How Australian Expats Earning in Japanese Yen or South Korean Won Are Assessed for Mortgage Borrowing Power

Australian lenders do not treat a Japanese yen or Korean won salary the same way they treat Australian dollar income. When assessing borrowing power for expats earning in JPY or KRW, lenders convert the income using an averaged exchange rate rather than the daily spot rate, then apply a discount, known as income shading, before that income counts toward loan serviceability. JPY is generally treated as a stronger currency for lending purposes than KRW, which means an Australian expat in Tokyo and one in Seoul on the same gross salary can end up with meaningfully different borrowing power once a lender finishes its assessment.

TL;DR

• Lenders convert JPY and KRW income using a 3 to 12 month average exchange rate, not the spot rate, to reduce the impact of currency swings.
• JPY is typically treated as a Tier 1 currency (10% to 20% haircut); KRW is typically Tier 2 (20% to 40% haircut), and some lenders will not accept KRW income at all.
• The NCCP Act does not set these haircut percentages. It requires lenders to make reasonable inquiries and verify a borrower’s financial position, and each lender then builds its own foreign income policy on top of that obligation.
• Documentation (payslips, employment contracts, bank statements) issued in Japanese or Korean usually needs certified English translation unless the lender has a multilingual assessment team.
• Borrowing power outcomes depend on individual circumstances, the specific lender’s foreign income policy, and current lending conditions, all of which are subject to change.

About the Author: This article is written from ODIN Mortgage’s specialist experience arranging Australian home loans for expats across 40+ countries, including secondary corridors like Japan and South Korea, using proprietary data on how individual lenders shade foreign income currency by currency.

Why Does Foreign Income Get Discounted at All?

Income shading exists because a lender assessing a JPY or KRW salary is exposed to two risks an AUD salary does not carry: currency movement and verification difficulty. If the yen or won weakens against the Australian dollar after a loan is approved, the borrower’s actual repayment capacity in AUD terms falls, even though their local salary hasn’t changed. Lenders manage this by discounting the income upfront rather than reassessing it later. Under Prudential Standard APG 223, the Australian Prudential Regulation Authority expects lenders to apply sound risk management and robust serviceability assessments, including a standard 3% interest rate buffer on top of the actual or assessed loan rate. APRA expects prudent handling of foreign currency exposure as part of this, but it does not mandate a specific statutory haircut. That detail is left to each lender’s internal credit policy, which is one reason haircuts vary so much across the 40+ lender panel ODIN Mortgage works with.

Think of it like a bank valuing a property in a currency that fluctuates daily. Even if the underlying asset (your salary) is stable in yen or won terms, its AUD-equivalent value moves with the exchange rate. The haircut is the lender’s way of building a buffer against that movement, similar to how a valuer might apply a conservative estimate rather than the top of a price range.

How Do Lenders Convert JPY and KRW Income Into Australian Dollars?

Lenders do not use the exchange rate on the day you submit your application. Instead, most apply a 3 to 12 month average exchange rate to smooth out short-term volatility in either currency. This matters because both the yen and the won can move meaningfully against the Australian dollar over a few months, and a lender basing a 30-year loan decision on a single day’s rate would be exposed to that volatility.

In practice, this means your borrowing power estimate today reflects recent average conditions, not a live conversion. A borrower checking AUD/JPY or AUD/KRW rates on a currency converter should not expect that exact figure to match a lender’s servicing calculation. This is a structural feature of how offshore income is assessed, not a lender-specific quirk, though the exact averaging window does vary by lender and is subject to change.

Is Yen Treated Differently to Won?

Yes, and the gap is significant enough to change a loan outcome. Major Australian lenders typically classify JPY as a Tier 1 currency, applying a haircut of 10% to 20% to the assessable income. KRW is generally treated as a Tier 2 currency, carrying a steeper haircut of 20% to 40%, and some lenders decline to accept KRW income for servicing purposes at all. These haircuts and currency classifications are indicative only, as individual lender policy varies and changes over time, so exact figures should always be confirmed against current policy at the time of application.

The table below illustrates the general pattern lenders apply.

The practical consequence is that two expats on an identical gross salary, one paid in yen and one in won, are unlikely to be assessed as having the same borrowing power. This is why ODIN Mortgage’s proprietary lender-by-lender data on foreign income shading matters in these corridors specifically: choosing a lender that treats your currency more favourably can be the difference between qualifying for the property you want and falling short.

What Does the NCCP Act Actually Require Here?

Building on the shading mechanics above, it’s worth being precise about what regulation does and does not dictate. The National Consumer Credit Protection Act does not prescribe specific currency conversion rates or foreign income shading percentages. What it does require is that lenders make reasonable inquiries about a borrower’s financial situation and take reasonable steps to verify that information, so that the resulting loan is not unsuitable for the borrower.

This means the specific haircut percentages, averaging windows, and accepted currencies you encounter are lender policy decisions made within a broader responsible lending framework, not fixed legal requirements. It also means these figures can and do change between lenders and over time. ODIN Mortgage is regulated under ASIC and the NCCP, and general information of this kind should not be taken as personal credit advice. Actual borrowing power depends on your individual circumstances and the policy of the specific lender assessed at the time.

What Documents Do Lenders Actually Ask For?

Once the shading methodology determines how much of your income counts, lenders still need to verify that the income exists and is stable. For expats in Japan or South Korea, lenders generally require two to three recent payslips, a current employment contract, and three to six months of bank statements showing salary deposits.

A detail that catches many applicants off guard: documents issued in Japanese or Korean typically need certified English translation before a lender will assess them, unless that particular lender has a multilingual assessment team able to review the originals directly. This adds a step to the process that borrowers earning in USD or GBP don’t encounter, and it’s worth arranging translation early rather than at the last stage of an application, since certified translation can add processing time to an already document-heavy process.

How Should Expats in Japan or Korea Approach a Borrowing Power Estimate?

Given the variability across lenders on both shading percentages and currency acceptance, a single online borrowing power calculator using a generic assumption will rarely reflect what you can actually access. A more useful approach is to treat the estimate as a range bounded by the most conservative lender (higher haircut, if KRW) and the most favourable lender that still accepts your currency and income structure.

A few practical steps help narrow that range:

• Confirm which currency tier your income falls into before assuming a borrowing power figure.
• Gather payslips, employment contracts, and bank statements early, and arrange certified translation in parallel rather than after a lender requests it.
• Compare shading policy across multiple lenders rather than assuming all 40+ lenders on a panel treat JPY or KRW identically, since policy differences here can be the deciding factor in approval.
• Treat any LVR figure you’re quoted as indicative only, since maximum LVR for non-resident and foreign income borrowers depends on individual lender policy and borrower profile, and is subject to change.

Frequently Asked Questions

Does earning in yen reduce my borrowing power compared to an AUD salary?
Generally yes, because a haircut of 10% to 20% is typically applied to JPY income before it’s used in serviceability calculations, on top of currency conversion using an averaged rate rather than the spot rate.

Can I get an Australian mortgage on a Korean won salary?
Some lenders accept KRW income, generally applying a steeper haircut of 20% to 40%, while others exclude KRW entirely. Lender choice matters significantly in this corridor.

Why don’t lenders use today’s exchange rate for my application?
Lenders typically use a 3 to 12 month average exchange rate to reduce the effect of short-term currency swings on a long-term loan assessment.

Does the NCCP Act set the shading percentage lenders apply?
No. The NCCP Act requires reasonable inquiry and verification of a borrower’s finances under responsible lending obligations, but the specific haircut percentages are set by individual lender policy, not by statute.

Do my payslips need to be translated?
Documents in Japanese or Korean generally require certified English translation, unless the lender has a multilingual team able to assess original-language documents directly.

Is there a standard interest rate buffer applied to my repayments?
Yes, under APG 223, APRA requires lenders to apply a standard 3% interest rate buffer as part of serviceability assessment, in addition to any foreign income shading.

Can a broker get me a better outcome than applying directly to a bank?
Outcomes depend on individual circumstances and lender policy, but understanding which of the 40+ lenders in the market treat a given currency more favourably can materially affect the borrowing power figure you’re offered.

About ODIN Mortgage

ODIN Mortgage is part of ODIN, an Australian expat property team covering mortgage broking, tax, and conveyancing coordination for Australians living overseas. Led by Mortgage Director Steven Lee and headquartered in Hong Kong, ODIN Mortgage has served 2,300+ Australian expats across 40+ countries, including clients earning in JPY and KRW across the Japan and South Korea corridors. The firm holds proprietary data on how 40+ Australian lenders shade foreign income currency by currency, information not published by lenders themselves, built from over a decade of expat lending deal flow. ODIN Mortgage is regulated under ASIC and the National Consumer Credit Protection Act (NCCP); this article is general information only and does not constitute personal credit advice.

If you’re earning in yen or won and want to understand your actual borrowing power rather than a generic estimate, get in touch with ODIN Mortgage at https://www.odinmortgage.com to discuss your circumstances against current lender policy.