The Korea Housing Finance Corporation (KHFC) will temporarily increase the guarantee ratio for housing project financing (PF) to a maximum of 100% to support funding for housing projects.
On August 31, KHFC announced that this change is a follow-up to the government's comprehensive financial measures for stabilizing the real estate market, which were announced on August 13.
As a result, the guarantee ratios for PF guarantees, construction cost plus PF guarantees, and construction financing guarantees will rise from the previous 90-95% to a maximum of 100%. This full guarantee will be in effect until the end of 2027. The aim is to reduce the risk of uncovered portions that financial companies bear, thereby encouraging funding for housing projects and improving the financing conditions for developers.
The guarantee standards for projects that include high-value housing or a mix of residential and quasi-residential units will also be relaxed. For projects that include housing priced over 1.2 billion won, the land acquisition costs and other project expenses will be fully guaranteed without deducting based on the proportion of high-value housing.
In projects where quasi-residential units, such as officetels, are constructed alongside residential units, the calculation of guaranteed funds will now consider the total floor area of both residential and quasi-residential units, moving away from the previous method that only accounted for residential area.
Additionally, the reduction of guarantee fees to lower financial costs for developers will be expanded. The existing 30% fee reduction period will be extended from April 2027 to the end of that year, and an additional 10% reduction will be applied to projects that commence early. Consequently, the total fee reduction rate can reach up to 40%.
These improvements will take effect for new guarantee applications received from today.
Kim Kyung-hwan, president of KHFC, stated, “We expect that this system improvement will enhance the funding conditions for construction projects and support a smooth supply of housing. We will actively prepare financial support measures for housing supply while monitoring market conditions.”
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.