India Home Loan Guide 2026: Rates, LTV Rules, PMAY and Costs

Indian lenders assess repayment capacity through two main metrics:

EMI-to-income ratio. Most lenders cap your total monthly EMI payments (including the new home loan) at 40% to 50% of your gross monthly income. The exact threshold varies by lender and income level. Public sector banks tend to apply 40%. Private banks and HFCs extend to 50% for high-income borrowers.

FOIR (Fixed Obligation to Income Ratio). This is the Indian equivalent of the debt-to-income ratio. It includes all fixed monthly obligations: existing personal loans, car loans, credit card minimum payments, and the proposed home loan EMI. Lenders want FOIR below 50% to 55%.

Income type matters significantly:

Salaried employees with salary slips and Form 16 get the most favorable treatment

Self-employed borrowers need two to three years of ITR (Income Tax Returns) showing stable or growing income

NRIs (Non-Resident Indians) can access home loans from most major lenders for properties in India, though documentation requirements are more extensive

Your CIBIL score (India's primary credit score, ranging from 300 to 900) directly determines both your eligibility and your interest rate. Lenders interpret scores as follows:

A difference of 100 CIBIL points can mean a difference of 8 to 12 lakh rupees in total interest cost on a 50 lakh loan over 20 years.

The Reserve Bank of India sets Loan-to-Value (LTV) limits for home loans based on the loan amount. These limits determine the minimum down payment you must bring regardless of your income or credit profile. Stamp duty and registration charges are excluded from the LTV calculation, so you must fund those entirely separately.

RBI LTV norms for home loans in 2026:

What this means in practice:

You do not deposit 10% and borrow the rest of a Rs. 1 crore property. You deposit 25 lakhs (25%) plus stamp duty and registration on top. If your state charges 6% stamp duty and 1% registration, add another 7 lakhs. Your total upfront cash requirement on a Rs. 1 crore property is approximately 32 to 35 lakhs.

Full upfront cost breakdown by property price:

Stamp duty rates vary significantly by state. Maharashtra charges 6% (with concessions for women buyers). Karnataka charges 5%. Delhi charges 4% for women and 6% for men. Always check your specific state's current rate.

Use the budget calculator to build your full global payment estimate including EMI, down payment, and all upfront costs.

The RBI cut the repo rate by 125 basis points across 2025, bringing it to 5.25% as of the December 2025 MPC meeting. Most floating-rate home loans are linked to the External Benchmark Lending Rate (EBLR), which transmits repo rate changes almost immediately to borrowers. This has driven home loan rates to near multi-year lows heading into 2026.

Current home loan rates by major lender (as of mid-2026):

The rate you see is not the rate you get. Published starting rates apply to borrowers with CIBIL 750 or above, salaried income, and loan-to-value ratios in the 75% to 80% range. Your actual rate depends on your specific profile.

Women borrowers receive a concession of 0.05% at SBI and HDFC Bank when the property is registered in the woman's name or jointly. This small difference compounds significantly over a 20-year tenure.

Almost every home loan in India is a floating rate loan. Very few borrowers choose fixed-rate options, and even those labeled "fixed" are typically fixed for only 2 to 3 years before converting to floating.

Why floating dominates:

Floating rates reset immediately when the RBI cuts the repo rate (for EBLR-linked loans)

Fixed rates carry a premium of 0.50% to 1.00% above floating

Over a 20-year tenure, the average rate through multiple rate cycles typically favors floating

How floating rate loans work:

Your EMI stays the same when rates change, but your tenure changes. If the RBI cuts rates, your outstanding balance drops faster and your tenure shortens. If rates rise, your tenure extends. Some lenders offer the option to adjust EMI instead of tenure, which is worth requesting.

EBLR vs RLLR vs LHPLR:

Different lenders use different benchmarks. SBI uses the Repo Linked Lending Rate (RLLR), which transmits rate changes immediately. HDFC Bank uses the External Benchmark Lending Rate (EBLR), also immediate. LIC Housing Finance uses the LHPLR (LIC Housing Prime Lending Rate), which adjusts quarterly rather than immediately. RLLR and EBLR linked loans are more transparent and transmit central bank decisions faster.

Your EMI (Equated Monthly Installment) is the fixed monthly payment that covers both interest and principal repayment. The formula that lenders use is:

EMI equals principal times monthly rate times (1 plus monthly rate) to the power of number of months, divided by ((1 plus monthly rate) to the power of number of months minus 1).

EMI comparison for a Rs. 50 lakh loan at 7.5% interest:

Extending your tenure from 20 to 30 years saves Rs. 5,323 per month but costs an additional Rs. 29.1 lakhs in total interest. Run your specific numbers on the mortgage calculator and the loan calculator.

RBI guidelines prohibit banks from charging prepayment penalties on floating-rate home loans to individual borrowers. This means you can make extra payments or pay off your loan entirely at any time without any penalty at all major banks.

Fixed-rate home loans may carry prepayment penalties of 2% to 4% of the outstanding amount.

Making a lump-sum prepayment (partial prepayment) reduces either your EMI or your tenure, depending on what you negotiate with the lender. Reducing tenure saves more total interest. Use the extra payment calculator to model exactly how much interest you save and by how many months you shorten the loan.

India offers meaningful tax deductions on home loans under the Old Tax Regime. These benefits do not apply under the New Tax Regime.

Section 24(b): Interest deduction

You can deduct up to Rs. 2 lakhs per year on interest paid on a self-occupied property. For properties given on rent, the full interest amount is deductible against rental income with no cap.

Section 80C: Principal repayment

The principal component of your EMI qualifies for deduction under Section 80C, subject to the overall Rs. 1.5 lakh annual limit. The same Rs. 1.5 lakh limit covers EPF contributions, life insurance premiums, and other eligible investments, so the effective home loan benefit under 80C is often limited by other deductions.

Section 80C: Stamp duty and registration

Stamp duty and registration charges paid during property purchase are also deductible under Section 80C in the year of payment, subject to the Rs. 1.5 lakh overall limit. You must not sell the property within 5 years of purchase or the deductions reverse.

Under-construction properties: Section 24(b) interest deduction is not available during construction. Once you take possession, you can claim the pre-construction interest in 5 equal annual installments plus the current year's interest, subject to the Rs. 2 lakh cap.

Joint home loans. If both co-borrowers are co-owners of the property, each borrower can independently claim up to Rs. 2 lakhs under Section 24(b) and Rs. 1.5 lakhs under Section 80C. A joint loan effectively doubles the total tax benefit available.

Use the salary and tax calculator to model your net monthly EMI cost after the Section 24(b) interest deduction under the Old Tax Regime.

PMAY is India's flagship housing subsidy scheme. It provides a credit-linked interest subsidy (CLSS) on home loans for economically weaker sections and low-to-middle income groups. The scheme has gone through multiple phases. Verify current availability, income limits, and subsidy amounts directly with your lender or at pmaymis.gov.in before relying on any subsidy in your purchase plan, as program terms change with government budgets.

Public sector banks (SBI, Bank of Baroda, Bank of India, PNB):

Lowest starting rates

Best option for government employees (GEN employees at SBI get additional discounts)

Strong PMAY processing

Slower approval speed (3 to 4 weeks)

Most favorable for large loans where rate savings over 20 years are substantial

Private banks (HDFC, ICICI, Axis, Kotak):

Rates slightly above public sector but often within 0.25% to 0.50%

Much faster processing (HDFC often delivers in-principle sanction within 48 hours)

Better customer service infrastructure for urban borrowers

Digital application process mature and faster

Housing Finance Companies (LIC Housing Finance, PNB Housing Finance, Bajaj Housing Finance):

More flexible on eligibility criteria, including cash-salary earners and non-standard employment

Sometimes more accommodating on credit score

LIC Housing Finance's Griha Siddhi scheme offers 90% LTV for loans up to Rs. 30 lakhs

Bajaj Housing Finance offers the longest tenure in India at up to 32 years, reducing EMI burden

Non-Resident Indians can take home loans from most major Indian banks and HFCs for properties in India.

Key differences from resident loans:

Repayment must flow through NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts

Loan proceeds disburse directly to the seller or builder, never to the NRI's overseas account

Eligible properties: residential purchase and construction

Documentation requirements include foreign employment contract, overseas bank statements, and international credit history

Rates are generally the same as domestic floating rates, though some lenders add a small premium of 0.25% to 0.50%

The RBI sets LTV-based minimums: 10% for loans up to Rs. 30 lakhs, 20% for loans between Rs. 30 and Rs. 75 lakhs, and 25% for loans above Rs. 75 lakhs. Stamp duty and registration (5% to 8% depending on state) must be funded entirely from your own savings on top of the down payment.

Rates start from 7.10% at select public sector banks (Bank of India, Bank of Maharashtra) for borrowers with CIBIL 750 and above. SBI starts at 7.15% to 7.25%, HDFC at 7.35% to 7.75%, LIC Housing Finance at 7.10% to 7.50%. The RBI repo rate is 5.25% as of December 2025.

Yes, under the Old Tax Regime. Section 24(b) allows a deduction of up to Rs. 2 lakhs per year on interest paid on a self-occupied home. Section 80C allows a deduction on principal repayment of up to Rs. 1.5 lakhs per year combined with other 80C investments. No deductions are available under the New Tax Regime.

Yes, for floating-rate home loans to individual borrowers. The RBI prohibits banks from charging prepayment penalties on floating-rate loans. Fixed-rate loans may have prepayment charges of 2% to 4%. Use the extra payment calculator to see your interest savings.

Most banks require a minimum CIBIL score of 650 to 700 to approve a home loan. To access the best published starting rates, you need 750 or above. Below 650, most banks decline the application and you would need to approach NBFCs at higher rates.

Stamp duty is a state-level tax on the registration of property transactions. Rates range from 4% to 8% of the property value depending on the state and buyer profile. As per RBI guidelines, stamp duty and registration charges cannot be included in the LTV calculation and cannot be financed by the home loan, except for properties worth less than Rs. 10 lakhs. They must be paid from your own savings.

Yes. Most major Indian banks and HFCs offer NRI home loans for property purchase in India. Repayment flows through NRE or NRO accounts. Loan proceeds go directly to the seller. Rates are generally the same as domestic floating rates.

A global payment estimate covers your down payment (based on RBI LTV tier), stamp duty and registration, loan processing fee, and your EMI for the full tenure, showing your total outflow over the life of the loan. Build yours with the budget calculator.