A home loan is a loan that is taken from banks to purchase a home. It is a secured type of loan and the money is repaid by paying monthly EMIs. The interest rates on a home loan can be fixed or floating. A fixed rate of interest is fixed throughout the tenure whereas a floating rate of interest changes according to the market conditions.

home loan interest rates in india
Home Loan Interest Rates in India

Home Loan Interest Rates Comparison in India

BankLoan RateProcessing Fee
Allahabad Bank8.85%0.40%
Max Rs. 50,000
Andhra Bank8.60%0.50%
Min Rs. 2,500 - Max Rs. 25,000
Axis Bank8.45%0.50%
Min Rs. 7,500 - Max Rs. 25,000
Bandhan Bank
Bank of Baroda8.85%0.25%
Min Rs. 1,000 - Max Rs. 20,000
Bank of India8.85%Upto 0.25%
Bank of Maharashtra8.50%0.50%
Canara Bank8.75%0.50%
Min Rs. 1,500 - Max Rs. 10,000
Central Bank of India8.60%0.50%
Max Rs. 20,000
City Bank8.50%Nil
Corporation Bank8.80%0.50%
Min Rs. 1,000 - Max Rs. 50,000
DBS9.45%Max Rs. 10,000
DCB Bank10.24%2.00%
Min Rs. 5,000
Dhan Laxmi Bank9.90%1.00%
Min Rs. 10,000
DHFL9.75%0.50%
Min Rs. 2,500 - Max Rs. 20,000
Federal Bank8.75%0.50%
Min Rs. 3,000 - Max Rs. 7,500
HDFC Bank8.40%0.50%
Min Rs. 3,000 - Max Rs. 10,000
HSBC Bank8.85%1.00%
Max Rs. 10,000
ICICI Bank9.05%0.25%
Min Rs. 5,000 - Max Rs. 5,000
IDBI Bank8.75%0.50%
Min Rs. 2,500
IDFC First Bank9.60%Min Rs. 5,000 - Max Rs. 5,000
Indian Bank8.75%0.23%
Max Rs. 20,381
Indian Overseas Bank8.65%0.53%
Min Rs. 8,900 - Max Rs. 13,350
Jammu and Kashmir Bank8.85%0.25%
Min Rs. 500 - Max Rs. 10,000
Karnataka Bank8.90%0.25%
Min Rs. 250
Karur Vysya Bank9.65%Min Rs. 5,000
Kotak8.90%Max Rs. 10,000
PNB8.50%0.50%
Min Rs. 20,000 - Max Rs. 50,000
Punjab and Sind Bank8.85%0.25%
Min Rs. 1,000 - Max Rs. 15,000
RBL10.45%Min Rs. 5,000 - Max Rs. 15,000
Sbi8.05%0.25%
Max Rs. 10,000
South Indian Bank9.45%1.00%
Max Rs. 10,000
Standard Chartered9.41%1.00%
Min Rs. 5,000 - Max Rs. 10,000
UCO Bank8.65%0.50%
Min Rs. 1,500 - Max Rs. 15,000
Union Bank of India8.70%0.50%
Max Rs. 15,000
United Bank of India8.65%0.59%
Min Rs. 1,180 - Max Rs. 11,800
Yes Bank9.85%1.00%
Max Rs. 15,000

Quick Home loan Guide

Due to digitization, loan processing in India has become easy. Generally, the banks have the following procedure.

Step 1: Fill the application form along with the required documents. This is done so as to verify your documents and also to see whether you will be able to pay back the loan amount.

Most of the bank’s representatives for your convenience will visit your home to collect the documents.

Step 2: Banks will require you to pay a processing fee. This fee is charged for the maintenance of your loan account.

Step 3:  Sometimes bank might call you to their branch for face to face discussion.

This is done to collect more information about you.

Step 4: Bank will verify your documents. It might take 1 to 2 days.

Step 5: If the bank finds that all requirements are met, they will sanction the loan. A sanction letter will be sent to the customer. The following details will be checked. 

Step 6: If the loan is approved, an offer letter will be sent stating the loan amount that is approved, the Interest rate on it, type of interest rate, loan tenure, modes of repayment and terms and conditions.

Step 7: An acceptance letter will be signed. This letter has to be signed for the bank’s record.

Step 8: Here all the details regarding the property will be checked by the bank. You have to submit all the property-related documents to the bank

Step 9: After the submission of the property documents, the bank will do a legality check.

The bank’s lawyer will check the documents to make sure that it doesn’t have any illegality in the property.

Step 10: The bank will do a thorough check of the site. They will find out the valuation of the property.

Step 11: After the loan agreement has been signed the loan will be disbursed.

Documents required

Following are the documents that are required for applying for a home loan.

Salaried PersonSelf-Employed ProfessionalSelf-Employed Non-Professional
Identity proof like a voting card or a passport or a driving license or a Pan Card.Identity proof like a voting card or a passport or a driving license or a Pan Card.Identity proof like a voting card or a passport or a driving license or a Pan Card.
Residence proof like a ration card or an electricity Bill or a passportResidence proof like a ration card or an electricity Bill or a passportResidence proof like a ration card or an electricity Bill or a passport
last 6 months of bank statementslast 6 months of bank statementslast 6 months of bank statements
Processing fee chequeProcessing fee chequeProcessing fee cheque
Form 16/Income tax returnsForm 16/Income tax returnsForm 16/Income tax returns
Salary slips of the last 3 monthsProof of business existent 
Proof of business existence

Educational qualification certificate
Business profile

Last 3 years Income tax ReturnsLast 3 years income tax returns

last 3 years CA audited Balance sheet and Profit & Loss account statementLast 3 years CA audited Balance sheet and Profit and Loss account

Factors affecting interest rates

Following are the factors that affect interest rates on home loans.

Credit Score

Interest rates are influenced by credit scores. If the credit score is high then you will be charged low-interest rates.

Loan Amount

You will be charged higher interest rates if you borrow a high loan amount.

Interest Rate Types

Fixed interest rates are fixed for the entire loan tenure. The rate is not affected due to market conditions as compared to the floating rate of interest. Thus to be on a safer side from the loss of future interest income, they charge high-interest rates as compared to the floating rate of interest. 

Job Profile

Interest rate is also influenced by one’s job profile. Generally, Salaried employee will be charged low-interest rates as compared to the self-employed individuals. This is done because a salaried employee has a stable source of income. Moreover, a government employee will be prefered more than salaried employees.

Loan-to-Value ratio

It is the ratio that determines what percentage of the price of a house will be furnished by the banks. The remaining amount has to be paid by you. Generally, Low-interest rate will be charged to you if the ratio is low.

MCLR

The marginal cost of funds based lending rates (MCLR) also affects interest rates. Lower the MCLR rate, lower will be interest charged to you. MCLR depends on the marginal cost of funds, operating cost, negative carry on account of cash reserve ratio (CRR) and tenor premium. Furthermore, the MCLR rate keeps on changing even after the loan has been sanctioned.