If you need a loan for a first home, use a housing provident fund loan first; if the amount is not enough, add a commercial loan as a combined loan — do not put the whole amount on a commercial loan alone

For a first home, a housing provident fund loan of more than 5 years is at 2.6%; the rate on newly issued bank mortgages around June (6) 2026 was about 3.1%. On a loan of 1000000 yuan over 30 years, using the fund for the whole amount costs about 96000 yuan less interest than a commercial loan for the whole amount. The fund has a loan ceiling; what it cannot cover can be topped up with a commercial loan — that is a combined loan.

Cost

No monetary cost. You may have to go to the housing provident fund center or the entrusted bank one or two more times, and disbursement may be a few days later than a commercial loan alone. The premise is that you have already paid into the fund continuously for a period.

Benefit

On 7 May (5) 2025 the People’s Bank of China issued a document lowering housing provident fund loan rates, effective from 8 May (5). For a first-home fund loan of more than 5 years the rate is 2.6%; for 5 years or less it is 2.1%. For a second home, more than 5 years is not below 3.075%, and 5 years or less is not below 2.525%. As of October (10) 2026 this was still the latest adjustment. Commercial mortgage rates are set as LPR plus or minus points; the LPR is the loan prime rate. On 20 September (9) 2026 the LPR for terms over 5 years was 3.5%. The People’s Bank of China’s monetary policy report for the second quarter of 2026 states that in June (6) “the rate on newly issued personal housing loans was about 3.1%.” How much you can save, worked by the equal-payment formula as an example: a loan of 1000000 yuan over 30 years, at 2.6%, has a monthly payment of about 4003 yuan, and at 3.1% about 4270 yuan. That is about 267 yuan less a month, and about 96000 yuan less interest over 30 years. Even if the fund ceiling covers only 600000 yuan and the other 400000 yuan goes commercial, it still beats putting the whole amount on a commercial loan: about 160 yuan less a month, and about 58000 yuan less interest over 30 years. The second-home fund rate floor of 3.075% is close to the commercial 3.1%, so little is saved.

Notes

A housing provident fund loan has four thresholds. First you must have paid in enough. A 2014 document from the Ministry of Housing and Urban-Rural Development and two other departments states that you must have paid in continuously and in full for more than 6 months before you can apply; payments made elsewhere can be combined. Caps and terms differ by place; the maximum is set by the local housing provident fund management committee. For example in Beijing a first-home loan for one contributor tops out at 1200000 yuan, with 200000 yuan of loan capacity per year of contributions. In Guangzhou one person tops out at 1000000 yuan, the term must not exceed 30 years, and for a second-hand home the building age plus the loan term must not exceed 50 years. When buying a second-hand home, the price used is the lower of the online-signed price and the appraisal; a low appraisal means less you can borrow. Finally there is more paperwork. The regulations require the fund center to decide within 10 days of accepting the application, and then mortgage registration still has to be done. Slower disbursement than a commercial loan is the author’s experience; if the seller is in a hurry for the money, say before signing that you will use a fund loan. The down-payment ratio on a combined loan must meet both the fund side and the commercial side. Fund balances can also be withdrawn to repay a loan; see Section 5, item 3 (the housing provident fund is not only for buying a home). If you already put everything on a commercial loan, you can ask the bank to lower the rate; see item 15 of this section (negotiating a lower rate).

Sources · 8

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