KARACHI: In a bid to boost affordable housing in the country, the government of Pakistan has introduced a new Markup Subsidy and Risk Sharing Scheme under the title “Mera Ghar-Mera Ashiana” for Affordable Housing Finance.
The initiative is aimed at enabling first-time homeowners to purchase or build small housing units at subsidised rates through participating banks and financial institutions.
According to State Bank of Pakistan (SBP), the scheme will cover the purchase of houses, flats, and plots, as well as construction of homes on already owned land. The maximum size of a unit eligible under the scheme is a house of up to 5 marla or a flat/ apartment of up to 1,360 square feet.
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As per eligibility criteria, only Pakistani citizens holding valid CNICs who do not already own a housing unit in their name can benefit from the facility and buying a first house or flat/ apartment. Under the scheme the applicant can apply for purchase of house up to 5 marla or flat up to 1,360 square feet or construction of house on already owned plot or purchase of plot and construction of house.
The maximum loan size has been divided into two tiers. As per details, under the Tier 1 (T1) financing up to Rs 2 million will be provided, while under the Tier 2 (T2) financing above Rs. 2 million and up to Rs. 3.5 million.
The loans will be available for a tenor of up to 20 years, with the government offering markup subsidy for the first 10 years. End users will pay a fixed markup of 5 percent under Tier 1 and 8 percent under Tier 2, while the bank price will be one-year KIBOR plus 3 percent. As per procedure, no processing costs or prepayment penalties will be charged to customers. Loans will be provided on a 90:10 Loan-to-Value (LTV) ratio, meaning borrowers will contribute 10 percent equity. The government will also provide risk coverage of 10 percent of the outstanding portfolio under the scheme on a first-loss basis.
All commercial banks, Islamic banks, microfinance banks (MFBs), and the House Building Finance Company Limited (HBFCL) have been designated as participating financial institutions (PFIs). They have been instructed to widely disseminate information about the scheme through their branch networks and ensure smooth implementation while preventing misuse.
The mechanism for disbursement of markup and credit loss subsidy will be announced in due course.
It may be mentioned here that previously, an affordable housing finance scheme titled “Mera Pakistan Mera Ghar” was suspended in June 2022, by the federal government to cut the subsidy expenditures and since then. However, in order to support the construction sector and affordable housing, a new scheme has been launched. The federal government has already allocated Rs 5 billion in the budget FY26 for a mark-up subsidy under a low-cost housing scheme.
Copyright Business Recorder, 2025
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