Understanding Korea's Jeonse Deposit Loan System
Jeonse is a uniquely Korean rental system where tenants pay a large lump-sum deposit — typically 50–80% of the property's market value — directly to the landlord, with no monthly rent. The landlord invests or uses this deposit, and returns the full amount when the lease ends (usually 2 years).
Since jeonse deposits can reach hundreds of millions of Korean Won, most tenants take out a jeonse loan — essentially a mortgage-like loan secured by the jeonse deposit contract rather than property ownership. The bank lends up to a set LTV ratio of the jeonse amount.
LTV ratios cap how much you can borrow relative to the deposit. General areas allow up to 80% LTV; government-regulated speculative zones may be limited to 60%. Program caps further restrict the total: standard bank jeonse loans cap at ₩500M, government-backed Jugeum loans cap at ₩320M, and youth-targeted programs cap at ₩200M.
The final maximum loan is the lower of: (jeonse amount × LTV) or the program cap. The remainder must be funded from your own savings. This calculator provides an estimate — actual loan approval depends on income, credit history, and DSR (debt service ratio) requirements.
Frequently Asked Questions
Jeonse carries landlord default risk. Tenants are protected if they register their lease (lease registration certificate) and maintain residency — they become a priority creditor in foreclosure. HUG jeonse deposit insurance (jeonse deposit insurance) provides additional protection for deposits up to a certain limit.
As of 2024, commercial bank jeonse loan rates range from about 3–5% APR. Government-backed Jugeum and youth jeonse loan rates are significantly lower — often 1.5–2.7% APR — but have stricter income and asset requirements.