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GuidesPersonal LoansA Guide: All You Need To Know About Getting Home Loans In India: October 2023 Update On Home Loan Rules
LAST EDITED BY PRANAV KARNAD ON APRIL 28, 2025.
Are you planning to buy your dream home in India? Housing loans are a popular option to help you turn your dreams into reality. From buying land and constructing a home to purchasing a flat or renovating an existing home, banks offer a range of home loan options to suit your needs. In this guide, we'll walk you through the different types of home loans available and provide tips on how to apply for a loan. Whether you're a first-time homebuyer or an experienced homeowner, our guide can help answer your questions about home loans in India.
If you want to borrow money for a home, you may not be able to borrow as much and you may have to pay back more each month for some home loans when interest rates go up due to new rules from the Regulatory Authority. Banks will now have to give you the option to switch to a fixed-rate loan when the interest rates change.
In the future, loan sanction letters sent to you will include the charges for changing a loan from a floating to a fixed rate. If interest rates go up a lot, your lender must make sure that your EMI (Equated Monthly Installment) still covers the monthly interest on the loan and that the loan amount doesn't increase after the EMI is paid.
If you are planning to take a personal loan, keep in mind that the Regulatory Authority has required lenders to calculate repayment capacity at a higher than prevailing rate to ensure that you can repay even when interest rates rise.
Most banks currently do not offer fixed-rate loans due to short-term deposits.
If banks are forced to offer a fixed rate, there would be a sufficient mark-up to take care of interest rate risks.
Here's what you need to know about new home loan rules from the regulatory authority:
The regulatory authority said that lenders are required to take into account the repayment capacity of borrowers to ensure that adequate headroom/margin is available for elongation of tenor and/or increase in EMI, in the scenario of a possible increase in the external benchmark rate during the tenor of the loan. They also added that it's necessary to avoid unduly long elongation which sometimes may going forward camouflage the underlying stress in a particular loan. Therefore, the extension of tenure has to be for a reasonable period. It's a commercial decision of the banks.
There are several things you need to know, but here are some crucial points you can use as a guide to home loan eligibility.
Before diving in, try the Fi Money EMI calculator to work out the home loan repayments.
Note: If you already own a piece of land and want to design the house according to your preferences, the cost of the plot is also considered during the approval process. The loan amount is decided based on a rough estimate of the construction cost and can also be taken to complete the construction of an unfinished house.
There's more in this detailed article right here.
Banks' lending rates vary between 6.5% to 12% due to inflation, repo rate changes, and other factors. Borrowers can choose a fixed or floating rate, with the former maintaining a consistent rate throughout the loan tenure and the latter subject to market fluctuations. Some banks offer special privileges, such as a 0.05% interest rate concession, to women borrowers, senior citizens, and bank staff.
Getting a home loan in India can be a challenging task, especially with the changing rules and regulations. However, by following some simple steps, one can make the process easier and smoother. Some of the steps are: choosing the right lender, comparing the interest rates and other charges, checking the eligibility criteria and documents required, applying online or offline, and repaying the loan on time. By doing so, one can get a home loan that suits their needs and budget. Moreover, one can also avail some tax benefits on home loans, such as deductions on interest and principal payments. Therefore, getting a home loan in India can be a rewarding experience if one is well-informed and prepared.
Fi Money, in partnership with multiple lenders provide Instant Loans that arrive directly in your Savings Account. These are pre-approved personal loans made available to select users with good credit scores. On Fi, this process is 100% paperless, and the loans are provided at competitive interest rates starting at less than 1.1% a month. Plus, you can avoid EMI late fees by setting up automatic in-app payments. Our licensed partner bank assigns an eligible loan amount to each user (up to ₹5 lakh).
New rules from the Regulatory Authority require lenders to calculate repayment capacity at a higher rate to ensure borrowers can repay even when interest rates rise. Most banks currently do not offer fixed-rate loans due to short-term deposits. If banks are forced to offer a fixed rate, there would be a sufficient mark-up to take care of interest rate risks. Lenders will also have to tighten norms for loans against property and education loans, which are the other two categories with long tenures.
New rules for home loans come into effect on January 1, 2023, requiring lenders to calculate repayment capacity at a higher rate.
Home loan interest rates in 2023 range from 6.5% to 12%. Borrowers can choose between fixed or floating rates. Some banks offer a 0.05% interest rate concession to women borrowers, senior citizens, and bank staff.
