Jeonse/Monthly Rent Calculator

Korea's unique housing rental system includes Jeonse (lump-sum deposit) and monthly rent (Wolse), which significantly impact tenants' financial planning. The Jeonse-to-monthly conversion rate is the interest rate applied when converting a Jeonse deposit to monthly rent or vice versa. The legal conversion rate is the Bank of Korea base rate plus 2%, with a maximum cap of 4%. As of 2025, during this period of rising interest rates, the conversion rate often approaches the maximum limit, making accurate calculations essential for both landlords and tenants. Misunderstanding the conversion rate can lead to paying unfairly high monthly rent or suffering losses due to low deposits. In Seoul and the metropolitan area, where Jeonse-to-sale price ratios often reach 70-80%, conversion calculations become even more critical. Using a Jeonse-monthly conversion calculator allows you to instantly verify appropriate rent and deposit amounts without complex formulas, enhancing your negotiation power during lease agreements. It's an essential tool for choosing favorable terms amid the ongoing trend of converting from Jeonse to monthly rent.

The legal Jeonse conversion rate is stipulated in Article 7-2 of the Housing Lease Protection Act, which states that the rate cannot exceed the base rate announced by the Bank of Korea plus 2 percentage points. As of 2025, if the base rate is 3.5%, the legal maximum conversion rate would be 5.5%, but a separate provision limits it to 4%. This protection mechanism for tenants means that if a landlord demands a conversion rate exceeding this limit, it is legally invalid. The conversion formula is simple: Monthly Rent = (Deposit Reduction × Conversion Rate) ÷ 12 months. For example, when converting a 300 million won Jeonse to a 100 million won deposit plus monthly rent at a 4% conversion rate, the monthly rent becomes (200 million won × 4%) ÷ 12 = approximately 667,000 won. Conversely, when converting monthly rent to deposit: Deposit = (Monthly Rent × 12 months) ÷ Conversion Rate. If the deposit is 100 million won with monthly rent of 667,000 won, (667,000 won × 12) ÷ 4% = 200 million won deposit value, making the Jeonse equivalent 300 million won. In practice, landlords sometimes apply rates lower than the legal maximum considering market conditions, so when comparing multiple properties, it's important to judge favorable or unfavorable conditions based on the conversion rate.

In recent years, the Korean real estate market has accelerated the conversion from Jeonse to monthly rent. According to Ministry of Land, Infrastructure and Transport statistics, the Jeonse ratio decreased from 45% in 2020 to below 35% in 2025, particularly pronounced in Seoul and the metropolitan area. This trend stems from several factors. First, rising Jeonse-to-sale ratios have increased landlords' burden of returning Jeonse deposits. If a property worth 1 billion won has a Jeonse of 800 million won (80% ratio), the small difference makes it difficult to return the deposit when selling. Second, rising interest rates have reduced the leverage effect of Jeonse. During the past low-interest era, gap investment—receiving Jeonse deposits and investing in other properties—was popular, but this strategy lost appeal in 2025's high-interest environment. Third, Jeonse fraud issues have made landlords avoid Jeonse contracts. As scam cases in villas and officetels became social problems, landlords began preferring stable cash flow through monthly rent. Fourth, from tenants' perspective, strengthened Jeonse loan regulations make securing Jeonse funds difficult, increasing cases of choosing monthly rent with lower initial costs. Amid these structural changes, the Jeonse-monthly conversion calculator has become an essential tool for tenants to find the optimal deposit and monthly rent combination suitable for their financial situation.

Determining whether Jeonse or monthly rent is more advantageous requires considering various factors including personal financial situation, liquidity needs, investment opportunities, and residence period. The biggest advantage of Jeonse is no monthly fixed costs, reducing living expense burden. This is particularly beneficial for freelancers with irregular income or entrepreneurs in early business stages. Additionally, since the Jeonse deposit is fully returned upon contract termination, it acts as a form of forced savings. However, Jeonse involves opportunity costs as large sums are tied up, and there's a risk of deposit non-return. As of 2025, high Jeonse-to-sale ratios have increased the risk of "empty Jeonse" where deposits cannot be recovered. In contrast, monthly rent has lower initial capital requirements and maintains liquidity. With a 50 million won deposit + 700,000 won monthly rent, compared to a 200 million won Jeonse, you can utilize 150 million won for other purposes. Investing this money at 5% annual return yields 7.5 million won per year (625,000 won monthly), making the real monthly rent burden only 75,000 won. Additionally, monthly rent eliminates concerns about deposit return and allows flexible responses to job changes or lifestyle adjustments with easier moving. However, monthly rent requires careful cash flow management with fixed monthly expenses, and cumulative rent can exceed Jeonse deposits for long-term residence. Using a Jeonse-monthly conversion calculator allows objective comparison of which choice is more economical for your situation.

Accurately comparing real costs between using Jeonse loans and paying monthly rent is crucial. As of 2025, Jeonse loan interest rates are around 4-5% annually, while Housing Finance Agency's Buttress Jeonse loans are available at low rates of 2-3%. Assuming you borrow 200 million won for a 300 million won Jeonse property, at 4% interest, annual interest is 8 million won (667,000 won monthly). In this case, you can reside in Jeonse housing with only 100 million won self-capital, bearing 667,000 won monthly interest. Conversely, with a 100 million won deposit + 800,000 won monthly rent, using the same 100 million won self-capital requires spending 800,000 won monthly, making the Jeonse loan 133,000 won cheaper per month. However, this calculation assumes deposit return possibility. If the landlord cannot return the Jeonse deposit upon contract termination, you face the burden of repaying the 200 million won loan principal. Also, actual burden varies depending on whether the Jeonse loan uses equal principal-interest repayment or lump-sum maturity repayment. Lump-sum maturity repayment involves paying only interest then repaying principal at once upon contract termination, with lower monthly burden but requiring large sum at maturity. Equal principal-interest repayment divides principal and interest monthly, with higher monthly burden but allowing remaining loan repayment with returned Jeonse deposit upon contract termination. Using a Jeonse-monthly calculator allows simulation of which choice is financially advantageous by inputting loan rate, self-capital, and monthly rent level. Young people and newlyweds particularly benefit from maximizing use of government-supported low-interest Jeonse loans.

Korea's Jeonse-monthly rent market shows significant regional differences. In Seoul as of 2025, the average Jeonse-to-sale ratio in Gangnam-3 districts (Gangnam, Seocho, Songpa) is 75-80%, with newly built apartments sometimes exceeding 85%. This means high deposit return risk, requiring tenant caution. Conversely, Gangbuk and outer areas have relatively safer ratios of 60-70%. Within metropolitan areas, Gyeonggi Province shows large regional variations. New towns like Bundang, Pangyo, and Gwanggyo have high Jeonse proportions and ratios, while old downtown areas show increasing monthly rent proportions. Incheon traditionally had high monthly rent proportions, but new towns like Songdo and Yeongjong have established Jeonse culture. Provincial metropolitan cities generally have dominant monthly rent culture. Busan, Daegu, Gwangju have Jeonse ratios below 30%, with most transactions being monthly rent. One-rooms and officetels are almost exclusively monthly rent. Sejong City has high civil servant residence rates, creating strong 2-year Jeonse demand with ratios exceeding 50%. Jeju Island has active short-term monthly rent due to tourism and migration demand. Regional conversion rates also differ—Seoul applies rates close to the legal maximum of 4%, while provincial areas commonly see 3-3.5%. When using a Jeonse-monthly calculator, it's important to make realistic calculations referencing the region's average conversion rate. Understanding regional rental market trends helps determine whether Jeonse or monthly rent is advantageous. Consulting regional Jeonse-monthly statistics from KB Kookmin Bank, Korea Real Estate Board, and others is helpful.

The Jeonse-monthly conversion rate is an important negotiation point when signing lease agreements. The legal maximum being 4% doesn't mean you must apply 4%—lower rates are possible depending on market conditions and negotiation. To increase negotiation power, first thoroughly research surrounding market prices. Check Jeonse-monthly transaction cases in the same apartment complex or nearby areas to understand average conversion rates. Use the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system or real estate apps. Second, leverage off-peak seasons. During January-February and June-July when moving demand is low, landlords often compromise on conditions fearing vacancies. Third, propose long-term contracts. If you want a 4-year instead of 2-year contract, landlords may lower the conversion rate expecting stable rental income. Fourth, when converting from Jeonse to monthly rent, propose gradual conversion rather than drastically reducing deposit at once. Converting 300 million won Jeonse to 200 million won deposit + monthly rent first is easier to negotiate than immediately converting to 100 million won deposit + monthly rent, reducing landlord burden. Fifth, bring pre-calculated scenarios using a Jeonse-monthly conversion calculator. Creating a table calculating monthly rent for deposits of 100 million/150 million/200 million won at 3%, 3.5%, and 4% conversion rates and showing it to the landlord enables rational negotiation. Finally, specify the conversion rate in the contract. Verbal promises don't serve as evidence in disputes, so clearly state in special terms like "3.5% conversion rate applied."

Whether Jeonse or monthly rent, tenants should prepare safeguards for deposit protection. Jeonse deposit return guarantee is a product provided by Housing & Urban Guarantee Corporation (HUG) or Seoul Guarantee Insurance (SGI), where the guarantee institution returns the deposit if landlords cannot. Guarantee fees are around 0.128-0.154% of the guarantee amount, approximately 380,000-460,000 won annually for a 300 million won Jeonse. Jeonse deposit return guarantee requires landlord consent and examines housing price and Jeonse ratio. If the Jeonse-to-sale ratio is too high (generally above 80%), guarantee approval may be rejected, requiring caution. For monthly rent, monthly rent guarantee insurance can be utilized. Instead of prepaying 3-12 months rent for a discount, the method replaces deposit with guarantee insurance. For example, with 50 million won deposit + 600,000 won monthly rent, using guarantee insurance reduces deposit to 10 million won while prepaying 12 months rent (7.2 million won). This reduces initial capital burden by 40 million won, with insurance premiums around 1% of guarantee amount. Another safeguard is checking the registration certificate before lease agreement. Verify that senior mortgage amounts plus Jeonse deposit don't exceed 80% of property value. For example, if a 500 million won property has a 200 million won mortgage, safe Jeonse is 200 million won (80% of 500 million = 400 million minus 200 million mortgage). A 300 million won Jeonse would be risky. Resident registration and confirmation date are essential. Register residence immediately after contract and receive confirmation date to secure priority repayment rights. After calculating appropriate deposit and monthly rent with a Jeonse-monthly calculator, securing these safeguards is the attitude of a wise tenant.

Jeonse-monthly rent residents can reduce real burden by utilizing tax benefits. Monthly rent tax credit is available when homeless household heads earn below 70 million won annually, providing 10-17% tax credit on monthly rent. Below 55 million won income gets 17%, 55-70 million won gets 15%, above 70 million won gets 12%. The deduction limit is 7.5 million won annually, so maximum credit is 1,275,000 won. For example, a worker earning 40 million won total salary paying 600,000 won monthly rent (7.2 million won annually) receives 17% of 7.2 million = 1,224,000 won tax credit, making real monthly rent about 498,000 won. To receive monthly rent tax credit, housing must be 85㎡ or smaller with standard price 400 million won or less, and lease agreement and monthly rent transfer records must be documented. For Jeonse, Jeonse loan interest can be received as housing fund income deduction. If a homeless household head resides in national housing size (85㎡ or less) with a Jeonse loan, 40% of interest repayment is income deductible (annual limit 3 million won). If Jeonse loan interest is 8 million won annually, 3 million won is income deductible, lowering taxable income. At 24% income tax rate, this saves 720,000 won in taxes. Housing Finance Agency's Buttress Jeonse loan has both low interest and interest income deduction benefits. Youth (ages 19-34) and newlyweds receive additional benefits. Youth monthly rent special support provides up to 200,000 won monthly (up to 12 months), and newlywed Jeonse loans have 0.2-0.5 percentage points lower interest than general loans. As of 2025, the government implements various support measures to reduce housing cost burden for youth and newlyweds, so check eligibility and actively utilize them. After calculating deposit and monthly rent with a Jeonse-monthly calculator, applying tax credits and income deductions allows accurate understanding of real burden amounts.

According to the Housing Lease Protection Act revised in 2020, tenants can extend contracts for 2 years once after the initial contract through contract renewal request rights. In other words, the right to reside in the same housing for 4 years total is guaranteed. At this time, landlords cannot raise deposits and monthly rent by more than 5%. If Jeonse was 300 million won, renewal can demand maximum 315 million won; if monthly rent was 800,000 won, maximum 840,000 won. Utilizing contract renewal request rights saves moving costs and secures residential stability. As of 2025 Seoul standards, moving costs reach 3-4 million won including packed moving 1.5-2.5 million won, brokerage fees 0.4-0.5% (1.2-1.5 million won for 300 million won), and various transfer costs 500,000 won, making contract renewal economically very advantageous. Jeonse-monthly conversion is possible during renewal. If you lived 2 years with 300 million won Jeonse and want to convert to monthly rent upon renewal, you can change the structure to lower deposit and receive monthly rent through landlord consultation. The conversion rate must still be within the legal maximum of 4%. Converting from monthly rent to Jeonse is also possible, but requires consultation as landlords must receive large sums. Points to note when exercising contract renewal request rights include: First, renewal requests must be made 6 months to 1 month before contract expiration. Rights are lost after 1 month before expiration. Second, landlords can refuse renewal with legitimate reasons like owner or lineal descendant actual residence, reconstruction, or major repairs needed. Third, after 2 years of renewal, no more renewal request rights exist, so prepare to move after 4 years total. Using a Jeonse-monthly conversion calculator to pre-calculate whether to maintain Jeonse or convert to monthly rent upon renewal, or how much to adjust deposit, then negotiating with landlords creates reasonable conditions. Contract renewal request rights are precious tenant rights, so actively utilize them to reduce housing cost burden and enjoy stable residential life.