The federal government has significantly enhanced the scope of the “Mera Ghar – Mera Ashiana” affordable housing finance scheme to better accommodate the needs of middle-income borrowers. In a major policy shift announced by the State Bank of Pakistan (SBP) on Tuesday, the maximum loan limit has been increased by 180 percent, rising from the previous cap of Rs3.5 million to a substantial Rs10 million. Alongside this financial expansion, the government has doubled the eligible housing unit size from 5 Marla to 10 Marla (or 2,720 sq. ft), while the permissible size for flats and apartments has been increased to 1,500 sq. ft. These amendments are designed to make the dream of homeownership more attainable for a wider segment of the population amid rising real estate costs.
The scheme continues to offer highly subsidized financing terms, with a fixed end-user markup rate of just 5 percent for the first 10 years of the loan. This represents a significant discount compared to prevailing market rates, as the government covers the difference between the 5 percent fixed rate and the bank’s pricing of one-year KIBOR plus 3 percent. Loans are available for a total tenure of up to 20 years, and the government provides additional support through a 10 percent risk-sharing facility on a first-loss basis. Furthermore, to reduce the upfront burden on borrowers, the scheme maintains a generous 90:10 Loan-to-Value (LTV) ratio, requiring only a 10 percent equity contribution from the customer.
The SBP has instructed all Participating Financial Institutions (PFIs)—including commercial banks, Islamic banks, microfinance banks, and the House Building Finance Company Limited (HBFCL)—to immediately disseminate these revised features across their branch networks. To ensure the scheme remains accessible and transparent, the central bank has mandated that no processing costs or prepayment penalties be charged to customers. These revisions are expected to stimulate the construction sector and provide a much-needed boost to the national housing market by allowing families to finance larger homes and apartments at historically low fixed rates.
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