Govt standardizes Affordable Housing Scheme with uniform 5% markup

March 13, 2026 (MLN): The Government of Pakistan has officially approved a significant expansion of the Markup Subsidy and Risk Sharing Scheme for Affordable Housing Finance, drastically increasing the maximum loan size from Rs3.5 million to Rs10 million.

In a notification issued by the Ministry of Housing and Works, the federal government also standardized the customer markup rate to a flat 5% for all tiers, moving away from the previous 8% for tier2 and 5% for tier1.

This revised package aims to facilitate the construction and purchase of 500,000 housing units over the next four years, providing a substantial boost to the construction, banking, and real estate sectors.

The updated policy introduces more inclusive criteria for size and financing to accommodate middle-income families.

The eligibility for houses has doubled from 5 Marla to up to 10 Marlas, or 2720 square feet.

Similarly, the limit for flats or apartments has been increased to 1500 square feet.

To ensure uniformity across the board, the government has mandated that interest on loans already disbursed at 8% will be adjusted down to the new 5% rate.

The Loan-to-Value (LTV) ratio remains highly favorable for buyers at 90:10, meaning the bank provides 90% of the cost while the buyer contributes only 10% equity.

The government has committed a massive subsidy to ensure the long-term viability of the project, targeting 50,000 units in the current fiscal year and scaling up to 200,000 units by the 2028-29 fiscal year.

To support the first 50,000 units alone, the government has allocated a total subsidy of Rs321.96 billion, covering both markup subsidies and risk-sharing costs.

Revised and Unchanged Parameters of the Housing Scheme

This comprehensive expansion of the housing sector is expected to have a significant multiplier effect on the national economy, providing a substantial boost to the cement, steel, construction, and banking sectors.

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