The federal government on Friday approved key revisions to the Markup Subsidy and Risk Sharing Scheme for Affordable Housing Finance, aiming to expand access to affordable homeownership across Pakistan.
The decision was finalized following recommendations by the Economic Coordination Committee (ECC) and later ratified by the federal cabinet, according to a notification issued by the Ministry of Housing and Works. The updated framework focuses on lowering borrowing costs while maintaining existing eligibility conditions.
Under the revised policy, eligibility criteria remain unchanged. The scheme will continue to support first-time homeowners who are Pakistani citizens holding valid CNICs and do not own any residential property in their name. Authorities say this ensures the programme targets genuine housing needs rather than investment buyers.
The scheme allows financing for multiple housing purposes, including purchasing a house or apartment, constructing a home on an already owned plot, or buying a plot followed by construction. Approved property sizes include houses up to five marla and flats or apartments measuring up to 1,500 square feet.
Financial institutions participating in the programme include commercial banks, Islamic banks, microfinance banks, and the House Building Finance Company Limited (HBFCL), broadening access through multiple lending channels nationwide.
One of the most significant revisions is the increase in the maximum loan size to Rs10 million, while the repayment period remains capped at 20 years. The government will provide a markup subsidy for the first 10 years, helping borrowers manage long-term repayment costs.
Bank pricing will be set at one-year KIBOR plus three percent, but borrowers will pay a fixed markup rate of five percent across both financing tiers. Previously, Tier-2 applicants faced higher rates, making housing finance less accessible for many middle-income families.
The loan-to-value ratio remains unchanged at 90:10, meaning banks will finance up to 90 percent of the property value, while borrowers must contribute 10 percent equity. Additionally, the government will provide risk coverage equal to 10 percent of the outstanding portfolio on a first-loss basis to encourage bank participation.
The programme aims to finance 500,000 housing units over four years, with targets set at 50,000 units in fiscal year 2025-26, 100,000 units in 2026-27, 150,000 units in 2027-28, and 200,000 units in 2028-29.
The State Bank of Pakistan (SBP) will serve as the implementing agency in coordination with the Pakistan Housing Authority-Foundation and participating financial institutions. The notification also confirmed that loans previously issued at eight percent markup will be adjusted downward to five percent to ensure uniformity.
Authorities have directed all relevant stakeholders, including the Ministry of Finance, SBP, and participating banks, to begin implementation steps immediately.
