State Bank of Pakistan extends housing loan tenure to 30 years

The State Bank of Pakistan has introduced significant amendments to housing finance regulations, extending the maximum loan tenure for home purchases to 30 years. These new rules are effective immediately and supersede previous directives issued between 2019 and 2021.

The revised framework allows financing for various purposes, including purchasing houses, flats, or plots, constructing homes on owned land, renovating existing properties, and installing renewable energy systems such as solar power. Loans for renewable energy projects are capped at a 10-year duration.

To ensure financial stability, the central bank has tightened eligibility criteria. Total monthly repayments for housing and other consumer loans must not exceed 65 percent of a borrower's net disposable income. Banks and Development Finance Institutions (DFIs) are now required to obtain updated credit reports from the Electronic Credit Information Bureau (e-CIB) or licensed private credit bureaus before approval.

Valuation requirements have also been updated: loans exceeding 10 million PKR require an estimate from at least one valuer approved by the Pakistan Banks Association, while internal valuations are permitted for loans up to that amount. Additionally, insurance or Takaful coverage is now mandatory for financed residential units, with coverage amounts matching the outstanding loan balance.