Home Loan

A home loan is a secured loan provided by banks and Housing Finance Companies (HFCs) to buy homes. Lenders provide loans for 75% to 90% of the property's value for the repayment period of 30 to 40 years. On MybankingTips you can compare interest rates and features from top banks and HFCs to find the best home loan for your needs.

Last updated: 24 December, 2024

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Eligibility Criteria For Home Loan

Here’s a simple guide to the key eligibility requirements for Home Loan:

  • Minimum Age: 18 years with some lenders setting the minimum age of 21 years
  • Maximum Age: Usually 70 years at the time of loan maturity with some lenders extending the tenure till 75 years of age
  • Credit Score: Preferably 750 and above
  • Work Experience: At least 2 years (for salaried)
  • Nationality: Indian Residents, Non-Resident Indians (NRIs), and Persons of Indian Origin (PIOs)
  • Minimum Salary: At least Rs. 25,000 per month (varies across lenders & locations)
  • Loan Amount: Up to 90% of property value
  • Business Continuity: At least 3 years (for self-employed)

Documents Needed for a Home Loan

Here’s a simple list of documents needed to apply for a home loan:

Basic Documents (For Everyone)

  • Identity Proof: Aadhaar Card, PAN Card, Passport, Voter ID, Driving License (Any one)
  • Address Proof: Electricity Bill, Water Bill, Telephone Bill, Ration Card, Bank Passbook, Passport (Any one)
  • Age Proof: Birth Certificate, Aadhaar Card, PAN Card, Passport, Driving License, 10th Class Mark-sheet (Any one)

Property Documents

  • Sale deed or allotment letter
  • Approved building plan
  • NOC (No Objection Certificate) from Society or Builder
  • Detailed cost estimate for house construction
  • Latest property tax paid receipt
  • Ownership papers (title deed)

Income Documents

For Salaried People:

  • Latest salary slips
  • Form 16 or Income Tax Returns (ITR) for the last 3 years
  • Bank statements for the last 6 months showing salary deposits
  • Proof of any savings or investments (if any)

For Self-Employed People:

  • Business address proof
  • ITR for the last 3 years
  • Balance sheet and Profit & Loss statement audited by a CA
  • Business license or professional registration certificate

Additional Documents for NRIs (Non-Resident Indians)

Identity and Address Proof:

  • Passport with visa stamps or PIO Card
  • Proof of current overseas address (e.g., utility bill, government ID)

For Salaried NRIs:

  • Recent salary slips or certificate
  • Work permit/employment letter (translated if needed)
  • Bank statements for the last 6 months showing salary deposits
  • Form P60 or employment contract

For Self-Employed NRIs:

  • Last ITR and financial statements
  • Bank account statements for the last 6 months
  • Business license or professional certificate

Property Documents for NRIs:

  • Sale agreement or allotment letter
  • Approved property plans
  • Receipts for any payments made
  • Clearance certificates (like an encumbrance certificate)

Other Important Documents

  • Completed loan application form with 3 passport-size photos
  • Loan account statement (if you have previous loans)
  • Credit report (if available)

Note: Prepare these documents to ensure a smooth home loan application process. The bank may also ask for more documents based on your situation.

Home Loan Processing Fees & Other Charges

The fees and charges for a Housing Loan can vary a lot depending on the lender and the credit profiles of loan applicants. To get an idea of the Home loan fees and charges, check the table below.

Particulars Charges
Processing Fee 1% – 2% of loan amount
Foreclosure/Prepayment Charges For floating rate: Nil
For fixed rate: Around 2% – 4% on the principal outstanding
Overdue Charges on EMI 2% per month of the unpaid EMI
EMI Bounce Charges Around Rs 400
Legal Fee As per Actuals

Tax Benefits on Home Loans

People with Home Loans can enjoy tax benefits under different sections of the Income Tax Act. These benefits help borrowers save a significant amount of money each year. Here are the tax advantages you can receive on your home loan EMI payments:

Section of Income Tax Act Nature of Home Loan Tax Deduction Max. Tax Deductible Amt.
Section 24(b) Interest paid Rs. 2 lakh
Section 80C Principal (including stamp duty and registration fee) Rs. 1.5 lakh

How to Apply for a Home Loan

Applying for a home loan is quick and simple. Just follow the following three easy steps:

  • Step 1: Share Your Details
  • Fill out your personal information and loan requirements, such as the loan amount and repayment tenure.
  • Step 2: Check the Offers
  • Based on your details, you’ll see a list of home loan options. Compare the interest rates, processing fees, and the maximum loan amount offered by each lender.
  • Step 3: Apply for the Loan
  • Pick the home loan offer that works best for you based on your requirements and submit your application.
  • After submitting your application, you’ll get a confirmation with a reference number. Then you will be contacted by a loan expert within 24 hours to guide you through the next steps.
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Types of Home Loan

Home loans come in various forms to suit different needs. Here are the most common types of Home Loans:

Features and Benefits Home Loan

Home loans are the best way to make dreams come true or to fill any financial gap. They are accessible, flexible, and fast to approve!

Here are the key features and benefits of Home loans:

  1. No Collateral Needed
  2. Flexible Usage
  3. Affordable Rates
  4. High Loan Amounts
  5. Flexible Tenure
  6. Top-Up Options
  7. Easy Documentation
  8. Fast Disbursal

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Faqs Home Loan

A home loan is a type of loan provided by a bank or financial institution to help people in buying or building a house. It can be used to purchase a ready home or a house under construction, or you can even construct your own home.

Compare interest rates, processing fees, loan tenure, and the Loan-to-Value (LTV) ratio offered by various lenders to find the best bank for the Home loan and make an informed decision to meet your budget.

Your eligibility for a home loan depends on your credit score, monthly income, age, job security, existing debts and the value of the property. Further, lenders would generally assess your repayment ability before approving your application.

Yes, you can prepay your home loan- either partially or completely. For floating-rate loans, lenders usually do not charge anything for prepayment. The fixed-rate loans typically charge a small fee for prepayment of 2%- 4% on the outstanding amount.

You can get tax deductions on your home loan under:

  • Section 80C: Deduction of up to ₹1.5 lakh on principal repayment.
  • Section 24(b): Deduction of up to ₹2 lakh on interest repayment.

  • Fixed Rate: The rate remains fixed during the whole loan term so that the same EMI is paid throughout the loan tenure.
  • Floating Rate: The rate keeps changing according to market fluctuations; as a result, EMIs may rise or fall.

A co-applicant can be an immediate family member such as a spouse, parent, or adult children. Your co-owners of the property must also be co-applicants.

Pre-EMI is the interest you pay on the loan amount disbursed before the full loan is disbursed. Regular EMIs start after the full loan amount is given by the lender.

No, lenders usually finance up to 75%-90% of the property value. You will need to pay the remaining amount as a down payment.

A credit score of 750 or more is primarily considered ideal to get a home loan at the best interest rates. Lower scores may still qualify, but the interest rates might be higher.

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