Core answer: equal-payment monthly payment = loan × monthly rate × (1+r)ⁿ ÷ [(1+r)ⁿ − 1]. ¥1M, 30 years, 3.0%: payment ¥4,216/month, total interest ¥518k. Every 0.1pp lower rate saves ~¥20k over 30 years — negotiating the rate beats haggling the house price.
The payment formula
Equal payment (fixed monthly):
Payment = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1]
P = principal, r = monthly rate (annual ÷ 12), n = total periods (years × 12)
Equal principal (declining):
Month k payment = P ÷ n + (P − principal repaid) × r
Hand-math errs easily — use the calculator: loan amount, term, rate, done.
Latest mortgage rates (2025)
| Loan type | Rate | Notes |
|---|---|---|
| Commercial (first home) | ~3.0%-3.3% | 5Y LPR 3.5% minus 20-50bp |
| Commercial (second home) | ~3.3%-3.9% | Local markups vary |
| Housing fund (first, 5Y+) | 2.6% | After the May 2025 cut |
| Housing fund (second, 5Y+) | 3.075% | ≥ 1.1× first-home rate |
Two repayment methods compared
¥1M / 30Y / 3.0%:
| Item | Equal payment | Equal principal |
|---|---|---|
| Monthly | ¥4,216 fixed | ¥5,278 first month, −6.9/month |
| Total interest | ¥518k | ¥451k |
| Best for | Stable income, cash-flow safety | High income, interest savings |
See the dedicated Equal Payment vs Equal Principal guide for the full breakdown.
Affordability red lines
- Bank approval line: payment ≤ 50% of monthly income (income proof must cover 2× payment)
- Financial safety line: payment ≤ 40% of household take-home income
- Emergency reserve: at least 12 months of payments in cash/money funds
Five money-saving tactics
- Max out the housing fund first: 2.6% vs 3.0%+ saves ~¥80k per ¥1M over 30 years; combine with commercial loan if the fund quota falls short
- Negotiate the rate markup: banks in the same city differ by 20-50bp — ask at least three
- Term shortening beats payment reduction: when prepaying, choose "same payment, shorter term" — roughly 1.5× the interest saving of the alternative
- Prepay in the golden window: for equal payment, the first third of the term is when prepayment saves most — the interest bulk is already paid after that
- Pick the LPR repricing date wisely: in a falling-rate cycle, Jan 1 repricing passes cuts through faster
Common mistakes
- "A 30-year loan means working for the bank": inflation dilutes long-term debt. A ¥1,000 payment was a fortune in 1995 and pocket change by 2015. Long-term low-rate mortgages are the best leverage ordinary people ever get.
- "Prepay as early as possible, always": compare the opportunity cost. If your investments reliably beat the mortgage rate, prepaying loses money; if not, prepay early.
- "More interest with equal payment = being ripped off": both methods charge interest on the remaining balance. Equal payment totals more interest purely because the balance falls slower — the bank collects nothing extra.