institutions are still unfamiliar with this asset class, financing decisions vary widely depending on the individual property and the borrower, making it a highly case-by-case process.
The most practical strategy is: “Once you find a property you’re interested in, use it as the basis for direct consultations with lenders.”
So What Should You Do?
If you already own a home or investment property, you may be able to increase your borrowing capacity by using it as additional collateral. Having a strong asset portfolio or substantial liquid financial assets also works in your favor.
However, be prepared to contribute some level of personal equity. In the current environment, where Minpaku lending is still in its early stages, banks are unlikely to respond flexibly unless borrowers are willing to contribute meaningful self-funding.