The federal government has approved major changes to its affordable housing finance scheme, aiming to make home ownership easier for citizens across Pakistan. The revised policy focuses on reducing borrowing costs and expanding access to housing loans, especially for first-time buyers.
According to an official notification from the Ministry of Housing and Works, the changes were introduced after approval by the Economic Coordination Committee (ECC) and later endorsed by the federal cabinet. The eligibility criteria remain unchanged, meaning the scheme is still available to Pakistani citizens with valid CNICs who do not own a house.
The scheme allows financing for buying a house or apartment, constructing a home on owned land, or purchasing a plot followed by construction. Approved property sizes include houses up to 5 marla and apartments up to 1,500 square feet.
Under the updated terms, the maximum loan amount has been increased to Rs 10 million, while the repayment period remains up to 20 years. The government will continue to provide a markup subsidy for the first 10 years, making loans more affordable. Borrowers will now pay a fixed markup rate of 5 percent, while banks will operate at a rate based on one-year KIBOR plus 3 percent.
The financing structure remains unchanged, with a 90:10 loan-to-value ratio, meaning banks will cover 90 percent of the cost while borrowers contribute 10 percent. Additionally, the government will offer risk coverage of up to 10 percent of the outstanding loan portfolio to support financial institutions.
The scheme will be implemented through commercial banks, Islamic banks, microfinance institutions, and the House Building Finance Company Limited (HBFCL). The State Bank of Pakistan (SBP) will oversee execution in collaboration with relevant authorities.
The government aims to finance around 500,000 housing units over the next four years, with a phased target starting from 50,000 units in the fiscal year 2025-26 and increasing annually. Moreover, loans previously issued at an 8 percent interest rate will now be adjusted to the new 5 percent rate to maintain consistency.
In conclusion, the revised housing finance scheme reflects the government’s effort to promote affordable housing by lowering interest rates and increasing loan limits. These measures are expected to improve access to home financing and support the growth of Pakistan’s housing sector.
