The paper asks how subsidies and finance have been mixed in traditional mortgage market policies that were designed to give low-income households access to homeownership. It highlights the distortions generated by the creation of traditional special savings and tax circuits and public mortgage market programs. Empirical evidence on mortgage subsidy reform in nine countries is provided which have reformed their systems in the context of fiscal, financial sector and housing sector reform. The main conclusion is that mortgage subsidy reform must be long-term and closely integrated with general financial sector, housing sector and fiscal reform to have success. With regard to the extent of mortgage market subsidies seen in emerging markets, reform programs should prioritize subsidy reduction before restructuring the subsidy portfolio. This argument is based on two insights: an optimal sequencing of mortgage market reforms requires the development of a financial and technological benchmark which is hampered by the presence of subsidies, and mortgage market subsidies are in general inappropriate instruments to attack the fundamental distribution inequalities exerted by lack of access to formal homeownership. Under these conditions, is there a rationale for introducing subsidies for threshold mortgagors in developing countries? The paper argues that if appropriately targeted, linked to household savings down payment, and subsidies can promote mortgage market efficiency and stability and facilitate housing finance reform. However, basic housing subsidies coupled with appropriate urban land and infrastructure policies should be a priority in markets with very unequal income distributions or high formal-informal housing market barriers.