[Edaily Choi Jeong Hoon Reporter Kim Se-yeon ] The government is introducing a policy loan to encourage young people paying monthly rent to purchase non-apartment housing, such as villas and officetels. Under this program, borrowers can purchase their own homes by repaying principal and interest to the bank at a rate similar to their monthly rent, and they will be eligible to receive preferential first-time homebuyer Loan-to-Value (LTV) ratios again when they move into an apartment after marriage or childbirth. While this initiative aims to reduce young people’s housing costs and lower demand for monthly rent and jeonse leases, it remains to be seen whether non-apartment properties—which face potential price increases and have low liquidity—will actually serve as a “housing ladder.”

Buy a Home for 850,000 Won a Month… First-Time Homebuyer LTV Also Preserved

The Financial Services Commission announced on the 13th, through its “Comprehensive Financial Measures for Real Estate Market Stability,” that it will launch the “Youth Future Home Loan” in January of next year. This loan is available to young people aged 39 or younger purchasing non-apartment housing units priced at 400 million won or less, with 3 trillion won to be allocated annually over a two-year period. The government is also pushing for an amendment to the Korea Housing Finance Corporation Act to include officetels in the program.

The government has promoted the concept of “buying a home with rent payments.” If a borrower takes out a 200-million-won loan with a 30-year term at an annual interest rate of 3%, the monthly principal and interest payment would be approximately 850,000 won—similar to the average monthly rent of 800,000 won for non-apartment housing. The program will offer a preferential interest rate approximately 2 percentage points lower than that of the standard Homeownership Loan, with additional preferential rates planned for households in rural areas, low-income households, and those with newborns. Specific interest rates will be announced after next year’s budget proposal is finalized.

Shin Jin-chang, Secretary-General of the Financial Services Commission, explained during a pre-announcement briefing the previous day, “This is a policy aimed at enabling people to own a home with a principal and interest burden comparable to monthly rent.” He added, “Repaying a 600-million-won home over 30 years at current interest rates would be too burdensome, so we also took into account housing prices that young people prefer and can afford.”

The 400 million won threshold reflects the prices of small officetels in Seoul and the greater Seoul area. As of last May, the average sales price for multi-family homes in Seoul was 380 million won, and for officetels with a usable floor area of 40–60 square meters, it was 410 million won, whereas the average price for an apartment was 1.33 billion won. Director Shin said, “We observed that young people prefer housing near train stations, considering transportation and the proximity of their workplace to their home,” adding, “We set the criteria by taking into account both housing prices and the repayment burden of 850,000 to 1 million won per month.”

A key benefit is that purchasing a non-apartment property does not exhaust the “first-time homebuyer” benefit. If a buyer purchases a non-apartment property through this program and later buys another home upon marriage or the birth of a child, the first-time homebuyer LTV preferential rate will be reapplied. Borrowers can secure loans covering up to 70% of the home price in the Seoul Metropolitan Area and regulated regions, and up to 80% in other areas. The intent is to allow these properties—such as villas or officetels—to serve as “bridge homes” before moving into an apartment.

However, not all “first-time homebuyer” benefits will be maintained. Currently, only the LTV preferential rate has been confirmed under financial regulations. Measures such as property acquisition tax reductions require further consultation with relevant government agencies. Under current regulations, applicants are considered non-homeowners if they own a single non-apartment property with an exclusive floor area of 85 square meters or less and a publicly assessed value of 300 million won or less (500 million won or less in the Seoul Metropolitan Area).

The Financial Services Commission (FSC) made it clear that this is not a policy forcing young people to purchase non-apartment housing. It explained that young people who wish to purchase an apartment can use the existing “Stepping Stone Loan” or the general “Home Sweet Home Loan,” and that after operating the “Future Home Sweet Home Loan” for two years, the eligibility criteria may be expanded to include apartments depending on market response.

Support will be provided not only to homeownership but also to young people living in half-jeonse or jeonse arrangements. A combined product guaranteeing both jeonse and monthly rent loans will be launched with an annual scale of 4.5 trillion won, and partial interest subsidies will be provided to young people in regional areas and those with low incomes. Monthly rent loans will be shifted from an automatic monthly disbursement system to an overdraft account system where funds can be drawn only when needed. The eligibility criteria and limits for the special jeonse loan guarantee for young people will also be expanded.

The “marriage penalty” faced by newlyweds will also be addressed. Currently, unmarried individuals with an annual income of 70 million won or less are eligible for the “Bogeumjari” loan, but newlyweds must have a combined household income of 85 million won or less. Going forward, couples will be eligible if their combined income is 85 million won or less, or if one spouse has an annual income of 70 million won or less.

Non-apartment properties

with low liquidity… Could they become a stumbling block rather than a “stepping stone”

?
The question is how much non-apartment housing can contribute to young people’s asset accumulation and the stability of the monthly rent and lease market. Villas and officetels are less likely to appreciate in value than apartments, and transactions are not as fluid, making it difficult to sell them at the right price when needed. If prices fall or a buyer cannot be found, homeowners may find themselves stuck with loans and undesirable housing—let alone being able to upgrade to an apartment. The decline in trust among young people due to the aftermath of jeonse scams is also a stumbling block.

Director Shin also stated, “It is true that non-apartment housing is currently less preferred, and prices may fall,” but added, “It is up to each individual to decide whether to continue paying monthly rent or to own a home, even if the potential for price appreciation is not as high as for apartments.”

Experts in the financial sector point out that lenders must consider not only low interest rates but also collateral value and transaction security. A financial industry official noted, “It is difficult to objectively assess market prices for non-apartment housing, and selling such properties takes time, which could actually hinder young people when they move to their next home.” The official added, “Rather than simply creating purchase demand through low-interest loans, measures must be put in place to improve housing quality, pricing transparency, and liquidity so that these properties can serve as a stepping stone.”