The Government of Pakistan has approved revisions to several features of the Markup Subsidy and Risk Sharing Scheme for Affordable Housing Finance to promote affordable housing nationwide.
The changes were approved following a decision by the Economic Coordination Committee and later ratified by the federal cabinet, according to a notification issued by the Ministry of Housing and Works.
Under the revised framework, the eligibility criteria remain unchanged. The scheme will continue to be available to first-time homeowners who are Pakistani citizens with valid CNICs and do not own any housing unit.
The financing facility covers several housing options, including the purchase of a house or apartment, construction of a house on an already owned plot, or the purchase of a plot followed by construction.
The scheme will apply to housing units with sizes of up to 5 marla for houses and up to 1,500 square feet for flats or apartments.
Financial institutions participating in the programme include commercial banks, Islamic banks, microfinance banks, and the House Building Finance Company Limited.
Under the revised terms, the maximum loan size has been increased to Rs. 10 million, while the maximum loan tenure remains 20 years. The government will provide a markup subsidy for the first 10 years of the loan.
Bank pricing will be based on one-year KIBOR plus 3 percent, while borrowers will pay a fixed markup rate of 5 percent across both tiers of the scheme. Previously, Tier-2 borrowers were subject to a higher interest rate.
The loan-to-value ratio remains 90:10, meaning borrowers will contribute 10 percent equity while banks will provide financing for the remaining 90 percent.
The government will also provide risk coverage equal to 10 percent of the outstanding loan portfolio on a first-loss basis to encourage lending under the programme.
The scheme aims to finance 500,000 housing units over four years, including:
- 50,000 units in FY 2025–26
- 100,000 units in FY 2026–27
- 150,000 units in FY 2027–28
- 200,000 units in FY 2028–29
The State Bank of Pakistan will serve as the implementing agency in coordination with the Pakistan Housing Authority-Foundation and participating financial institutions.
To ensure uniformity across the programme, the government has also decided that loans already disbursed at an 8 percent interest rate will be adjusted to 5 percent.
Relevant stakeholders, including the Ministry of Finance, SBP, and participating banks, have been directed to take the necessary steps to implement the revised housing finance scheme.
