First-Time Home Buyer Guide: Home Ownership A to Z

📅 2025-01-21

Buying your first home is the biggest investment in life. Learn everything about home ownership from preparation to execution.

1. Preparation Before Home Purchase

① Financial plan: Prepare equity (10% down, 10% interim, 80% balance) + acquisition tax/registration fee (5-10%). Example: 300M KRW home needs minimum 45M KRW. ② Check loan limit: Calculate LTV (loan-to-value 40-70%), DTI (debt-to-income 40-60%). ③ Credit management: Maintain credit grade 1-3 for rate preference. ④ Housing subscription: Confirm non-homeowner, check subscription points. ⑤ Decide housing type: Choose apartment, villa, multi-family housing, etc. ⑥ Area research: Consider workplace, transportation, school district, living facilities.

2. Property Search and Selection

Online platforms: Check market price on Naver Real Estate, Zigbang, Dabang, Hogangnono. Visit real estate agents: Visit 2-3 places to compare, check commission (0.4-0.9% of sale price). Site inspection: Visit minimum 3-5 places, check surroundings, noise, sunlight, leaks. Check property registration: Confirm ownership, mortgage, lease rights, attachment. Land/building register: Check illegal expansion, use violation. Official price vs transaction price: Official price is tax standard, transaction price is actual market price. Negotiation: Price negotiation favorable in high inventory periods (winter, off-season).

3. Apply for Mortgage

Mortgage types: Bank general loan, Didimdol loan (first-time buyer), qualified loan, Bogeumjari loan. Didimdol loan: Annual income under 60M KRW, home price under 600M KRW, 1.85-3.0% annual rate, LTV up to 80%. Application process: ① Bank consultation → ② Submit documents (income proof, employment cert, property registration) → ③ Review (credit/collateral evaluation) → ④ Approval and contract → ⑤ Loan execution. Compare loan rates: Compare commercial banks, internet banks, Korea Housing Finance Corporation. Preferential rate: Additional 1%p reduction with salary transfer, card use, auto-payment.

4. Contract and Registration Process

① Draft sales contract: Pay down payment (usually 10%), specify interim/balance schedule. Carefully check special terms (defects, repairs, handover date). ② Pay interim payment: Usually 1-2 months after contract, can cover with loan. ③ Pay balance and transfer ownership: Apply for registration through attorney, usually takes 1-2 weeks. ④ Report/pay acquisition tax: Within 60 days of balance payment, first-time buyer exemption benefit. ⑤ Residence registration: Confirm actual residence obligation, register at community center. ⑥ Execute loan: Bank directly transfers to seller on balance date.

5. Acquisition Tax and Incidental Costs

Acquisition tax: 1-12% of home price (exemption for first-time buyer). First-time under 600M KRW: 1.5% → about 0.9% after exemption. Under 900M KRW: 1-3%. Over 900M KRW: 3-12% (progressive). VAT (new construction): 10% of home price (but national housing size exempt). Attorney fee: Registration fee 500K-1M KRW. Brokerage fee: 0.4-0.9% of sale price (ex: 300M × 0.5% = 1.5M KRW). Moving cost: 500K-2M KRW. Total incidental cost example: About 7-10M KRW for 300M KRW home.

6. First-Time Home Buyer Benefits

Acquisition tax exemption: 50-100% exemption for homes under 1.2B KRW. Didimdol loan: Income under 60M KRW, 1.85-3.0% annual rate, LTV up to 80%. Subscription special supply: First-time special supply (lottery method, possible without points). Income deduction: Housing subscription savings deduction up to 2.4M KRW annually. Precautions: Must be non-homeowner including spouse, must meet income/home price criteria. Application: Issue first-time confirmation at community center or online (Government24).

Conclusion

First home purchase requires careful preparation and planning. Actively utilize government support programs and avoid excessive loans for stable home ownership.

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