Housing Provident Fund vs Commercial Loan: Which to Choose?

If you are planning to buy a home in China, you face a key financial decision: Should I use the Housing Provident Fund (Gongjijin), a Commercial Loan, or a mix?

1. The Housing Provident Fund (Gongjijin)

The Gongjijin is a mandatory housing savings scheme.

Advantages

• Ultra-low Interest Rate: Currently approx 3.1%, significantly lower than commercial offers.
• Direct Repayment (Chong Huankuan): Use your accumulated balance to automatically pay monthly installments.

Limitations

• Loan Cap: Capped limit. For example, in Shanghai, the family limit is often 1.2 million RMB.

2. The Commercial Loan

Standard mortgage offered by banks (ICBC, BOC, etc.).

Features

• Interest Rate: Based on LPR (Loan Prime Rate). In 2025, rates are around 3.5% - 3.9%.
• Flexible Limits: Based on income and property value.

3. The Winning Strategy: Portfolio Loan (Zuhe Dai)

The smart solution is the Combined or Portfolio Loan.

How it works

1. Gongjijin Priority: Maximize the provident fund quota first to get the 3.1% rate.
2. Commercial Top-up: Cover the rest with a commercial loan.

Conclusion

The golden rule in the Chinese property market is simple: Always maximize your Gongjijin quota.