China Overhauls Its Mortgage Rules: 40-Year Terms, Income Caps, and a Shift to Selling Finished Homes
China's central bank and banking regulator extended personal mortgage terms to 40 years, capped monthly payments at half of a borrower's income and told banks to renegotiate with struggling homeowners on August 28. The same day, three ministries moved to make selling finished homes — not off-plan apartments — the national norm, a direct answer to the country's unfinished-building crisis.
China's homebuyers landed the most sweeping rewrite of mortgage rules in years on August 28. The People's Bank of China and the National Financial Regulatory Administration jointly issued a document reforming real-estate credit, extending the maximum personal mortgage term from 30 years to 40, capping what a household may spend each month, and telling banks to renegotiate with borrowers who cannot keep up. Within hours the changes sat near the top of Baidu's news board and filled several hot-search slots on Weibo under #房贷# — "mortgage."
A longer loan, with guardrails
The figure circulating fastest on Weibo was 635 yuan. On a 1 million yuan loan at roughly 3 percent interest, stretching repayment from 30 years to 40 trims the monthly payment by about that amount — state media's explainer noted — real relief in a country where a mortgage routinely consumes a third of household income. But commenters parsed the fine print quickly. "This isn't a rate cut," one detailed post warned. "The saving comes from stretching out the loan. It only applies to new mortgages — existing borrowers can't convert." The trade-off is the total: interest paid over four decades is far larger, which is why even the official accounts paired the good news with the caveat.
The same package introduced trial Measures for personal housing loans that read as guardrails for the longer road: a monthly mortgage payment must stay below half the borrower's income, total debt service below 60 percent, and lenders must genuinely assess repayment capacity rather than wave applications through. For households already stretched, regulators wrote in an escape valve — banks should negotiate with borrowers facing temporary income shortfalls, adjusting schedules through deferred payments, extensions or delayed principal.
The end of buying off a blueprint
The credit rules were one half of the day. The same afternoon, the housing ministry, the natural-resources ministry and the banking regulator issued a notice on improving commodity-housing sales that pushes the market toward selling apartments only after they are built. Presale projects may not market units until the main structure is topped out; every purchase payment must sit in a supervised escrow account; and land auctions are to prioritize developers who sell finished homes, with the property deed handed over at delivery — "交房即交证" (get the keys, get the certificate).
The change answers the ugliest phrase in Chinese real estate: 烂尾楼, the unfinished towers that have dotted the map since developers' debts caught up with them. Pre-sale — 期房, "future housing" — let builders finance construction with buyers' money, and buyers carried both the risk and the mortgage for years before receiving keys. "Why not build the house first and sell it after?" one Weibo user asked in a post that resurfaced as the notice landed. More than 30 provinces have already piloted completed-home sales since 2022, with Hainan and the special zone of Xiong'an furthest along; the notice converts what was an experiment into the industry's default.
On Zhihu, the most-upvoted question about the package asked what "signal" the changes send. The clearest one concerns who carries risk: the state has decided buyers should no longer finance a building they cannot see, and banks should no longer assume incomes never fall — project loans for presale construction are now capped at five years. What the rules do not settle is the other side of the ledger: developers, cut off from presale cash, must finish what they have already started before they can start anything else.