Union Budget 2026: How Can Fin Homes Ltd Stands to Benefit from Housing Reforms

The Union Budget 2026 has emerged as a significant catalyst for the Indian housing finance sector, with a clear focus on the 'Housing for All' mission and the development of Tier 2 and Tier 3 cities. For a pure-play housing finance company (HFC) like Can Fin Homes Ltd, the budget's emphasis on urban infrastructure and middle-income housing provides a robust tailwind. As the government transitions from policy formulation to execution efficiency, Can Fin Homes is well-positioned to leverage its strong presence in the individual housing loan segment to drive its next phase of growth.

Redefining the Affordable Housing Landscape

One of the most critical expectations addressed in the Union Budget 2026 is the recalibration of the 'affordable housing' definition. Historically capped at Rs 45 lakh, the industry has long advocated for a revision to reflect rising land and construction costs. The budget's move to align these thresholds with current market realities—potentially raising the cap to Rs 75-85 lakh in metropolitan areas—significantly expands the addressable market for Can Fin Homes.

This shift allows a larger portion of the company's loan portfolio to qualify for concessional GST rates and interest subvention schemes. For Can Fin Homes, which focuses heavily on the salaried and professional segments, this redefinition lowers the entry barrier for first-time homebuyers, directly translating into higher loan application volumes and improved disbursements.

Tax Incentives and Home Loan Interest Deductions

The Union Budget 2026 has introduced measures to improve the disposable income of middle-income families. A key highlight is the proposed increase in the home loan interest deduction under Section 24(b) of the Income Tax Act. By raising the limit from Rs 2 lakh to a more substantial Rs 5 lakh, the government has effectively reduced the net cost of homeownership.

For Can Fin Homes, this measure is a direct driver of demand. Higher tax savings make monthly EMIs more manageable for borrowers, encouraging them to opt for larger loan amounts or move from rental housing to self-owned properties. This fiscal relief is particularly impactful for the company's core customer base in Tier 2 and Tier 3 cities, where the dream of owning a home remains a primary financial goal.

PMAY 2.0 and the Revitalisation of CLSS

The government's commitment to building an additional 2 crore houses under the Pradhan Mantri Awas Yojana (PMAY) provides a steady pipeline of opportunities for HFCs. The revamped Credit Linked Subsidy Scheme (CLSS) under PMAY-Urban 2.0 is designed to be more incentivising than its predecessor. By providing targeted subsidies to EWS, LIG, and MIG sections, the budget ensures that credit flow remains robust in the affordable segment.

Can Fin Homes, with its established processing mechanisms for PMAY loans, stands to benefit from the increased allocation. The company’s focus on asset quality ensures that while it participates in these government-led schemes, it maintains a healthy loan book, which stood at Rs 40,693 crore as of Q3 FY26.

Strategic Alignment with City Economic Regions

The Union Budget 2026 introduced the concept of 'City Economic Regions' (CERs), focusing on Tier 2 and Tier 3 cities as engines of growth. The allocation of Rs 5,000 crore per CER over five years for modern infrastructure and basic amenities will lead to the creation of new residential hubs.

This policy perfectly aligns with Can Fin Homes' strategic plan to expand its branch network to 300 branches by FY28. By establishing a presence in these emerging growth centers, the company can capture the rising demand for housing finance in regions where urbanisation is accelerating. The focus on temple towns and industrial corridors further diversifies the company's geographic footprint.

Digital Transformation and Operational Efficiency

The budget's emphasis on 'Reform Express' and the use of AI as a force multiplier for better governance resonates with Can Fin Homes' ongoing digital transformation. The company has been upgrading its IT systems to enhance operational efficiency and customer service.

Government initiatives to simplify GST and rationalise compliance requirements for MSMEs and service providers will indirectly benefit Can Fin Homes by improving the financial health of its self-employed borrower segment. Faster digital clearances and a more transparent regulatory environment reduce the turnaround time for loan approvals, allowing the company to scale its operations without a proportional increase in costs.

Budgetary Impact Summary Table

Market Impact and Investor Sentiment

Investors are closely monitoring Can Fin Homes as a key beneficiary of the budget's housing-centric approach. The combination of tax breaks for buyers and supply-side incentives for developers creates a virtuous cycle for housing finance. Analysts suggest that the measures announced will help maintain the company's Net Interest Margins (NIMs) by lowering the risk premium associated with affordable housing loans.

Furthermore, the budget's focus on ESG initiatives and green building subsidies aligns with Can Fin Homes' commitment to sustainability, including promoting rooftop solar installations. This makes the company more attractive to institutional investors who are increasingly prioritising ESG-compliant portfolios.

Conclusion

Union Budget 2026 has provided a comprehensive roadmap for the real estate and housing finance sectors. For Can Fin Homes Ltd, the policy shifts toward higher tax deductions, redefined affordability, and a focus on Tier 2/3 cities act as powerful growth enablers. As the company moves toward its goal of 300 branches and continues to strengthen its Rs 40,693 crore loan book, the fiscal support from the budget ensures a stable and prosperous environment for its operations. The focus now shifts to the implementation of these measures, which will determine the pace of credit off-take in the coming quarters.