Pakistan Home Loan / House Financing Calculator 2026
Estimate the monthly installment, total profit or interest and required down payment on a house loan in Pakistan, conventional (KIBOR + spread) or Islamic diminishing musharakah.
| Down payment | — |
|---|---|
| Amount financed | — |
| All-in rate (KIBOR + spread) | — |
| Total interest over the term | — |
| Total paid to the bank | — |
| First-year payments: principal / profit split | — |
In short
Pakistani banks price house finance at KIBOR plus a spread of about 2–4%, repriced periodically, with financing capped at 85% of the property value and tenures up to 25 years. Islamic diminishing musharakah uses a KIBOR-linked rental rate and produces the same monthly installment as the amortising formula at the same rate.
Who this is for: Home buyers in Pakistan comparing bank house-finance offers and checking what installment their income supports.
How house financing is priced in Pakistan
Almost every bank prices home finance as KIBOR + spread: the Karachi Interbank Offered Rate (usually the 1-year tenor) plus a fixed margin of around 2–4 percentage points, repriced every 1, 3, 6 or 12 months. When the State Bank changes the policy rate, KIBOR moves and so does your installment.
- Conventional: an amortising loan; the installment is P × r × (1+r)^n ÷ ((1+r)^n − 1) with r the monthly rate and n the number of months.
- Islamic (diminishing musharakah): the bank and you co-own the property; each month you buy one of the bank's "units" and pay rent on the units it still holds. The rental rate is benchmarked to KIBOR, so the monthly figure is the same as the conventional formula at the same rate — the difference is the contract structure.
- Loan-to-value: SBP caps financing at 85% of the property value; most banks require 20–30% down for self-employed applicants.
- Affordability: banks typically allow total installments of 33–40% of verified net income.
Additional one-off costs — valuation, legal, insurance (life and property) and processing fees — usually add 1–2% of the financed amount in the first year.
See also: Pakistan Car Loan / EMI Calculator.
Assumptions
- Rate = KIBOR + spread; installment uses the standard amortising formula on the financed amount.
- Down payment is forced to at least 15% (SBP maximum LTV 85%).
- Islamic mode uses the same arithmetic with profit/rent labels; fees, insurance and repricing are not modelled.
Worked example
Financed = PKR 12,000,000 at 14% a year (1.1667% a month) over 240 months.
Installment = PKR 149,222 a month; total paid ≈ PKR 35.8 million, of which ≈ PKR 23.8 million is interest/profit.
In year one, about PKR 1.67 million of the PKR 1.79 million paid is interest and only ~PKR 118,000 reduces the principal.
Frequently asked questions
Is Islamic house finance cheaper than conventional?
At the same benchmark and spread the monthly payment is the same. Differences come from the spread each bank charges, the repricing frequency and fees — compare the all-in rate and the total cost, not the label.
Can I prepay or make lump-sum payments?
Yes; most banks allow partial prepayment after 12 months, sometimes with a 1–2% charge in early years. On a diminishing musharakah you buy extra units, which reduces future rent.
What happened to Mera Pakistan Mera Ghar?
The subsidised mark-up scheme stopped accepting new applications in 2022; existing borrowers keep their subsidised rate for the agreed period.
Does the installment include property tax or insurance?
No. Property insurance and life insurance premiums are usually billed separately each year, and property tax is paid to the provincial excise department.
What is the monthly installment on a 1 crore home loan in Pakistan?
At 14% over 20 years, about PKR 124,350 a month; at 12%, about PKR 110,100. The rate moves with KIBOR.
How much down payment is needed for a house loan in Pakistan?
At least 15% (SBP caps financing at 85%); most banks ask 20–30%, more for self-employed applicants.
Related calculators
See all Pakistan calculators → · All free online calculators
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