The Affordable Housing Finance Scheme in Pakistan has received important updates after the federal government approved several changes aimed at making homeownership easier for citizens. The revised plan, approved by the Economic Coordination Committee and later confirmed by the federal cabinet, focuses on improving access to housing finance for first-time homeowners across the country.
According to a notification issued by the Ministry of Housing and Works, the updated Affordable Housing Finance Scheme will continue to support people who want to buy or build their first home. The programme is part of the government’s broader effort to address Pakistan’s housing shortage and promote affordable residential development.
Eligibility Criteria Remains the Same
Under the revised Affordable Housing Finance Scheme, the eligibility requirements for applicants have not changed. The programme is still designed specifically for first-time homeowners who meet certain basic conditions.
Applicants must be Pakistani citizens and possess a valid CNIC. In addition, they must not already own a house or apartment in their name. These conditions ensure that the scheme benefits individuals who truly need financial support to purchase their first property.
By maintaining the same eligibility criteria, the government aims to ensure that the Affordable Housing Finance Scheme continues to target middle- and lower-income households that often struggle to secure housing loans through traditional banking channels.
Multiple Financing Options for Homebuyers
The Affordable Housing Finance Scheme provides flexibility by allowing people to use financing for different housing needs. Applicants can apply for loans to purchase an already built house or apartment.
In addition, individuals who already own a plot of land can use the financing to build a house. The programme also allows applicants to buy a plot and construct a house afterward, offering greater convenience for families planning long-term housing projects.
The scheme supports houses up to 5 marla and flats or apartments with a maximum size of 1,500 square feet. These limits were approved by the Economic Coordination Committee to ensure the programme focuses on affordable housing units rather than luxury developments.
Increased Loan Limit
One of the most significant changes in the updated Affordable Housing Finance Scheme is the increase in the maximum loan amount. Under the new rules, eligible applicants can now obtain financing of up to Rs10 million.
The repayment period remains unchanged at up to 20 years, giving borrowers a long-term option to manage their payments comfortably. The government will also continue to provide a markup subsidy for the first 10 years of the loan period.
This increase in the loan limit is expected to make the Affordable Housing Finance Scheme more practical for many families, especially in urban areas where property prices have risen significantly in recent years.
Lower Markup Rate for Borrowers
Another important improvement in the scheme is the reduction in the markup rate paid by borrowers. Banks will determine the base pricing using one-year KIBOR plus 3 percent.
However, individuals benefiting from the Affordable Housing Finance Scheme will pay a fixed markup rate of only 5 percent. Previously, some borrowers were required to pay higher rates under different tiers of the programme.
The reduction of the interest rate from 8 percent to 5 percent aims to create uniformity across the system and make housing loans more affordable for a larger segment of the population.
Loan Structure and Risk Coverage
The financing structure of the Affordable Housing Finance Scheme will follow a 90:10 loan-to-value ratio. This means banks will provide 90 percent of the total financing required for the property, while the borrower must contribute the remaining 10 percent from personal funds.
To encourage financial institutions to participate in the programme, the government will also provide risk coverage. The scheme includes a first-loss risk coverage of 10 percent on the outstanding loan portfolio.
This protection reduces the financial risk for banks and increases their willingness to provide loans under the Affordable Housing Finance Scheme.
Participation of Banks and Financial Institutions
Several financial institutions will participate in the programme to ensure wider access to housing finance. These include commercial banks, Islamic banks, microfinance banks, and the House Building Finance Company Limited.
The implementation of the Affordable Housing Finance Scheme will be supervised by the State Bank of Pakistan in collaboration with the Pakistan Housing Authority Foundation and participating banks.
This coordinated approach aims to ensure smooth implementation and efficient distribution of housing loans.
Housing Targets for the Next Four Years
The government has also set ambitious targets for the programme. The Affordable Housing Finance Scheme aims to help finance around 500,000 housing units over the next four years.
The target includes 50,000 housing units in 2025–26, followed by 100,000 units in 2026–27. The number will increase to 150,000 units in 2027–28 and reach 200,000 units in 2028–29.
These targets highlight the government’s commitment to addressing Pakistan’s growing housing demand through structured financing solutions.
A Step Toward Solving the Housing Shortage
Housing affordability has long been a challenge for many families in Pakistan. Rising property prices and limited access to affordable loans have made it difficult for first-time buyers to enter the property market.
The revised Affordable Housing Finance Scheme represents a significant step toward addressing these challenges. By lowering markup rates, increasing loan limits, and providing risk support for banks, the government aims to create a more accessible housing finance system.
If implemented effectively, the programme could play a key role in expanding homeownership opportunities and improving living standards for thousands of Pakistani families in the coming years.
