The purpose of this study is to 1) provide a brief overview of existing housing finance systems in Bangladesh, including those available to the urban and rural low-income households, and, 2) to make suggestions for the improvement of housing finance mechanisms for lower-middle and lower income groups suitable to the conditions in Bangladesh. The poverty of the population is reflected in the housing conditions. It was estimated that close to half of all housing units were made of temporary materials. Estimates of the requirements for housing in urban areas vary from 300,000 units to 550,000 annually for the next twenty years depending on the number of backlog and replacement units incorporated in the estimates. The main constraint in housing production is the high cost of housing in relation to incomes.