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Buying your ideal home is one of life’s biggest milestones, and securing the right home loan is key to making it happen, hopefully stress-free.
Whether you are a first-time buyer or looking to move up, our ultimate guide will help you understand everything you need to know before applying for a home loan in India.
What is a Home Loan?
A home loan is a secured, borrowed product by banks and housing finance companies; it is used by an individual to buy, construct, or renovate a residential property. Different banks have their methods of calculating loan amounts, but typically, it is based on property valuations and your repayment ability. When you take out a home loan, you have committed to pay back the loan amount, with interest over a certain tenure period through Equated Monthly Installments (EMIs). When taking out a loan, the property is the security for the lender, so it gives them rights to the property until the loan is paid in full.
Understanding Home Loans
Home loans exist to allow people to become homeowners, with large amounts of money that are paid back over a long time. The main terms involved in a home loan are:
- Principal: The loan amount authorized by the lender to the borrower.
- Interest Rate: The interest expressed as a percentage of the principal that needs to be paid to borrow funds.
- Tenure: The total amount of time to repay the loan, which can range from 5 to 30 years.
- EMI (Equated Monthly Installment): A fixed monthly payment by the borrower that is made up of two parts (the original principal and interest).
An understanding of the system allows residents in India to evaluate their home loan obligations and respective repayment plans more functionally.
Factors Impacting Home Loan Application and Approval
There are many factors affecting whether your home loan application is approved. These include:
Credit History
An applicant with a positive credit history showing timely repayments is a good sign that your application will be approved.
Income and Employment
Employment stability and adequate income are important factors when applying for a home loan.
Existing Liabilities
Having few existing liabilities gives you a greater chance of becoming eligible for the home loan.
Property
The value of the property and its location are very important since the lender will be assessing the property in terms of its market value and legal clearances.
Loan-to-Value Ratio
The Lender will lend a certain percentage of the value of the property. For loans of ₹30 lakh or less, lenders will lend up to 90% of the value of the property.
Home Loan Interest Rates and Charges
Interest rates on home loans can be:
- Fixed Rate – The interest rate % remains the same throughout the life of the loan, making it predictable in terms of your EMI.
- Floating Rate – The interest rate will vary, taking into account revisions by the applicable lenders and policy adjustments made by the Reserve Bank of India. This means that EMIs may vary.
As of May 2025, there are many banks offering home loan interest rates starting at 8.00% per annum. An example would be the State Bank of India, where rates start at 8.00% p.a., Bank of Baroda offers rates ranging from 8.40% to 11.10% p.a.
Because rates can be significantly different across lenders, it is important to compare rates from various lenders to get the best deal possible.
Eligibility for Home Loans in India
Most lenders will take into account several considerations to evaluate whether an applicant is eligible for a home loan.
- Age: Applicants should be between 21–65 years of age. Younger applicants may have benefits with a longer time period to pay back the loan, increasing their chances of repayment.
- Income: The income of the borrower should be regular and sufficient. A salaried borrower should have a minimum salary of ₹25,000 per month, and a self-employed borrower needs ₹2 lakh per annum.
- Employment: Salaried borrowers should have a minimum of two years of work experience; for self-employed, you should have a minimum period under your current business of three years.
- Credit Score: A credit score of at least 750 is preferred by most lenders. Good credit means you will be more likely to receive larger loans with better interest rates.
- Existing Financial Obligations: Lenders consider current debts to ensure the applicant can manage additional EMIs without financial strain.
- Property Value and Location: The property’s market value and legal clearances play a significant role in loan approval.
Home Loan Deals from Leading Banks
When it comes to home loans, the interest rate and loan terms can vary significantly across banks and housing finance institutions. This makes it essential for borrowers to compare current deals from leading banks to find the one that aligns best with their financial needs and repayment capacity.
Below is a detailed overview of home loan offers from top Indian banks, including interest rates, key features, and any special schemes as of mid-2025.
State Bank of India (SBI)
1. Interest Rate: Starting from 8.00% p.a. (floating)
2. Loan Tenure: Up to 30 years
3. Processing Fee: Up to 0.35% of the loan amount (minimum ₹2,000)
5. Key Benefits:
- No hidden charges
- Concession for women borrowers
- Interest concession for salaried employees
6. Special Feature: SBI’s MaxGain overdraft-linked home loan allows you to save interest by parking surplus funds in your loan account.
HDFC Ltd (Now part of HDFC Bank)
1. Interest Rate: Ranges between 8.40% to 9.40% p.a.
2. Loan Tenure: Up to 30 years
3. Processing Fee: Up to 0.5% of the loan amount or ₹3,000 (whichever is higher)
4. Key Benefits:
- Customizable repayment options
- Loans for under-construction, ready-to-move-in properties, and self-construction
- Top-up loans available
Bank of Baroda
1. Interest Rate: Starting from 8.00% p.a.
2. Loan Tenure: Up to 30 years
3. Processing Charges: Nil for a limited time under promotional schemes
4. Key Benefits:
- No prepayment/foreclosure charges for floating-rate loans
- Higher eligibility based on borrower’s profile
5. Special Schemes: Balance Transfer Scheme to shift your existing home loan from another lender at a lower rate.
Axis Bank
1. Interest Rate: Starts from 8.75% p.a.
2. Loan Tenure: Up to 30 years
3. Processing Fee: Up to 1% of the loan amount (minimum ₹10,000)
4. Key Benefits:
- Quick digital approval process
- Home loan EMI waiver facility after a set number of years
- Top-up loans for existing customers
5. Special Feature: Balance Transfer + Top-Up Offer available through their online portal.
ICICI Bank
1. Interest Rate: From 8.90% p.a. (floating)
2. Loan Tenure: Up to 30 years
3. Processing Fee: Up to 0.50% of the loan amount + GST
4. Key Benefits:
- Pre-approved instant home loans for existing customers
- Attractive top-up loans
- Special offers for salaried professionals and NRIs
Features and Benefits of Home Loans
A home loan represents, in excess of a monetary product, a gateway to owning a home. The lending institutions in India have improved their home loan products with the overall aim of making the home loan more borrower-friendly, safe and efficient over a course of time. Whether you are looking to buy your first home or to refinance, understanding the complete range of features and benefits will help you take a better decision that will be financially sound and viable.
Let’s go into these in detail:
The tax benefit of a home loan is the most enticing:
- Section 80C: You can claim up to ₹1.5 lakh every financial year on the principal repayment of your home loan. This amounts to principal repayment as well as stamp duty or registration fees.
- Section 24(b): If the property belongs to you and you are living in it, there is no upper limit on the interest deduction. However, for a self-occupied house, the deduction can be claimed on interest paid annually, which is up to ₹2 lakh. For a let-out house, there is no upper limit.
- Section 80EE / 80EEA: Under these sections, for first-time home owners, in addition to the deductions already mentioned above concerning Interest deduction, more room for additional tax-friendly options is available. 80EEA deduction is provided to qualify borrowers based on interest only (and you can claim up to 50,000 on 80EE or claim up to 1,5 lakh on 80EEA) if the restrictions are met.
If you have a home loan, and you find another bank offering a lower interest rate, you can transfer the outstanding balance to the new lender, called a home loan balance transfer.
Advantages of a home loan balance transfer –
- A fall in the interest servicing.
- Reduced EMI.
- Better service or flexibility in repayments.
- Easy access to a top-up loan for renovation or urgent needs.
For example, you started with a rate of interest of 9.5%, and now another lender offers you 8.4%. The potential home loan balance transfer would save you lakhs during the loan term.
Most banks offer a tenure of up to 30 years on home loans, which are at the discretion of the borrower, so the borrower can have a loan repayment plan following their earning capacity and lifestyle:
- Short tenures, higher EMIs, and lower interest amount payout.
- Long tenures, lesser EMIs, and increased interest amount payout.
You can always choose to shorten the tenure by way of prepayment planning or by way of a balance transfer. Lenders also provide calculators to assist borrowers using EMI, which can help borrowers visualize how they would repay their loan.
Most lenders today allow partial and full prepayment of your home loan, and so the overall interest burden on you will get reduced.
- Prepayment: You can pay extra whenever you have surplus (bonus, salary increment, etc.) The repayment is also adjusted against the principal amount, and that is what you will save on interest in the future.
- Foreclosure: You can close the entire outstanding amount of your loan before the term of the loan is over.
Note: RBI has made it amply clear that lenders cannot impose any prepayment or foreclosure charges on any floating-rate home loans provided to any individual borrower. In fact this makes this option very borrower friendly.
Other Interesting Features
There are also other features that enhance the appeal of modern day home loans such as:
- Top-up Loans: After you have repaid a total of (X) amount of loan, banks may offer additional Top-Up loans at home loan rate, simply following this time you might want the funds for renovations or just for personal needs.
- Step-up/Step-down Repayment Options: Again some banks provide certain flexibility in their loan repayments that you can increase or decrease the EMI based on your income projection.
- Home Loan Insurance: this provides your family is protected from being liable for your home loan in case of untimely death or job loss.
- Online Access & EMI Calculators: borrowers can easily manage their loans, view their repayment history and can even calculate their EMIs using online calculators randomly provided by banks for their customers.
Tips for First-Time Home Loan Buyers
Evaluate Your Finances
Ensure you have a steady source of income and that your credit score is good before applying for a home loan.
Compare Home Loan Offers
Home Loan interest rates are not the only fees to consider when comparing offers. Be sure to look at processing fees, prepayment charges, and any other terms that are included in a home loan agreement.
Know What You're Signing
Make sure you understand all of the terms and conditions and what they mean for your home loan, including how penalties and charges might apply.
Prepare for the Down Payment
We recommend saving up for your down payment, which may typically range between 10% and 25% of the costs of the property.
Use EMI Calculators
There are plenty of online EMI calculators that you can use to estimate your loan repayments, factor this amount into your monthly finances and see how you might need to adjust.
Getting a Home Loan for Different Budgets
When you’re planning for home ownership, one of the most pressing questions is: “How much home loan can I afford?” There are so many financial and personal considerations it depends on aligning the property you want with the value you can afford so that you’re not financially overextended in the long-term.
In this part we will detail the differences in home loan eligibility as it relates to the different income levels and budget, you encounter.
| Budget Range | Ideal For | Typical Monthly Income | Estimated Loan Eligibility | Property Cost Range | Key Tips |
|---|---|---|---|---|---|
| ₹10 – ₹30 lakh | First-time buyers, buyers in Tier 2/3 cities | ₹20,000 – ₹35,000 | ₹15 – ₹22 lakh | ₹20 – ₹30 lakh | - Apply under PMAY for interest subsidy - Co-apply with spouse to increase loan eligibility |
| ₹30 – ₹75 lakh | Salaried professionals, urban buyers | ₹40,000 – ₹80,000 | ₹25 – ₹50 lakh | ₹35 – ₹75 lakh | - Choose a longer tenure to manage EMI - Maintain a CIBIL score above 750 for better interest rates |
| ₹75 lakh – ₹1.5 crore | Higher-earning individuals, metro city buyers | ₹90,000 – ₹1.5 lakh | ₹60 lakh – ₹1.2 crore | ₹80 lakh – ₹1.5 crore | - Compare floating vs. fixed interest - Look for balance transfer options after 2–3 years |
| ₹1.5 crore and above | Business professionals, luxury home seekers | ₹1.6 lakh and above | ₹1.2 crore and above | ₹1.5 crore and above | - Consider a structured repayment plan - Explore home loan overdraft features like SBI MaxGain. |
Documents Required for Home Loan
The documents needed for a home loan usually include:
- Identity proof: PAN Card, Passport, Voter ID, Aadhaar Card.
- Address proof: Utility bills, Passport, Aadhaar Card.
- Income proof: Salary slips, bank statements, Income Tax Returns.
- Property Documents: Sale agreement, title deed, approved building plan.
- Employment proof: Offer letter, employment verification.
Want to Start Your Journey to Homeownership?
A home loan isn’t just a financial product — it’s your future. Knowing your eligibility, interest rates, and the application process helps you take control of one of life’s most significant decisions.
- Find competitive offers
- Get professional advice
- Make educated, confident decisions
Start your home loan journey with reliable advice today.
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