China's housing provident fund explained: contributions, uses and loans
You and your employer each pay 5% to 12% of your salary into a housing fund you can use to buy, build or rent a home. How it works, with Shanghai examples.
The housing provident fund (住房公积金) is a compulsory savings scheme for employees in China. You and your employer each contribute a share of your salary into your personal housing fund account, and the money is meant to help you buy, build, renovate or rent a home. For many families it is the key to affording a first home, because it also gives access to cheaper mortgage loans. This guide explains how China's housing provident fund works, how much is contributed, the tax benefits, and how you can use the money.
Housing provident fund contributions
Employee and employer pay the same rate, set by each city within a range of about 5% to 12% of your contribution base. The contribution base is normally your average monthly salary for the previous year, limited by a minimum and maximum set locally.
In Shanghai, the rate is 5% to 7% each, on a base of CNY 2,740 to CNY 37,731 a month from 1 July 2026. A supplementary housing fund of 1% to 5% is optional for employers who want to offer more.
For example, on a CNY 10,000 monthly base at 7%, you pay CNY 700 and your employer pays CNY 700, so CNY 1,400 goes into your account each month, or CNY 16,800 a year. Over ten years, before interest, that is CNY 168,000 towards a home.
Tax benefits of the housing fund
Your own contributions within the official limits are deducted before individual income tax, and your employer's contribution is not taxed as income. That makes the housing provident fund one of the most tax-efficient ways to save in China. A higher contribution rate means slightly lower take-home pay each month, but more money set aside tax-free. The balance also earns interest at a rate set by the authorities.
How you can use the housing provident fund
Buying, building or renovating your own home. You can withdraw your balance to help pay for a home you will live in, subject to local rules and documents such as a purchase contract.
Repaying a mortgage. Many cities let you withdraw regularly to repay a home loan, whether it is a commercial mortgage or a housing fund loan.
Paying rent. If you do not own a home, you can usually withdraw money to pay rent, within limits set by your city.
Retirement or leaving the country. You can withdraw the balance at retirement or when permanently leaving the country, under city rules.
Housing provident fund loans
Members who have contributed for a minimum period can apply for a housing provident fund loan, usually at a lower interest rate than a commercial mortgage. The maximum loan depends on your account balance, contribution history, income and local limits, and it is often higher for families buying their first home. Many buyers combine a housing fund loan with a commercial mortgage, known as a portfolio loan, to cover the full amount. Read our guide to China's loan prime rate and mortgages to compare rates, and to equal principal versus equal instalment repayments to choose a repayment method.
Rules differ by city
The housing provident fund is managed locally, so contribution ranges, withdrawal rules and loan limits differ from city to city. If you move to another city, you can usually transfer your account. Check your local housing provident fund centre or its app for the exact rules, your balance and your contribution history. Making sure your employer contributes correctly each month protects your future borrowing power.
The housing fund and your payslip
The housing fund appears on your payslip alongside the five social insurances: pension, medical, unemployment, work injury and maternity. Together they can take more than 17% of your salary in a city like Shanghai. Our guide to China's five insurances explains each one, and our China salary tax calculator shows Shanghai's social insurance and housing fund deductions and your individual income tax.
Frequently asked questions
How much is the housing provident fund contribution in Shanghai?
5% to 7% each from employee and employer, on a base of CNY 2,740 to CNY 37,731 a month from July 2026.
Is the housing provident fund taxed?
Contributions within the official limits are deducted before income tax, and the employer's share is not taxed as income.
Can I use my housing fund to pay rent?
Yes, in most cities, within local limits.
Sources
This article is general information, not financial advice.