Home Loans

The seven kinds of home loan on LOANZ 360

Details for each: home purchase loan, home construction loan, home extension loan, home improvement loan, plot loan, home loan balance transfer and home loan top up.

A home loan rate has two parts: a benchmark and a spread. The benchmark is an external or internal reference such as the repo rate, which the Reserve Bank of India sets, or a lender's own marginal cost of funds. The spread is the margin the lender adds for its costs and for the risk it sees in you and in the property. The benchmark can move; the spread is usually fixed in your agreement.

Most home loans to individuals are floating-rate: your EMI or your tenure changes when the benchmark changes. Some lenders offer a fixed rate for an initial period and a floating rate after that. Know which you are signing. Read fixed vs floating interest rate and repo rate, EBLR and MCLR explained. Check live figures on the interest rates page.

What moves the rate on your home loan

Never choose on the headline rate. Ask for the Key Fact Statement and compare offers on the APR, which brings the rate and the charges into one yearly figure.

Begin with what you hold today: nothing, a plot, a house, or a loan. That decides the type, not the amount you want.

• You are buying a flat or house and do not own the property yet: a home purchase loan. Check whether it is ready or under construction, because the way money is released differs.
• You own a plot and want to build: a home construction loan. The lender pays in stages as work proceeds and asks for the approved plan and a cost estimate.
• You do not own a plot yet and plan to build in a few years: a plot loan, with the understanding that lenders set conditions on the land and on building within a stated time.
• You own the house and need another floor or room: a home extension loan, backed by the sanctioned plan for the added area.
• You own the house and need repairs or a refit: a home improvement loan. For small sums, compare it with a personal loan, which needs no property papers but usually costs more.
• You already pay a home loan and feel the rate or service is poor: a balance transfer, after you count the fees on both sides.
• You already pay a home loan and need a further sum, such as for a child's education: a top up, which is usually cheaper than a personal loan because the property secures it.

A decision guide by borrower situation

Every lender publishes its own criteria. Most test the following.

• Age: minimum at application and maximum at the end of the loan. The tenure available depends on how many working years remain.
• Income and its stability: salary slips and statements for the salaried; returns, statements and business proof for the self-employed. Rental and pension income can count.
• FOIR: the share of income taken by EMIs and card dues after the home loan EMI is added.
• Credit score and report: lenders see the pattern behind the score, including past loans and card use.
• Property: clear title, approvals, a location the lender serves, builder or project status, and a valuation.
• Margin: the share of the cost you pay yourself. RBI limits how much of the property value a lender may finance, so lenders require a down payment.
• Co-applicants: adding an earning family member can raise the loan amount.

Try the home loan eligibility calculator, the eligibility calculator and the FOIR calculator. Read home loan approval tips, loan eligibility and FOIR and the guide on a joint home loan. Terms to know: FOIR, LTV and property valuation.

A home loan amount is the smaller of two ceilings. The first is the property ceiling: the lender takes the lower of the purchase price and its own valuation, and lends up to a share of it. RBI sets limits on that share, which step down as the loan gets larger, and the lender may set lower ones. Check the current tiers with the lender; they are not typed here. The second is the income ceiling: your FOIR room, converted into a loan amount using the rate and tenure.

Example, a couple buying a flat. The agreed price is ₹80,00,000 and the lender values it at ₹78,00,000. The lender uses the lower figure. Suppose the lender's limit for this loan size is 80 per cent of value. That is a ceiling of ₹62,40,000, so the buyers must bring at least ₹17,60,000 themselves, plus stamp duty, registration and other costs. This is an illustration of the logic only.

Now the income test. The couple's combined monthly income is ₹2,00,000 and they already pay ₹20,000 in EMIs. If the lender allows total EMIs up to 55 per cent of income, the limit is ₹1,10,000, and the room for a home loan EMI is ₹90,000. At an example rate of 9 per cent a year over 20 years (an illustration, not a quote), an EMI of ₹90,000 supports a loan of roughly ₹1 crore. That is above the property ceiling, so the property ceiling of ₹62,40,000 decides. Try your own figures with the EMI calculator, the EMI by tenure calculator and the affordability calculator.

The reverse can also happen. A buyer with a modest income and a cheap flat is capped by income, not by the property. Whichever ceiling is lower wins. A larger down payment cuts the loan and the interest; a longer tenure cuts the EMI but raises total interest. Read home loan down payment and how to reduce home loan EMI.

Documents usually asked for, by applicant profile

Property papers and why each is asked

The full list is in home loan documents. NRIs should read NRI home loan. Never send an unmasked Aadhaar number by chat or email. Terms: title deed, encumbrance certificate, RERA, sale deed, occupancy certificate, khata.

• Work out your budget: the EMI you can carry, the down payment and the extra costs such as stamp duty, registration and moving.
• Check your credit report and fix errors. Checking your own score does not lower it.
• Compare your details with lenders' published criteria before you apply, so you do not collect avoidable enquiries.
• Apply with KYC and income papers, and share the property papers once you have a property in mind.
• The lender verifies you and the property: credit report, employer or business check, a valuation visit and a legal opinion on the title.
• The lender issues a sanction letter stating amount, rate type, tenure and charges. Read it with the Key Fact Statement.
• You sign the loan agreement and the mortgage documents. The mortgage is created and registered or recorded as the law and the state require. Stamp duty and registration rules differ by state.
• The lender disburses, directly to the seller or builder for a purchase, or in stages for a construction. You start paying interest or EMIs as the agreement says.
• The lender keeps the original property papers until you close the loan.

Typical stages are application, verification, valuation and legal check, sanction, agreement and disbursal. Time varies with the property and the completeness of your papers; none is promised here. Legal and valuation queries cause most of the waiting, so answer them quickly.

A home loan is priced at a rate that is commonly floating. Over 15 or 20 years a small gap in the rate or fees moves your total cost by lakhs of rupees, so look at the whole picture. Every charge below is set by the lender, the state or a third party, and appears in the Key Fact Statement or the agreement.

Charges and costs on a home loan

Prepayment first. Under the Reserve Bank of India's Pre-payment Charges Directions, 2025, regulated lenders may not levy pre-payment charges on floating-rate loans to individuals for non-business purposes, whatever the source of funds and without a minimum lock-in. The directions apply to loans sanctioned or renewed on or after 1 January 2026 (RBI notification). A home loan sanctioned before that date, or one on a fixed rate, may follow the rules in its own agreement, so read the Key Fact Statement. Part-payments can shorten the tenure or lower the EMI; the prepayment calculator shows the interest you save.

Compare offers on the APR, not on the headline rate. See Key Fact Statement and APR, the rate comparison calculator and loan prepayment and foreclosure.

The tax law has long allowed deductions related to home loans: for interest paid, and for principal repaid, subject to limits and conditions that depend on whether the home is self-occupied or let out, and on when the loan was taken. The Income-tax Act, 2025 has changed section numbers, and this page quotes none and no limits. Rules also differ for joint borrowers, who generally claim according to ownership and repayment. Read home loan tax benefits, keep your interest and principal certificate from the lender, and confirm the current position with the Income Tax Department or an adviser. Government subsidy schemes for eligible buyers, such as PMAY, have their own eligibility; check the scheme's official site.

A regulated lender must give you a Key Fact Statement before you accept. It lists the amount, rate type, tenure, EMI, every fee and the APR. Put two statements side by side and compare the rate type and spread, the APR, the up-front fees, any bundled insurance, the prepayment terms and the penal and reset terms. The terms in a Key Fact Statement matter more than the headline rate.

Mistakes that cost home buyers money

More: home loan mistakes to avoid and first-time home buyer checklist.

Warning signs on a property or a loan offer

Read home loan red flags and home loan fraud prevention. If a lender breaks the rules, use the lender's grievance route and then the regulator's complaint process; see the grievance page.

A missed EMI brings a penal charge, a returned-debit charge and a negative report to the credit bureaus. Because a home loan is secured, the stakes are higher. After a stretch of non-payment set by the rules, the account can become a non-performing asset and the lender can start recovery. For many secured loans, the SARFAESI Act lets a lender take possession of the property after notice, without first going to court. See NPA and SMA and SARFAESI Act.

• Talk to the lender before you miss a date. Ask for a longer tenure, a short moratorium or a restructure, and get any agreement in writing.
• Prioritise the home loan EMI over unsecured debts in a squeeze.
• Open every notice and note its deadline; reply in writing.
• Consider selling or renting out the property in a planned way, rather than waiting for recovery action.

Read missed EMI consequences, mortgage laws in India and borrower rights and grievance.

• Ask the lender for a foreclosure statement with the exact amount for a stated date.
• Pay through the lender's account and keep the receipt.
• Collect the closure letter and no objection certificate (NOC).
• Collect every original property paper held by the lender and check them against the list given at the start.
• Make sure the lender releases its charge on the property. This may need a release step with the registration office or the central registry, as applicable.
• Update the property record or ask the society or builder to record the release if required.
• Check your credit report after 30 to 45 days to confirm the loan shows as closed.

Details: how to get an NOC after loan closure. Keep the NOC, release papers and final statement permanently, because you will need them when you sell.

• You share your details and agree to an item-by-item consent notice. Nothing is checked or shared without your consent, and you can withdraw it as easily as you gave it.
• Your details are compared with each partner lender's published criteria, so you apply only where you are likely to qualify. This helps avoid unnecessary credit enquiries; too many lender checks in a short time can lower your score.
• Our team prepares a credit assessment summary before the file reaches a lender.
• You choose where to apply. One advisor follows the file through the property papers, valuation, legal queries, sanction and disbursal, and you track status in your account.
• The lender decides, prices and pays out; for a home loan it often pays the seller or builder directly.
• Signed-in borrowers can also see properties that banks and NBFCs have listed for auction or sale. After disbursal, you can track EMIs with due dates and reminders.

Related reading: home loan documents, first-time home buyer checklist, home loan tax benefits, home loan mistakes to avoid, home loan approval tips, mortgage laws in India, balance transfer and top-up, NRI home loan tax benefits, secured loan, mortgage, pre-EMI, down payment, balance transfer calculator and the EMI calculator. For other property-backed borrowing see loan against property.