Housing Loans Are Set to Make a Comeback in Lebanon After Years of Suspension

Lebanon appears increasingly close to reviving state-backed housing loans, potentially reopening a path to homeownership that largely disappeared after the financial collapse.

The Public Corporation for Housing says preparations have begun to restart lending, with Director General Rony Lahoud proposing a program that would require buyers to provide at least a 20% down payment while financing the remaining amount at an interest rate of around 3.5%.

The corporation has asked the Finance Ministry for $100 million in funding, which would initially be distributed across roughly 1,400 Lebanese families. The final amount has not yet been approved, meaning the program is not operational yet, but the proposal has now entered the 2027 budget discussion.

If approved, it would mark a major return for an institution that effectively stopped accepting new housing-loan applications after Lebanon’s financial crisis began in 2019. For years, one of the traditional routes through which lower- and middle-income Lebanese families bought apartments was largely frozen.

That collapse in mortgage financing fundamentally changed Lebanon’s property market.

Before the crisis, many households could buy homes through long-term subsidized loans supported by Banque du Liban and the Public Corporation for Housing. After the banking system collapsed and the central bank stopped subsidizing new housing loans, buyers were increasingly pushed toward cash purchases.

For young couples and middle-income workers, that made homeownership dramatically harder.

A $150,000 apartment that might once have been financed over decades effectively became a purchase requiring most of the money upfront.

That is one reason the proposed 3.5% program could matter far beyond the families who eventually receive loans.

Lahoud has argued that housing finance is closely linked to the wider economy. Apartment purchases support construction, engineering, architecture, furniture, household appliances, legal services and thousands of jobs tied to real estate. He has said the disappearance of housing loans helped accelerate Lebanon’s broader economic downturn.

But there is an important distinction.

Housing finance has not been completely absent from Lebanon.

Banque de l’Habitat has already restarted subsidized housing lending through financing provided by the Arab Fund for Economic and Social Development. Its program resumed in 2024, and by July 2026 it had issued 1,059 loans worth around $74 million. Most were used to purchase apartments.

The maximum loan under that program was increased to $100,000 in 2025, while the interest rate was reduced this July from 6% to 5.75%.

So the development now being discussed is not the return of every form of housing credit from zero.

It is the potential revival of the much broader Public Corporation for Housing model, which historically played a central role in making homeownership accessible to lower- and middle-income Lebanese households.

That could be especially significant because of how dramatically housing affordability has changed since 2019.

Property prices in many parts of Beirut and Mount Lebanon remain denominated in fresh dollars, while salaries for a large portion of the population have not recovered to their pre-crisis purchasing power.

At the same time, conventional commercial mortgages remain extremely limited.

The result is a market increasingly divided between buyers with cash, often including expatriates and families supported by relatives abroad, and residents who may earn enough to service a monthly mortgage but cannot accumulate the cash needed to buy an apartment outright.

Housing loans could begin closing that gap.

But the proposed program also raises several questions.

The first is funding.

The Public Corporation for Housing has requested $100 million, but the final allocation has not yet been determined. The 2027 budget still needs to move through the political process, meaning neither the size of the program nor its launch date is guaranteed.

The second is scale.

Funding 1,400 families would be meaningful for those households, but it would remain small relative to the number of Lebanese priced out of homeownership during the last seven years.

The third is eligibility.

Lahoud says the lending conditions could resemble the corporation’s previous criteria, but the detailed requirements have not yet been finalized.

Income ceilings, apartment value limits, repayment periods and geographic restrictions will ultimately determine whether the program reaches the middle class or only a narrow group of borrowers.

There is also the issue of the banking system.

Lebanon’s mortgage market cannot fully recover while confidence in commercial banks remains damaged and long-term credit remains scarce. A government-backed housing program can reopen one channel, but restoring a functioning mortgage market on a national scale will require a broader rehabilitation of banking and credit.

Still, the direction is notable.

For years, Lebanon’s real estate market operated under the assumption that the mortgage era was effectively over.

That may now be beginning to change.

Banque de l’Habitat is already lending again. The government is considering financing the Public Corporation for Housing. Banque du Liban also issued a new circular this month dealing with facilities and housing-loan interest subsidies, another indication that housing credit is returning to the policy agenda.

For young Lebanese, the significance is not merely financial.

The disappearance of affordable housing finance became part of a much larger problem affecting marriage, family formation and emigration.

Buying a first home was once an achievable milestone for many middle-income couples.

After 2019, it increasingly became something that required family wealth, diaspora income or leaving Lebanon altogether.

The return of housing loans will not solve Lebanon’s housing crisis by itself.

But if the proposed program is funded and implemented at scale, it would restore something Lebanon has been missing since the collapse: the possibility that an ordinary salaried household could once again buy a home gradually rather than needing to pay for it almost entirely in cash.