Free and instant — plug in your own numbers.
On a Rs 15 million house in Pakistan, a bank that finances 70% over 20 years at 6-month KIBOR plus 2.5% charges about Rs 139,506 a month. Over the 20 years you pay about Rs 23 million in markup, more than twice the Rs 10.5 million you borrowed. To qualify, you need a net income of around Rs 214,624 a month.
This guide shows how house financing is worked out, the State Bank's 2026 rules, how much income you need, and the choices that change the total cost most. Test your own property in the Pakistan home loan calculator.
How the instalment is worked out
The instalment stays the same each month while the rate stays the same. Early instalments are mostly markup, and more of each payment goes to the loan as the balance falls. How loan interest is calculated walks through this with a full schedule.
Worked example: a Rs 15 million house
- Property value: Rs 15,000,000
- Financing: 70% = Rs 10,500,000. Your own share is Rs 4,500,000.
- Rate: 6-month KIBOR 12.66% + 2.5% spread = 15.16% a year
- Monthly rate: 15.16% ÷ 12 = 1.2633%, over 240 months
- Instalment: Rs 139,506 a month
- Total paid: Rs 139,506 × 240 = about Rs 33,481,398
- Total markup: about Rs 22,981,398
- Takaful at 0.5% a year of the amount still owed: about Rs 781,370 over 20 years
In the first year you pay Rs 1,585,836 in markup and only Rs 88,234 off the loan. That is why paying even a little extra early on saves so much.
The 12.66% is the State Bank's 6-month KIBOR offer rate on 30 October 2026. Check the latest rate before you apply.
State Bank rules for house finance (2026)
| Rule | Limit |
|---|---|
| Most the bank can finance | 90% of the value, so at least 10% from you |
| Longest tenure | 30 years |
| All loan instalments together | Up to 65% of your net monthly income |
| Takaful or insurance | Required, for the amount still owed |
| Property valuation | By a PBA-panel valuer when financing is above Rs 10 million |
These are from the SBP's Housing Finance Prudential Regulations 2026, updated on 18 August 2026, which raised the longest tenure from 20 to 30 years. They are outer limits. Each bank sets its own lower limits on financing, age and income, and many banks finance only 60% to 85%.
How much income do you need?
Under the 65% rule, all your loan instalments together can be up to 65% of your net monthly income:
For the Rs 139,506 instalment: Rs 139,506 ÷ 0.65 = Rs 214,624 a month, if you have no other loans. A car loan instalment of Rs 50,000 would raise that to about Rs 291,548. Banks may also ask for more, especially for self-employed people.
20 years or 30 years?
| Tenure | Instalment | Total markup |
|---|---|---|
| 20 years | Rs 139,506 | about Rs 22,981,398 |
| 30 years | Rs 134,111 | about Rs 37,779,960 |
At this rate, stretching the loan to 30 years lowers the instalment by only about Rs 5,395 a month but adds about Rs 14.8 million in markup. When rates are high, most of the instalment is markup either way, so a longer loan barely helps the monthly figure. It mainly helps if you need it to qualify. 15-year vs 30-year mortgage shows the same effect with US numbers.
Key idea At 15% or more, a longer tenure barely lowers the instalment but adds millions in markup. Borrow for the shortest time you can safely afford.
How much the financing share matters
| Financing | Loan | Instalment over 20 years |
|---|---|---|
| 70% | Rs 10,500,000 | Rs 139,506 |
| 90% | Rs 13,500,000 | Rs 179,365 |
Each extra rupee you put in yourself saves you the markup on it for the whole loan. Remember the costs on top of your share: registration, stamp duty and transfer fees, which depend on your province and city, plus legal and valuation fees.
When KIBOR moves
Most house finance in Pakistan is variable. KIBOR is reset every 6 or 12 months, and your rate is that KIBOR plus the same spread. On the example loan:
- If KIBOR rises by 2%, the instalment goes up to about Rs 155,293.
- If KIBOR falls by 2%, it drops to about Rs 124,214.
Leave room in your budget for a rise. If the higher instalment would break your budget, borrow less.
Conventional loan or diminishing musharakah?
Islamic banks mostly use diminishing musharakah. You and the bank buy the house together. You pay rent for the bank's share and, each month, also buy a small part of that share. As your share grows, the rent falls, and the house is fully yours at the end. The rent is usually tied to KIBOR, so the monthly payment is close to a conventional loan's. Compare the total cost, takaful and early-payment terms between banks.
Should you buy or keep renting?
Buying makes sense when you plan to stay for many years and the instalment fits comfortably. If you might move within a few years, the upfront costs and early markup can make renting cheaper. Rent vs buy shows how to compare the two.
A quick checklist
- Get the bank's own valuation. It can be lower than the asking price, which raises your share.
- Check the 65% income rule with all your loans, not just this one.
- Compare 15, 20 and 30 years in the Pakistan home loan calculator.
- Budget for registration, stamp duty, transfer, legal and valuation costs.
- Ask about early repayment charges, because paying extra early saves the most markup.
Frequently asked questions
What is the longest home loan in Pakistan?
Up to 30 years under the State Bank's 2026 rules. Many banks also want the loan finished by an age such as 65 or 70, so older borrowers may get a shorter term.
How much of the house price will the bank pay?
SBP rules allow up to 90%, so you need at least 10% plus all the other costs. In practice, many banks finance 60% to 85%, depending on the property and your income.
Will my home loan instalment change?
Usually yes, because most house finance is tied to KIBOR and reset every 6 or 12 months. A 2% rise on the example loan adds about Rs 15,787 a month.
Can I pay off my home loan early?
Most banks allow partial or full early payment, sometimes with a charge. Because early instalments are mostly markup, extra payments in the first years save the most. Ask your bank for its exact charges.
This article is for general education and is not financial advice. Rules, rates and products vary by lender and country. See our disclaimer.
