The Affordable Housing Loan & Micro LAP trends report says the segment continues to bring first-time borrowers into the formal credit system and to widen credit access among underserved customer groups. It also creates growth opportunities beyond major urban centres.
Affordable housing makes up 68% of active home loans; smaller cities drive growth: CRIF
Credit inclusion
More than one in five affordable housing originations by volume, or 21%, comes from a new-to-credit (NTC) borrower. This is a significantly higher proportion than in larger-ticket housing loans. Women accounted for 31% of affordable housing origination value in the 12 months ended August 2026.
While NTC borrowers in affordable housing loans remain in the 20–22% range, new-to-product (NTP) borrowers account for nearly 70% over the same period, underscoring the segment’s strong product-level expansion.
Growth shifts to smaller markets
Nearly 79% of the affordable housing portfolio is concentrated in the top 10 states, where growth is being driven by locations beyond the top 100. This highlights the importance of Tier II, Tier III and peripheral markets. Uttar Pradesh and Rajasthan are emerging as key growth pockets.
HFCs gain ground
Housing finance companies (HFCs) increased their share of the affordable housing portfolio outstanding from 26.9% in August 2021 to 31.4% in August 2026. Their growth continues to outpace the broader industry, particularly in the affordable and mid-market housing segments.
Micro LAP emerges as growth engine
The report also points to the growing importance of Micro LAP (loan against property), which comprises property loans of up to ₹25 lakh. As of August 2026, Micro LAP accounts for 85.6% of active property loans, with a portfolio outstanding of ₹4.7 lakh crore across 83.1 lakh active loans. The segment has recorded a CAGR of nearly 20% over the past five years, supported by strong participation from HFCs, NBFCs and small finance banks (SFBs).
Micro LAP originations touched nearly ₹32,000 crore across 4.3 lakh accounts in the first quarter of FY27, with origination value rising 8.8% year-on-year. HFCs recorded 21.1% year-on-year growth in portfolio outstanding as of August 2026, while SFBs expanded rapidly from a smaller base, reflecting growing lender confidence in the segment.
Asset quality improves, but risks remain
Asset quality in affordable housing has improved across key delinquency buckets over the past year. The improvement has been particularly visible in the ₹10–25 lakh category, which reported stronger gains in risk metrics across lender types.
Micro LAP portfolio performance also improved in August 2026, with stronger gains among HFCs and SFBs. However, risk remains elevated in smaller-ticket loans. Loans below ₹10 lakh continue to warrant closer monitoring. Borrower-level analysis shows relatively higher delinquency among customers with gold loan exposure, who constitute 9% of overall borrowers, reinforcing the importance of deeper risk assessment.
Industry sentiment towards affordable housing remains strongly positive. Nearly 72% of surveyed stakeholders view the segment as either extremely or moderately promising over the next one to three years.
The rapid growth of Micro LAP underscores rising demand for smaller-ticket secured credit. Together, the two segments are expected to drive deeper credit access across emerging and underserved markets, supported by alternative-data-led underwriting, digitisation, low-cost funding support and supply-side reforms.