South Korea expands housing support for young people and newlyweds

South Korea's Financial Services Commission has unveiled a comprehensive package of housing support measures targeting young people and newlyweds, aiming to alleviate financial burdens in the real estate market. The new policies, announced as part of the "August 13 Real Estate Measures," broaden eligibility and introduce new loan products.

A key initiative is the "Youth Future Bojumjari Loan," set to launch in January. This policy mortgage is designed for individuals under 39 years old purchasing their first non-apartment home, such as villas or officetels, valued at up to 400 million won. Borrowers must have an annual income below 70 million won, with loan-to-value ratios up to 80%.

Additionally, the government is introducing "Youth Jeonse-Wolse Combined Guarantee." This new product allows young people to combine security deposits for both jeonse (lump-sum deposit) and wolse (monthly rent) under a single guarantee. The loan limit is increased to 90% of the deposit, up to 200 million won, or 300 million won for newlyweds and families with children. The age limit for the existing Youth Special Jeonse Loan Guarantee is also extended from 34 to 39.

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There are extremely exceptional cases where the results of making a system become too unfair. It would be good to open a path for relief by introducing a committee form to allow for exceptional review and decision-making.

To address the "marriage penalty" in existing loan programs, the income requirements for the Bojumjari Loan for newlyweds will be eased starting in October. Currently, couples must have a combined annual income of 85 million won or less. The new rule allows couples to qualify if one spouse earns 70 million won or less, even if their combined income exceeds the original threshold.

Furthermore, the criteria for recognizing first-time homebuyers are being adjusted. Individuals who previously owned property due to unavoidable circumstances, such as inheritance, may now be eligible for first-time buyer benefits after a review by a financial institution's loan review committee. The government also plans to incorporate "future income" projections when calculating loan limits for young borrowers, allowing for larger loan amounts based on anticipated salary increases.

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We considered the aspect of regressivity, but the core issue is that people who could receive benefits when single are unable to do so after marriage. We focused on resolving the problem of why it's possible before marriage but not after.