The Ministry of Housing and Works recently issued a crucial notification. The Federal Government officially approved major revisions to the “Markup Subsidy and Risk Sharing Scheme for Affordable Housing Finance”. Furthermore, these changes followed strict approvals from the Economic Coordination Committee (ECC) and the Federal Cabinet. Ultimately, the government aims to make homeownership more accessible for first-time buyers holding CNICs.
Massive Boost in Loan & Property Limits
Previously, loan sizes were heavily restricted. Now, the maximum loan size has jumped significantly to PKR 10 Million. Consequently, citizens can aim for larger properties. The revised scheme allows the purchase or construction of houses up to 10 Marlas or 2720 square feet. Alternatively, buyers can opt for flats up to 1500 square feet.
Moreover, the financial burden on the end-user has decreased. The government introduced a flat 5% interest rate for both Tier 1 and Tier 2 customers. To ensure absolute uniformity, interest on loans already disbursed at the older 8% rate will be immediately adjusted down to 5%. Meanwhile, the loan tenor remains unchanged at 20 years, with a targeted subsidy covering the first 10 years.
Aggressive Expansion & Subsidy Allocation
The government has dramatically scaled up the project’s ambition. The revised scheme targets the development of 500,000 housing units over the next four years. Specifically, the rollout begins with 50,000 units in the current fiscal year 2025-26. It will then scale up to 100,000 units in 2026-27, 150,000 units in 2027-28, and finally hit 200,000 units in 2028-29.
To support this massive expansion, the government is pouring in significant funds. For the first 50,000 units financed until June 30, 2026, the total subsidy cost is set at PKR 321.96 billion. This massive budget includes a markup subsidy of PKR 281.96 billion and a risk-sharing cost of PKR 40 billion.
Affordable Housing Finance Scheme: Key Changes at a Glance
| Parameter | Previous Limit | Revised Limit |
| Max Loan Size | Up to PKR 3.5 Million | Up to PKR 10 Million |
| House Size | Up to 5 Marla | Up to 10 Marlas / 2720 Sqft |
| Flat Size | Up to 1360 sq. ft. | Up to 1500 sq ft |
| Customer Pricing | Tier 1: 5% Tier 2: 8% |
Flat 5% (both tiers) |
Finally, multiple implementing agencies will oversee this rollout. The State Bank of Pakistan (SBP), Pakistan Housing Authority-Foundation, and the Ministry of Housing and Works will manage the execution. Consequently, all participating financial institutions must take necessary action to implement these revised features immediately.
