India Home Loan Guide 2025: Interest Rates & Tax Benefits
Complete guide to home loans in India including current interest rates, Section 80C tax benefits, PMAY schemes, and EMI calculation in INR.
India Home Loan Market 2025
India's home loan market is highly competitive with numerous banks and NBFCs offering attractive rates and schemes. Understanding your options helps you save lakhs in interest.
Current Interest Rates (INR)
- SBI Home Loan: 8.50% - 9.65%
- HDFC Home Loan: 8.60% - 9.50%
- ICICI Home Loan: 8.75% - 9.70%
- Axis Bank: 8.75% - 9.65%
- LIC Housing Finance: 8.50% - 9.80%
Types of Home Loans
Home Purchase Loan: For buying ready-to-move-in or under-construction property.
Home Construction Loan: For constructing house on owned land.
Home Extension Loan: For expanding or renovating existing property.
Plot Loan: For purchasing residential plot (higher rates, typically 9-11%).
Balance Transfer: Transfer existing loan to another lender for better rates.
Eligibility Criteria
- Age: 21-65 years (varies by lender)
- Income: Minimum ₹25,000/month (salaried), ₹2 lakh/year (self-employed)
- Employment: Minimum 2-3 years work experience
- Credit Score: 750+ for best rates
- LTV Ratio: Up to 90% for loans below ₹30 lakh, 80% for higher amounts
Tax Benefits Under Income Tax Act
Section 80C - Principal Repayment:
- Deduction up to ₹1.5 lakh per year
- Available for self-occupied property
- Property should not be sold within 5 years
Section 24(b) - Interest Payment:
- Deduction up to ₹2 lakh per year (self-occupied)
- No limit for let-out property
- Available from year of possession
- Pre-construction interest deductible in 5 equal installments
Section 80EE - First-Time Buyers:
- Additional ₹50,000 deduction on interest
- For loans sanctioned between April 2016 - March 2017
- Property value should not exceed ₹50 lakh
- Loan amount should not exceed ₹35 lakh
Section 80EEA - Affordable Housing:
- Additional ₹1.5 lakh deduction on interest
- For loans sanctioned between April 2019 - March 2022
- Property value should not exceed ₹45 lakh
- Stamp duty value should not exceed ₹45 lakh
PMAY (Pradhan Mantri Awas Yojana)
Government subsidy scheme for affordable housing:
- EWS (Annual Income up to ₹3 lakh): Interest subsidy up to ₹2.67 lakh
- LIG (Annual Income ₹3-6 lakh): Interest subsidy up to ₹2.67 lakh
- MIG-I (Annual Income ₹6-12 lakh): Interest subsidy up to ₹2.35 lakh
- MIG-II (Annual Income ₹12-18 lakh): Interest subsidy up to ₹2.30 lakh
Processing Fees and Charges
- Processing Fee: 0.25% - 1% of loan amount
- Prepayment Charges: Usually nil for floating rate loans
- Legal & Technical Charges: ₹5,000 - ₹15,000
- Stamp Duty: 5-7% of property value (varies by state)
- Registration Charges: 1% of property value
Fixed vs Floating Rate
Floating Rate:
- Linked to repo rate or MCLR
- Changes with market conditions
- Generally 0.5-1% lower than fixed rate
- No prepayment penalty
Fixed Rate:
- Rate locked for initial period (typically 2-5 years)
- Converts to floating after fixed period
- Suitable if expecting rate increases
- May have prepayment restrictions
Documents Required
Salaried Individuals:
- Last 6 months salary slips
- Form 16 for last 2 years
- Last 6 months bank statements
- Identity and address proof
- Property documents
Self-Employed:
- ITR for last 3 years
- Business proof and registration
- Last 12 months bank statements
- Balance sheet and P&L statements
- Property documents
Calculate Your Home Loan EMI
Use our calculator set to INR to:
- Calculate monthly EMI
- See total interest payable
- View year-wise amortization schedule
- Compare different loan amounts and tenures
- Plan prepayment strategy
Tips for Indian Home Loan Borrowers
- Compare rates from at least 5-6 lenders
- Negotiate processing fees and other charges
- Maintain CIBIL score above 750
- Make maximum down payment to reduce EMI
- Utilize full tax benefits under various sections
- Consider balance transfer if rates drop significantly
- Make prepayments to reduce interest burden
- Check PMAY eligibility before applying