Home Loan Guide 2025-26: Eligibility & Tax Benefits
A home loan (also called housing loan or mortgage) is a secured loan provided by banks and housing finance companies (HFCs) to help you purchase, construct, renovate, or extend residential property in India. The property itself serves as collateral, which is why home loans offer lower interest rates (8.5%-9.5% in 2025) compared to personal loans.
Types:
- Home Purchase Loan
- Home Construction Loan
- Home Improvement Loan
- Balance Transfer Loan
Key Features
- LTV: Up to 90%
- Rate: 8.50% - 9.50%
- Tenure: 5 - 30 Years
- Tax: Save up to ₹3.5L
Home Loan Eligibility (2025)
Understanding eligibility is the first step toward successful loan approval. Here is what major Indian lenders evaluate:
1. Age Requirements
| Bank/HFC | Min Age | Max Age (Maturity) |
|---|---|---|
| SBI, HDFC, ICICI | 21 years | 70 years |
| Axis Bank | 21 years | 70 years |
| PNB Housing | 21 years | 75 years |
2. Income & Credit Score
- Min Salary: ₹25k - ₹40k/mo
- Business Income: ₹2L+ Annual
- Work Exp: 2-3 Years Total
- 750+: Excellent (8.5%)
- 700-749: Good (8.75%)
- <650: High Risk
FOIR Explained
| Lender Type | Max FOIR | Your Take-Home |
|---|---|---|
| Most Banks | 50-55% | 45-50% |
| HFCs | 55-60% | 40-45% |
| Govt Banks | 50% | 50% |
Down Payment Rules
Banks finance only 75-90% of property value. You must pay the rest upfront.
| Property Value | Max LTV (Loan) | Your Payment |
|---|---|---|
| Up to ₹30L | 90% | 10% |
| ₹30L - ₹75L | 80% | 20% |
| Above ₹75L | 75% | 25% |
Fixed vs Floating Rates
Changes with RBI Repo Rate.
- ✅ Lower starting rate (8.5%)
- ✅ Zero prepayment charges
- ❌ EMI fluctuates
Constant for 3-5 years.
- ✅ EMI certainty
- ❌ Higher starting rate (9%+)
- ❌ Prepayment penalties apply
Hidden Charges
| Type | Amount | Negotiable? |
|---|---|---|
| Processing Fee | 0.25% - 1% | Yes ✅ |
| Admin Fee | ₹5k - ₹15k | Maybe ⚠️ |
| Legal/Valuation | ₹3k - ₹10k | No ❌ |
Tax Benefits: Save ₹3.5 Lakh
Principal Repayment
- Max ₹1.5 Lakh/year.
- Includes Stamp Duty.
- Lock-in: 5 Years.
Interest Payment
- Max ₹2 Lakh/year (Self-occupied).
- Unlimited (Let-out property).
- Must complete construction in 5 yrs.
EMI Amortization Reality
First-time buyers are often shocked: Initial EMIs are mostly interest!
| Year | EMI Split |
|---|---|
| Year 1 | 82% Interest / 18% Principal |
| Year 10 | 64% Interest / 36% Principal |
| Year 20 | 1% Interest / 99% Principal |
Common Mistakes
Fix: Follow 30-35% Rule.
Fix: Budget extra 15-20%.
Fix: Check 6mo prior.
Fix: Stick to 15-20 yrs.
Fix: Get 4-5 quotes.
Application Checklist
Phase 1: Pre-Application
- Check Credit Score (Target 750+).
- Calculate Affordability.
- Save Down Payment (20-25%).
Phase 2: Application
- Gather KYC & Income Docs.
- Apply to 3-4 Lenders.
- Property Valuation.
Phase 3: Disbursement
- Sign Agreement & Pay Stamp Duty.
- Buy Insurance.
- Collect Original Deeds (Post-repayment).
Frequently Asked Questions (FAQs)
Final Verdict
With eligibility criteria becoming transparent and tax benefits saving up to ₹3.5 lakh annually, 2025 is an excellent time for first-time buyers.
Fincado Research Team
Fact CheckedOur analysis is built on deep-dive research into RBI Benchmarks and lender-specific disclosures. We verify every interest rate and fee structure against real-world borrower approvals to ensure the highest level of accuracy for Indian home buyers.
Disclaimer: This content is for educational purposes only. Loan terms vary. Always consult your bank or financial advisor.
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