China Subsidises One Point of Mortgage Interest for First-Home Buyers From October 1

China will subsidise one percentage point of the annual interest on newly issued commercial mortgages for first-home buyers from 1 October 2026, under a notice issued jointly on 29 September by the Ministry of Finance, the People's Bank of China and the National Financial Regulatory Administration. The subsidy is capped at 1 million yuan of loan principal, runs for up to five years on a qualifying loan, and only attaches to a unit of no more than 120 square metres bought for no more than 1.5 million yuan.

What it means for a foreign buyer

The eligibility caps are the whole story for anyone buying from outside China. At 120 square metres and 1.5 million yuan the policy does not touch the stock a foreign buyer looks at in Shanghai, Beijing, Shenzhen or Guangzhou, where a compliant unit at that price is close to non-existent. If you have been waiting for Beijing to loosen purchase restrictions in the tier-one cities before committing capital, this is not that, and it is evidence that the central government has chosen to spend its money at the mass-market end instead. Read it as a signal of where support is going, not as an opening.

Where it does change your arithmetic is the lower-tier market, and there the window is short. A foreign individual who already clears the separate residency qualification, is treated as a first-home buyer in that city, and buys inside both caps can claim a full percentage point off the interest on up to 1 million yuan of principal. Xinhua puts the cumulative saving at nearly 50,000 yuan. The implementation period is tentatively one year, so the loan has to be newly issued inside that window; the five years is how long the subsidy then runs, not how long you have to decide.

Check your first-home status in the specific city before you sign, because that is the test the lender applies and it is set locally.

What changed

Before 1 October there was no central-government interest subsidy on ordinary commercial home loans in China. Rate relief came from the People's Bank cutting the loan prime rate and from cities lowering their mortgage rate floors, both of which move the rate everyone pays. This is different in kind: a fiscal transfer aimed at a defined slice of buyers rather than a change in the rate.

The conditions are cumulative. The buyer must be a first-home purchaser. The loan must be a newly issued commercial personal housing loan. The unit must be no larger than 120 square metres and must cost no more than 1.5 million yuan, which Xinhua converted to about 222,516 US dollars. The subsidy applies to a maximum of 1 million yuan of that loan at an annualised one percentage point, for a period of up to five years. Second homes do not qualify. The notice as reported carries no list of eligible cities and no regional carve-out.

The People's Bank moved on the same day on the supply side. It cut the rate on its pledged supplementary lending facility by 0.25 percentage points to 1.5 per cent for one-year terms, and raised the relending quota for technological innovation by 200 billion yuan to 1.4 trillion yuan. Pledged supplementary lending is the facility policy banks draw on for redevelopment and urban renewal, so a cheaper PSL rate is a funding-cost cut for the programmes that generate new supply.