A home loan is secured against the property you are buying, and that single fact explains almost everything about it — why the rate is roughly a third of a personal loan's, why the tenure runs to thirty years, and why the lender cares as much about the flat as it does about you.
Most guides on this subject list eligibility criteria and stop. This one goes further: how the bank works backwards from the EMI you can carry rather than forwards from your salary, why two borrowers with identical incomes get different rates, what the valuation actually checks, and the three approvals that can each hold up a file after you have been sanctioned.
The short version
- Your limit comes from your EMI capacity, not a multiple of salary — lenders cap total EMIs near half your take-home.
- You fund 10–25% yourself. No lender in India finances the whole price, and stamp duty sits outside the loan entirely.
- The property is assessed as hard as you are. Title, approvals and valuation stop more files than credit scores do.
- Rate is floating and linked to the repo rate, so your EMI or tenure will change during the loan. Plan for it.
- Tax relief is real but capped — up to ₹1.5 lakh of principal and ₹2 lakh of interest a year, under the old regime.
Know what you need already? Jump straight there — or read on for the full picture.
What a Home Loan Really Is
It is a secured, long-tenure loan for buying, building or improving a home, where the property itself is the security. You hold the title; the lender holds a charge on it until the last instalment is paid.
Three consequences follow, and they shape everything else on this page.
It is cheap. Because the lender can recover its money from the asset, the rate sits far below unsecured borrowing — commonly 8.5% to 11% against 11% to 24% on a personal loan. On a ₹40 lakh loan that gap is worth several lakh rupees a year.
It is slow. The lender is underwriting two things: you, and the property. Title documents, building approvals and a physical valuation all take time, and none of it can be rushed by being well prepared on the income side.
It is long. Tenures run to thirty years, which keeps the EMI manageable and makes the total interest very large. On a twenty-year loan you typically repay close to double what you borrowed. That is not a reason to avoid it — rent is not free either — but it is a reason to prepay when you can.
| Parameter | Typical range in India |
|---|---|
| Loan amount | ₹5 lakh to ₹5 crore, profile and property dependent |
| Interest rate | Approx. 8.5% – 11% p.a., floating (indicative) |
| Tenure | 5 to 30 years |
| Loan to value (LTV) | Up to 90% under ₹30 lakh; 80% for ₹30–75 lakh; 75% above ₹75 lakh |
| Processing fee | 0.25% – 1% of the loan, often capped; sometimes waived |
| Time to disbursement | 2 to 5 weeks from a complete file |
| Prepayment charge | Nil on floating-rate loans to individuals |
Indicative market ranges for illustration, not an offer. LTV limits follow RBI's risk-weight framework and are applied by lenders with their own margins on top.
Who Qualifies
Six things are checked, and they are not weighted equally. The first two decide whether you have a file at all; the rest decide its size and price.
- Age — usually 21 to 65 at loan maturity for salaried applicants, and up to 70 for self-employed. The maturity age matters more than your age today, because it caps your tenure.
- Income stability — two to three years of continuous work history. Salaried applicants need six months to a year in the current job; self-employed need two to three years of filed returns.
- Credit score — 750 and above opens everything. Below 700 the file narrows sharply, and below 650 it usually needs a co-applicant or a housing finance company rather than a bank.
- Existing obligations — every running EMI reduces what you can borrow, rupee for rupee of monthly capacity.
- The property itself — clear title, an approved building plan, and an occupancy or completion certificate where applicable.
- Your own contribution — the 10% to 25% margin plus stamp duty and registration, which the loan does not cover.
The property is an applicant too
This is the part borrowers under-prepare for. A file can clear every income check and still fail because the building lacks an occupancy certificate, the title has an unresolved succession claim, or the lender does not fund that project. Ask your lender for its approved-project list before you pay a booking amount — most banks maintain one, and a flat in an approved project moves through valuation in days rather than weeks.
What Income You Need
Lenders do not lend a multiple of your salary. They work backwards from the EMI you can carry, using the fixed obligation to income ratio — total EMIs, including the new one, capped at roughly 50% to 60% of net monthly income.
Here is the same arithmetic at four income levels, assuming a 20-year tenure at 8.75% and no existing EMIs:
| Net monthly income | EMI a lender will allow | Indicative loan | Property you could target |
|---|---|---|---|
| ₹40,000 | ~₹20,000 | ₹22 – 24 lakh | ₹28 – 30 lakh |
| ₹60,000 | ~₹30,000 | ₹33 – 36 lakh | ₹42 – 45 lakh |
| ₹1,00,000 | ~₹50,000 | ₹55 – 60 lakh | ₹70 – 75 lakh |
| ₹1,50,000 | ~₹80,000 | ₹88 – 95 lakh | ₹1.1 – 1.2 crore |
Illustrative. The property column assumes a 20–25% own contribution and excludes stamp duty and registration.
Two things move these numbers more than anything else. An existing car loan or personal loan comes straight off the EMI column — a ₹12,000 car EMI removes roughly ₹13 lakh of home loan capacity. And a co-applicant with income adds theirs to yours, which is why joint applications are the standard route to a larger property.
Clear the small loans first
If a home loan is twelve months away and you are carrying a consumer-durable EMI or a personal loan with a year left, closing it early is usually worth more than the interest it saves. It frees monthly capacity at roughly eleven times its own size in home loan eligibility, and it takes an enquiry off your recent credit history at the same time.
What Your Credit Score Does
On an unsecured loan the score decides whether you are approved. On a home loan, where the lender holds the property, it mostly decides the price — and over thirty years the price is where the money is.
| Score band | What usually happens | Effect on a ₹40 lakh, 20-year loan |
|---|---|---|
| 750 and above | Best rate on offer, fastest processing | Baseline |
| 700 – 749 | Approved, typically 0.25% – 0.5% higher | Roughly ₹1.5 – 3 lakh more over the term |
| 650 – 699 | Fewer lenders; a co-applicant helps | Roughly ₹4 – 7 lakh more |
| Below 650 | Banks mostly decline; housing finance companies may lend | Materially higher, and a smaller LTV |
Because the loan runs so long, a quarter-percent is not a rounding error. If your score is close to a band boundary and the purchase can wait three to six months, repairing it first is one of the highest-return things you can do — the score guides set out what actually moves it.
What It Costs
Home loan rates in India are floating and, since October 2019, most retail floating-rate loans are linked to an external benchmark — for the majority of banks, the RBI's repo rate. Your rate is that benchmark plus a spread the lender sets from your profile.
What that means in practice: when the repo rate moves, your loan moves with it. Lenders normally hold the EMI steady and adjust the tenure instead, which is comfortable in the short term and expensive over the full term. You can ask for the EMI to be reset rather than the tenure — most will do it on request, and few mention the option.
What decides your spread:
- Credit score — the largest single input, as the table above shows.
- Loan to value — a smaller loan against the same property prices better. Putting down 25% instead of 15% often buys a lower rate as well as a smaller loan.
- Income type — salaried applicants at graded employers price below self-employed applicants on the same income.
- Loan amount — the larger slabs sometimes attract finer pricing.
- Existing relationship — a salary account with the lender is worth asking about before you compare elsewhere.
Why this page does not list bank-by-bank rates
Floating rates change whenever the benchmark or a lender's spread changes, so any table of named banks and specific numbers is out of date within weeks — and a wrong rate published against a bank's name is worse than no rate at all. What stays true is the band and what moves you within it, which is what this section covers. For live figures, ask us to run a comparison or check the lender's own rate card.
Charges Beyond the Interest
| Charge | Typical amount | Worth knowing |
|---|---|---|
| Processing fee | 0.25% – 1%, often capped | Frequently negotiable, and waived in campaigns |
| Legal and technical valuation | ₹3,000 – ₹10,000 | Charged even if the file is later declined |
| Stamp duty on the mortgage | State-dependent | Separate from the stamp duty on the sale deed |
| Prepayment / foreclosure | Nil on floating-rate loans to individuals | RBI does not permit these charges on floating-rate retail loans |
| Conversion / switch fee | 0.25% – 0.5% of outstanding | Charged to move to a lower spread with the same lender |
| Late payment | 1% – 2% per month on the overdue amount | Also reported to the credit bureaus |
The two that catch people out are the last two. A conversion fee is what a lender charges to give you the better spread it is already offering new customers — worth paying when the gap is 0.4% or more, and worth asking about every couple of years. And nil prepayment charges on floating loans means every spare rupee you put in goes straight against principal, which is the single most effective thing you can do on a long loan.
Documents Required
Everyone:
- PAN and Aadhaar
- Address proof
- Passport-size photographs
- Six to twelve months of bank statements
Salaried applicants:
- Three months of salary slips
- Form 16 and the latest ITR
- Employment proof — appointment letter or employee ID
Self-employed applicants:
- Two to three years of ITR with computation of income
- Audited financials where applicable
- Business proof — GST registration, Udyam, or trade licence
- Current account statements
The property — the set people forget:
- Sale agreement or allotment letter
- Chain of title documents
- Approved building plan
- Occupancy or completion certificate, for ready property
- NOC from the builder or housing society
- Latest property tax receipt
The general checklist across products is on the documents page. What is specific here is the last block: income documents are yours to produce, property documents are the seller's or builder's, and chasing them is what usually adds a fortnight to a file.
How the Application Runs
- Check eligibilityShare income, existing EMIs and the rough property value. A soft enquiry — it does not touch your credit score.
- Compare and chooseLook at rate, processing fee and the conversion clause together. A lender with a slightly higher rate and no conversion fee can cost less over twenty years.
- Submit the income fileKYC, income proof, bank statements. This is the part you control, and it can be complete before you have chosen a property.
- Sanction in principleThe lender approves an amount against your profile alone. Valid for three to six months, and it makes you a far stronger buyer when negotiating.
- Property and legal checkThe lender's lawyer verifies title and approvals. Most delays and most declines happen here, not at the credit stage.
- Technical valuationA valuer visits and puts a number on the property. If that number is below the price you agreed, your loan is calculated on the valuation — and the difference comes out of your pocket.
- Final sanction letterRead the rate, the spread, the reset frequency and the conversion clause before signing anything.
- Agreement, mortgage and disbursementFunds go to the seller or builder, not to you. For under-construction property, in stages against construction progress.
The valuation gap, and why it hurts
Suppose you agree ₹60 lakh and the valuer assesses ₹55 lakh. At 80% LTV your loan is calculated on ₹55 lakh, not ₹60 lakh — so you get ₹44 lakh instead of ₹48 lakh, and must find ₹4 lakh more on top of the margin you had already planned. It is the most common late-stage shock in a home purchase, and the reason not to exhaust your savings on the booking amount.
Real EMI Examples
Three borrowers, so the arithmetic is visible rather than abstract. All at 8.75% floating.
| Loan | Tenure | Monthly EMI | Total interest | Total repaid |
|---|---|---|---|---|
| ₹20 lakh | 20 years | ~₹17,670 | ~₹22.4 lakh | ~₹42.4 lakh |
| ₹40 lakh | 20 years | ~₹35,350 | ~₹44.8 lakh | ~₹84.8 lakh |
| ₹40 lakh | 30 years | ~₹31,470 | ~₹73.3 lakh | ~₹1.13 crore |
Compare the last two rows. Ten extra years cuts the EMI by about ₹3,900 a month and adds roughly ₹28.5 lakh in interest. That is the trade in its plainest form — and it is why the useful question is not "what is the lowest EMI I can get" but "what is the shortest tenure I can genuinely service".
Run your own numbers in the calculator at the top of this page, or against other products in the EMI calculator.
One extra EMI a year
On a ₹40 lakh, 20-year loan, paying one additional EMI every year — roughly ₹35,000, often affordable out of a bonus — closes the loan about three and a half years early and saves in the region of ₹9 lakh in interest. Prepayment on a floating-rate loan carries no charge, so the only cost is the money itself.
Tax Benefits
Real, and capped. Under the old tax regime, a home loan on a self-occupied property gives two separate deductions:
| Section | What it covers | Annual cap |
|---|---|---|
| 80C | Principal repaid, plus stamp duty and registration in the year of purchase | ₹1.5 lakh, shared with your other 80C investments |
| 24(b) | Interest paid, self-occupied property | ₹2 lakh |
| 24(b) | Interest paid, let-out property | No cap on the deduction; loss set-off limited to ₹2 lakh a year |
| 80EEA | Additional interest, first-time buyers | ₹1.5 lakh — check whether it applies to your sanction date |
Three things worth knowing. The 80C cap is shared — if your EPF and insurance already fill ₹1.5 lakh, the principal adds nothing. Joint owners who are both borrowers can each claim both deductions on their share, which frequently doubles the benefit. And under the new tax regime these deductions are largely unavailable, so the benefit depends on which regime you file under.
This is not tax advice
Limits, sections and regime rules change with each Finance Act, and how they apply depends on your own filing position. Confirm the current position on the Income Tax Department site or with your CA before you plan around any figure here.
Home Loan vs the Alternatives
Home Loan
✅ Best for: Buying, building or extending a home
✅ Rate tendency: Roughly 8.5% – 11%, floating
❌ Key point: Property is mortgaged; 2–5 weeks to disburse
Personal Loan
✅ Best for: The margin money or interiors, not the purchase
❌ Rate tendency: 11% – 24%
❌ Key point: Lenders check for this and it can cut your home loan eligibility
Loan Against Property
✅ Best for: Raising money against a property you already hold
✅ Rate tendency: Above a home loan, well below unsecured
❌ Key point: No tax benefit unless the money funds a house
Balance Transfer
✅ Best for: A running loan priced above the current market
✅ Rate tendency: Whatever the new lender offers
❌ Key point: Fresh legal and valuation costs; worth it early in the term
The one to be careful with is the second. Funding your down payment with a personal loan looks like a solution and is usually a trap — the EMI reduces the home loan you qualify for, and lenders look specifically for recent unsecured borrowing when assessing where your margin money came from.
Mistakes Worth Avoiding
Budgeting for the price, not the cost
Stamp duty and registration run to 5%–8% of the property value depending on the state, and they sit outside the loan. On a ₹50 lakh flat that is ₹2.5–4 lakh in cash, on top of your margin.
Taking the longest tenure by default
It is offered because it makes the EMI look comfortable. Thirty years instead of twenty on ₹40 lakh costs roughly ₹28.5 lakh more in interest.
Paying a booking amount before checking the project
If the lender does not fund that project, or the title has a problem, the booking amount is at risk and the loan is not coming. Ask for the approved-project list first.
Applying to four lenders at once
Each formal application is a hard enquiry. Compare on soft checks, then apply to one.
Never asking about the conversion fee
Lenders offer new customers a better spread than existing ones. Ask every couple of years what it would cost to move to the current rate — it is often a fraction of what you would save.
Letting the tenure absorb every rate rise
When the repo rate goes up, most lenders extend the tenure silently. Ask for the EMI to be increased instead if you can carry it; otherwise a twenty-year loan quietly becomes a twenty-six-year one.
The Full Home Loan Guides
Six pages sit under this one, each taking a single question further than a pillar page can. They are ordered the way the decision actually arrives.
Before you apply
Once you are ready
Choosing a lender
If you already have a home loan
If a home loan is not the right instrument
Sometimes it is not — the borrowing is against a property you already own, the amount is small enough that a mortgage is disproportionate, or the purchase is not a home at all.
Questions This Page Gets Asked
How much home loan can I get on a ₹50,000 salary?
Broadly ₹27–30 lakh with no other EMIs, a score above 750 and a twenty-year tenure. Existing EMIs reduce it directly, and a co-applicant's income adds to it.
What is the minimum credit score for a home loan?
Most banks want 700 and above, and reserve their best pricing for 750+. Below 650 the mainstream banks usually decline, though some housing finance companies still lend at a higher rate and a lower LTV.
How much down payment do I need?
Between 10% and 25% of the property value depending on the loan size, plus stamp duty and registration which the loan never covers. Budget 20%–30% of the price in cash to be safe.
Can I get a home loan for the full property value?
No. RBI's framework caps how much of the value can be financed, and lenders apply their own margin within that. Anyone promising 100% funding is describing something other than a home loan.
Is a home loan rate fixed or floating?
Almost always floating, linked to an external benchmark — usually the RBI repo rate — plus the lender's spread. Fixed-rate home loans exist but are rare and price higher.
Are there charges for prepaying a home loan?
Not on floating-rate loans to individual borrowers. RBI does not permit foreclosure or prepayment charges on those, so you can pay extra whenever you have it.
How long does approval take?
A sanction in principle on your income alone can come in two to five working days. Full disbursement takes two to five weeks, because title verification and valuation sit in between.
Can two people take a home loan together?
Yes, and it is common. Both incomes count towards eligibility, and if both are owners and borrowers, both can claim the tax deductions on their share — which often doubles the benefit.
Can I claim tax benefit on an under-construction property?
Interest paid before possession is not deductible in the year it is paid. It can be claimed in five equal instalments starting from the year you take possession, within the same overall cap.
What happens if my property is valued below the agreed price?
Your loan is calculated on the valuation, not the price. The shortfall becomes additional cash you have to arrange, which is why it is unwise to commit every rupee of savings to the booking amount.
Can I transfer my home loan to another bank?
Yes. A balance transfer moves the outstanding to a lender offering a lower rate. It costs fresh legal and valuation charges, so it makes most sense early in the term when the interest component is largest.
Do I need property insurance?
Lenders usually require it, and many will offer to bundle a policy and finance the premium inside the loan — meaning you pay interest on it for the full term. It is not always bad value, but it should be your decision. Check the sanction letter line by line.
Why Apply Through Money Bharti
- One application, many lenders. Compare offers from 100+ RBI-registered banks and housing finance companies without applying to each separately.
- Soft enquiry first. Seeing what you qualify for does not mark your credit report — and on a home loan, a cluster of hard enquiries is read badly.
- Free for borrowers. We are paid by lending partners, not by you, and we never ask for a fee before approval.
- Straight answers on the trade-offs — including when a shorter tenure, a larger down payment or a different lender's conversion clause would serve you better than the fastest approval.
- A marketplace, not a lender. Approval, rate and terms are decided by the lender; the agreement is between you and them.
Where These Figures Come From
Every band on this page is an indicative market range, not an offer, and each is checkable against a primary source rather than another blog:
- LTV limits and prepayment rules — Reserve Bank of India, which sets the risk-weight framework lenders work within and prohibits foreclosure charges on floating-rate retail loans.
- Housing finance company regulation — National Housing Bank.
- Deduction limits and regime rules — Income Tax Department. These change with each Finance Act; confirm the current year before planning.
- Rates and charges — each lender's own published rate card. This page gives a band and what moves you within it, deliberately not named-bank figures, which go stale within weeks.
From Our Blog
Responsible borrowing note
A home loan is a commitment measured in decades, secured on the place you live. Borrow against income you can evidence rather than income you expect, keep total EMIs well within your means, and read the sanction letter in full — including the reset frequency, the conversion clause and any bundled insurance. All rates, fees and figures on this page are indicative market ranges for illustration and are not an offer. Approval, pricing and the sanctioned amount rest entirely with the bank or housing finance company. This content is general information, not financial or tax advice.
About this page
Written by the Money Bharti editorial team. Money Bharti is a loan marketplace working with 100+ RBI-registered banks and NBFCs, registered at 26/4, Third Floor, Khaira Mod, Najafgarh, New Delhi 110043.
Last updated: . Rates, limits and tax rules on this page are reviewed against the RBI, NHB and Income Tax Department sources listed above.
Naveen — if you want a named author and reviewer here for E-E-A-T, send me the person's name, qualification, years of experience and LinkedIn URL and I will put a proper author box in. I have not invented one.