KARACHI: After introducing amendments to the prudential regulations, the State Bank of Pakistan (SBP) has extended the maximum tenor for housing finance up to 30 years from 20 years.

“The maximum tenor for housing finance shall be 30 years,” said the amended regulations by the State Bank.

The biggest obstacle has been the lack of long-term deposits. Banks kept arguing that they could not extend loans for longer periods because their deposits are limited to five years.

“The maximum Loan-to-Value ratio for housing finance shall be 90:10,” said the SBP.

According to Regulation HF-6 (the Debt-Burden Ratio), total monthly amortisation payments, comprising the housing finance under consideration and all other outstanding consumer-financing obligations, will not exceed 65pc of the net disposable income of the prospective borrower.

The circular said that banks and DFIs will use the informal-income estimation models (proxy models) circulated by the Pakistan Banks’ Association (PBA) to assess income and repayment capacity for housing finance.

Banks and DFIs will extend housing finance to borrowers solely for the purchase of a house or apartment; construction of a house on a plot already owned by the borrower; purchase of a plot and construction of a house thereon; extension or expansion of an existing house; renovation of a housing unit; and installation of renewable-energy solutions in housing units.

Under Regulation HF-2 of the State Bank of Pakistan’s revised housing finance rules, banks and DFIs must adopt standardised, simplified loan-application forms and explicitly list all required processing documents in both physical and digital formats in Urdu and English.

Published in Dawn, August 21st, 2026