Home Loan Interest Rates

Home loan interest rates in India currently start from 7.15% p.a. Among banks, rates start from 7.25% p.a. The rate you get depends on your credit score, income, loan amount and the lender's spread over the repo rate.

Usually, public sector banks offer the lowest interest rates to applicants with a stable income and high credit score.

Generally, yes. Most housing finance companies and NBFCs charge higher rates than banks, although some large HFCs offer rates close to those of banks. HFCs may have more flexible eligibility criteria for self-employed borrowers and those with informal income.

A fixed rate stays the same for a set period or the full loan tenure, so your EMI does not change. A floating rate is linked to an external benchmark, usually the RBI repo rate, and changes when the benchmark changes.

For most borrowers, a floating interest rate can be a suitable choice. It is generally 1%–3% lower than a fixed rate and may decrease when the RBI cuts the repo rate. Individual borrowers are also generally protected from prepayment penalties on floating-rate loans. A fixed rate may be better if you want predictable payments and expect interest rates to rise significantly.

Repo-linked home loan rates must be reset at least once every three months. They may change when the RBI revises the repo rate. MCLR-linked loans usually have reset periods of six or twelve months, depending on the lender's terms.

When the RBI raises the repo rate, interest rates on floating home loans go up, and when it cuts the repo rate, they come down. Fixed home loan rates stay the same even when the repo rate changes.

Banks and housing finance companies use your CIBIL score to assess your credit risk and decide the interest rate. A score of 760 or above usually helps you qualify for the lowest advertised rates. Scores between 650 and 760 may lead to an increase in the offered interest rate, while scores below 650 can result in higher rates or rejection of your application.

Yes, lenders usually charge self-employed borrowers a higher rate than salaried borrowers. This is because a self-employed person's income can be less regular, which increases the repayment risk for the lender.

Yes, many banks and housing finance companies offer women borrowers a rate discount of around 0.05% when they are the primary applicant or a co-owner. Some states also offer lower stamp duty rates for women property buyers.