Subsidy for housing loans

July 2025

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The cabinet has approved Rs.72 billion as part of a subsidy to low-cost housing loans. The objective is to facilitate buying and building of 50,000 low-cost homes during this fiscal year (FY 2025-26).

The scheme will target first time homebuyers with valid CNICs (ID cards) who don’t hold a house. The scheme will let these homebuyers take out low-cost loans for financing their house. These loans can last up to 20 years at most.

For loans under Rs. 2 million, the interest rate will be 5%, while for loans between Rs. 2 million and Rs. 3.5 million, the interest rate will be 8%, for the first 10 years of the scheme. For reference, SBP policy rate today is 11%. The low interest rates are only for the first 10 years of the loan. Afterwards, market interest rates on loan will apply.

The scheme applies to loans for houses of 5 marlas or below. For flats, it applies to loans for flats of size up to 1360 square feet or below. The loan-to-equity ratio for the scheme will be 90:10, meaning 90% of the cost for housing will be funded by the loan, and the remaining 10% will be provided by the borrower (as equity).

The scheme will last for 20 years and will incur a total cost of about Rs. 72 billion. Out of this, about Rs. 62 billion is for interest support and Rs 10 billion is for risk cover. The scheme for its first year, FY 2025-26, is projected to cost about Rs 3.93 billion.

The scheme will be run by Pakistan Housing Authority Foundation (PHAF). The budget for running and promoting the scheme is not part of the Rs. 72 billion discussed above, and will be provided separately and has yet to be decided.

Source:

https://bloompakistan.com/govt-approves-markup-subsidy-for-low-cost-housing-loans/