The A-to-Z Guide to Getting a Home Loan in India (2025-2026)

Introduction: The Dream of Your Own Home

Hello, and a very warm welcome to Fiknow!

What is the biggest dream for any Indian family? After “Roti” (food) and “Kapda” (clothes), it is “Makaan” (a house).

The feeling of having your own home is special. It is a feeling of safety, pride, and success. It is the place where you will build your family, celebrate festivals, and create memories. The day you do your “Griha Pravesh” puja is one of the happiest days of your life.

But let’s be honest. For 99% of us, a house is the most expensive thing we will ever buy.

Not many people have ₹50 lakhs or ₹1 crore in cash. This is where a Home Loan comes in.

A home loan is not just a loan. It is a partnership with a bank. It is a “good loan” that helps you buy an “asset”—something that grows in value over time.¹

But the process can look very scary. What is CIBIL? What is LTV? What is a “floating” rate? What is EBLR? It sounds like a difficult exam.

This guide will make it simple.

We will be your financial friend. We will walk you through the entire journey, step-by-step. We will explain every difficult word in simple language, like a 5-year-old can understand.

This is your A-to-Z guide. By the end, you will be an expert, ready to get your dream home with confidence.

A Very Important Note (Disclaimer):

We at fiknow.com are here to give you knowledge. This article is for information and education only. It is NOT financial advice. A home loan is a 20 or 30-year promise. It is the biggest financial decision of your life. Please think carefully and read all loan documents from the bank very, very carefully before you sign.

Ready to build your dream? Let’s begin.

**Part 1: A Quick Reality Check (Are You Really Ready?)**

This is the first and most important talk. Before you even look at a house, you must know the real cost.

The #1 mistake people make is thinking: “Price of House = Cost of House”

This is 100% wrong.

The “Cost of House” is the real cost. It includes many “hidden” charges that the builder will not tell you about.

Let’s make a list. If you are buying a house for ₹50 Lakhs:

Stamp Duty: This is a state government tax. It is usually 5% to 7%.
- Cost: ₹2.5 Lakhs to ₹3.5 Lakhs
Registration Fee: The fee to register the house in your name. Usually 1%.
- Cost: ₹50,000
Brokerage (if you use a broker):
- Cost: ₹50,000 to ₹1 Lakh
Interiors, Furniture, & Painting: Your new house will be empty!
- Cost: ₹3 Lakhs to ₹5 Lakhs (minimum)
GST (if it’s a new, under-construction house):
- Cost: 5% (e.g., ₹2.5 Lakhs)

Total “Real” Cost:

₹50 Lakh (House) + ₹3 Lakh (Stamp Duty) + ₹50,000 (Registration) + ₹3 Lakh (Interiors) + ₹2.5 Lakh (GST) = ₹59 Lakhs!

Why is this important?

Because the bank’s loan will only cover the basic house price (the ₹50 Lakhs).

All the other costs (Stamp Duty, Registration, Interiors) you must pay from your own pocket.

This “own pocket” money is called the “Down Payment.”

Part 2: The Down Payment (Your First Big Hurdle)

You now know that you need a lot of money before you even get the loan. This is your down payment.

The bank will never pay 100% of the house price. This is an RBI rule.

The bank will only pay 75% to 90% of the house price. This is called “LTV” (Loan-to-Value).

Let’s break down LTV. It’s simple.

House Price: ₹1 Crore
Bank’s LTV: 80%
Bank’s Loan: The bank will give you a maximum loan of ₹80 Lakhs.
Your Down Payment: You must pay the remaining 20%, which is ₹20 Lakhs.

And remember! You also have to pay for Stamp Duty, Registration, and Interiors from your own pocket.

So, your total “cash in hand” needed is:

₹20 Lakhs (Down Payment) + ₹10 Lakhs (Other costs) = ₹30 Lakhs

The Fiknow.com Rule: Before you start, you must have at least 25% to 30% of the house’s value in your savings account (as cash, FDs, or mutual funds you can sell).

Part 3: The “Money Report Card” (Your CIBIL Score)

This is the single most important thing for a home loan.

What is a CIBIL Score?

Think of it as your “Money Report Card” from school.

It is a 3-digit number from 300 to 900.
This number tells every bank in India how responsible you are with money.
Have you paid your old loans and credit card bills on time? Your score goes up.
Did you miss your EMI payments? Your score goes down.

Why does it matter for a Home Loan?

For a personal loan, the CIBIL score is important. For a home loan, it is EVERYTHING.

This 3-digit number will decide three things:

Will you get the loan? (Yes / No)
How much interest will you pay?
How much loan will you get? (80% LTV or 90%?)

Banks see you in “risk” categories.

Your CIBIL Score	What the Bank Thinks…	Your Interest Rate
780 – 900	“Excellent! This person is the class topper. A ‘Gold’ customer. 100% safe.”	The Best. You will get the lowest interest rate (e.g., 8.5%).
720 – 779	“Good. A responsible person. A safe bet.”	Good. You will get a normal, competitive rate (e.g., 8.7%).
650 – 719	“Average. A bit risky. Sometimes late on payments. We must be careful.”	High. The bank might approve you, but will charge a “penalty” (e.g., 9.5% or 10%).
Below 650	“Poor. High Risk.”	REJECTED. Most good banks will reject your home loan application.

The Interest Rate difference is huge!

On a ₹50 Lakh loan for 20 years:

At 8.5% (Good CIBIL), your total interest paid is ₹55.1 Lakhs.
At 9.5% (Bad CIBIL), your total interest paid is ₹64.2 Lakhs.

A bad CIBIL score will cost you ₹9.1 Lakhs extra!

How to Check Your CIBIL Score for FREE?

You don’t have to guess. By law, you can check your score for free.

Go to the official websites of the four credit bureaus in India:

CIBIL (TransUnion)²
Experian
Equifax
Crif High Mark

What if Your Score is Bad? (How to Fix It)

If you check your score and it’s 650, STOP. Do not apply for the loan.

You will be rejected, and the rejection will lower your score even more!

Instead, take 6-12 months to fix your score. It’s easy.

PAY EVERY SINGLE BILL ON TIME. This is the #1 rule. Pay your credit card bill, your phone bill, your old EMIs. Set reminders. Never be late.
PAY DOWN YOUR CREDIT CARD. If your credit card limit is ₹1,00,000, do not use more than ₹30,000 (30%). If you are using ₹90,000 (90% utilization), your score will be very low.
DO NOT APPLY FOR NEW LOANS. Every time you apply, the bank does a “hard inquiry,” which drops your score.
CHECK FOR MISTAKES. Look at your credit report. Did an old loan company forget to mark your loan as “Closed”? Call them and get it fixed.

Part 4: Understanding Home Loan “Magic Words” (The Glossary)

The bank manager will use many “magic words.” Let’s learn them so you are not confused.

Principal: The actual loan amount the bank gives you (e.g., ₹50 Lakhs).
Tenure: The time you have to pay back the loan. For home loans, this is very long: 15, 20, or even 30 years.
- Pro Tip: Always choose the shortest tenure you can afford. A 15-year loan is much, much cheaper than a 30-year loan.
EMI (Equated Monthly Instalment):
- This is your monthly payment to the bank. “Equated” means it is the same amount every month.
- Your EMI is made of two parts: a small part of the Principal and a big part of the Interest.
LTV (Loan-to-Value):
- We learned this. It’s the percentage of the house’s value the bank will pay (e.g., 80%).
Processing Fee:
- A one-time “file opening” fee. It is usually 0.5% to 1% of your loan amount (e.g., ₹25,000 on a ₹50 Lakh loan).
- Pro Tip: This fee is almost always negotiable. Ask the manager to make it 50% off or zero.
APR (Annual Percentage Rate):
- This is a “pro-tip” word. The bank will advertise an “Interest Rate” of 8.5%.
- But when they add the “Processing Fee,” the real cost of the loan might be 8.65%.
- This real cost is the APR. Always ask: “What is the final APR?”

Part 5: The BIGGEST Question: Fixed vs. Floating Rate?

This is the most confusing question for every home loan borrower. Let’s make it simple.

You are paying interest to the bank. What will that interest rate be?

1. Fixed Rate (The “MRP” Path)

What it is: The interest rate is “fixed” or “locked” for the entire 20 years.
If you take the loan at 9.5%, it will be 9.5% forever.
The Good:
- Peace of mind. You know exactly what your EMI is.
- If the RBI increases interest rates in the future, your rate will not change.
The Bad:
- It is always more expensive. The bank will charge you 1% to 2% higher from the start. (e.g., if the floating rate is 8.5%, the fixed rate will be 10%).
- If the RBI lowers interest rates, your rate will not change. You will be stuck paying a high rate.

2. Floating Rate (The “Market” Path)

What it is: The interest rate is “floating” (it can go up or down). It is linked to the market.
The Good:
- It is always cheaper to start. The bank will offer you a low rate, like 8.5%.
The Bad:
- No peace of mind.
- If the RBI increases interest rates, your EMI will also increase.

How do “Floating” rates work now? (The EBLR System)

This used to be very confusing. But in 2019, the RBI made a new, simple rule.

All new floating rate loans are now linked to an EBLR (External Benchmark Linked Rate).

What it means: The bank links your loan to an “external” rate, like the RBI’s “Repo Rate.”
Example:
- Bank says your loan is: RBI Repo Rate + 2.5%
- If RBI’s Repo Rate is 6.5%, your interest rate is: 6.5% + 2.5% = 9.0%
- If RBI increases the Repo Rate to 6.75%, your rate auto-magically becomes: 6.75% + 2.5% = 9.25%
This is very transparent. The bank cannot cheat you. If the RBI cuts the rate, the bank must cut your rate.

So, which one is better?

99% of all home loans in India today are FLOATING.
Fiknow.com Advice: A Floating Rate loan is almost always the better choice. It is cheaper and more transparent (thanks to the new EBLR system). You just have to be prepared for your EMI to change once a year.

Part 6: The 7-Step Guide to Getting Your Loan (The “A-to-Z” Action Plan)

This is the main “how-to” part. Follow these 7 steps.

Step 1: Finalize Your Budget & Your Down Payment

(We already covered this in Part 1 & 2).
Action:
1. Check your savings. How much cash do you have for the down payment and other costs?
2. Check your CIBIL. Is it 750+?
3. Check your “EMI-paying-power.” How much EMI can you comfortably pay every month? (Rule of thumb: all your EMIs should not be more than 40-50% of your take-home salary).

Step 2: Collect Your “Paper File” (Documents)

Get your “file” ready. This makes you look professional.

KYC (Identity): PAN Card, Aadhaar Card.
KYC (Address): Electricity Bill or Passport.
Photographs: 2-3 passport-size photos.
If you are Salaried (Income Proof):
- Latest 3 months’ Salary Slips.
- Latest 6 months’ Bank Statement (where your salary comes).
- Your Form 16 (from your company) for the last 2 years.
If you are Self-Employed (Income Proof):
- Latest 3 years’ Income Tax Returns (ITR).
- Your business’s Profit & Loss statement and Balance Sheet.
- Latest 12 months’ Business Bank Statement.

Step 3: Go “Loan Shopping” (Compare Banks)

This is a pro-tip. Do not just go to your salary bank.

Action:
1. Go to your salary bank (like SBI or HDFC). Ask them for their “best offer.”
2. Go to a competitor bank (like ICICI or PNB). Tell them, “SBI is offering me 8.6%. Can you do better?”
3. Go to a Housing Finance Company (HFC) like LIC HFL.
4. Compare all the offers. Look at:
  - The Interest Rate (APR).
  - The Processing Fee (and ask for a waiver!).
  - The Pre-payment charges (ask for ZERO).
5. Choose the bank that gives you the best overall deal.

Step 4: Get a “Pre-Approval” or “Sanction Letter”

You give your “Paper File” (Step 2) to the bank you chose.
The bank will check your CIBIL, your salary, and your papers.
If everything is good, they will give you a “Sanction Letter” or an “Approval Letter.”
This letter is your “Golden Ticket.” It is a written promise from the bank that says: “We promise to give Mr. Kumar a loan of ₹80 Lakhs at 8.6% interest.”
This letter is valid for 3-6 months.

Step 5: Find Your Property & Get Legal Checks

Now you have the Sanction Letter. You are a “cash-ready” buyer.
You go to the builder or the seller and finalize your house.
You give the “Property Papers” (the “Sale Agreement” or “Allotment Letter”) to the bank.
This is a key step: The bank will now do its own “due diligence” (a legal check) on the property.
A lawyer from the bank will check the original property papers, the “title deed,” the “7/12 extract,” and make sure the seller really owns the house and the land is clear.
This is a good thing for you! The bank is protecting its money and your money.

Step 6: The “Valuation” Step

The bank will send an “engineer” or “valuer” to your new house.
This person will check the house and decide its real market value.
Why? The bank’s loan (LTV) is based on the lower of:
1. The price you are paying (e.g., ₹1 Crore).
2. The bank’s valuation (e.g., ₹95 Lakhs).
In this case, the bank will only give you 80% of ₹95 Lakhs, not 80% of ₹1 Crore.

Step 7: Sign the Agreement & “Disbursement” (Get the Money!)

The legal check is clear. The valuation is clear. You are approved!
Final Step: You will go to the bank and sign the main “Loan Agreement.” This is a 50-page file. Read the main schedule (Loan amount, EMI, rate) very carefully.
Disbursement: The bank will now “disburse” (release) the loan money.
Important: The bank will NOT give the ₹80 Lakhs to you.
The bank will pay the money directly to the Builder or the Seller.
You will pay your down payment (₹20 Lakhs) to the seller.
The seller has now received the full ₹1 Crore.
You sign the “Sale Deed.” The house is yours! Your EMI will start from the next month.

Part 7: How to Save Money (Special Schemes & Tax Benefits)

Your loan is active. Now, how do you save money?

1. Pradhan Mantri Awas Yojana (PMAY)

What it is: A government scheme for first-time home buyers.
How it works: If your annual family income is below a certain limit (e.g., ₹18 Lakhs), the government will give you a “subsidy” on your interest.
This subsidy (called CLSS) is a lump sum of ₹2.3 Lakhs to ₹2.67 Lakhs.
This money is paid directly to your loan, and your total loan (Principal) is reduced.
Action: Ask your bank, “Am I eligible for the PMAY subsidy?”

2. Tax Benefits (The Best Part!)

The government rewards you for taking a home loan. You can save a lot of income tax every year.
Section 80C: The Principal part of your EMI is a “tax deduction.” You can claim up to ₹1,50,000 per year.
Section 24(b): The Interest part of your EMI is also a “tax deduction.”³ You can claim up to ₹2,00,000 per year.
Total Savings: If you are in the 30% tax bracket, these two sections can save you over ₹1,00,000 in tax every single year.

3. Special Rates for Women

To encourage women to own property, many banks (like SBI) offer a special discount if a woman is the main or co-owner of the house.
The interest rate might be 0.05% lower. It’s a small but respectful benefit.

Part 8: Big Mistakes to Avoid (The “Warning”)

A home loan is a 20-year journey. Avoid these traps.

Mistake 1: Not Reading the “Fine Print”
- The Trap: You are excited and sign the 50-page file without reading.
- The Result: You might be stuck with a “pre-payment penalty” or a bad interest rate.
- The Fix: Read the main “Loan Schedule” page. Check the rate, the fees, and the pre-payment rules.
Mistake 2: Forgetting the “Other” Costs
- The Trap: You use all your savings on the down payment.
- The Result: You have no money left for the Stamp Duty, Registration, or Interiors.
- The Fix: Always follow the “Down Payment + 10%” rule.
Mistake 3: The “Pre-Payment Penalty” Trap
- The Trap: You get a bonus and want to pre-pay ₹2 Lakhs to reduce your loan. The bank charges you a 2% “penalty” (₹4,000).
- The Fix: By RBI rule, all FLOATING rate home loans have ZERO pre-payment penalty. This is another big reason to choose a floating rate.
Mistake 4: Confusing a Home Loan with a Personal Loan
- The Trap: You need money for your wedding, so you take a “top-up” on your home loan.
- The Fix: This is a complex topic. A home loan is a “good loan” (secured, low interest) used to build an asset. It is not a “bad loan” (unsecured, high interest) like a personal loan for a holiday. Even for a big-life event, a personal loan is very different. For example, a https://fiknow.com/marriage-loan-guide-india/ has a much higher interest rate and no tax benefits.
- Pro Tip: A “home loan top-up” is cheaper than a personal loan.⁴ If you need money for renovation or education, a top-up is a smart idea.

Conclusion: The Start of a New Journey

You are now an expert. You know that a home loan is a 20-year partnership.

It looks like a long process, but it is a journey.

Let’s remember the 5 most important steps:

Be Ready: Have your Down Payment (at least 20-25%) saved before you start.
Check Your CIBIL: Your “Money Report Card” is everything. Get it to 750+.
Choose “Floating”: A “Floating” EBLR loan is cheaper and more transparent.
Get “Pre-Approved”: Shop for the loan first, then the house.
Read the Agreement: Check the final rate, fees, and rules before you sign.

Buying a home is a big, emotional, and wonderful decision. By being a smart, informed borrower, you are not just buying a house—you are building a secure future for your family.

Congratulations on your new journey!

Frequently Asked Questions (FAQ) Section

Q1: What is the minimum CIBIL score for a home loan?

A: There is no “official” number. But from our experience, most good banks (like SBI, HDFC) will not approve a loan if your score is below 700-720. For the best interest rates, you need a score of 780 or higher.

Q2: Can I get a 100% loan (zero down payment)?

A: No. By RBI rules, this is not allowed. The maximum loan (LTV) you can get is 90% (for loans up to ₹30 Lakhs). For most loans, expect to get 75% to 80%. You must have a down payment.

Q3: What is “pre-EMI”?

A: This is for “under-construction” houses. If your ₹80 Lakh loan is given in “parts” (e.g., ₹20 Lakhs per year), the bank gives you two choices:

Pre-EMI: You only pay interest on the ₹20 Lakhs.
Full EMI: You start paying the full ₹80 Lakh EMI from Day 1.”Pre-EMI” seems cheaper, but it is a trap. You are only paying interest. Your main ₹20 Lakh loan is not reducing at all. Always try to start the “Full EMI.”

Q4: Can I get a second home loan?

A: Yes. If you have the salary to pay both EMIs, you can get a second, third, or fourth home loan. The tax benefits for the second home are slightly different.

Q5: What is better: a 15-year loan or a 30-year loan?

A: A 15-year loan is always better, if you can afford the EMI.

30-Year Loan: Low EMI, but you pay a huge amount of interest. (You might pay ₹1.5 Crore in interest for a ₹70 Lakh loan).
15-Year Loan: High EMI, but you pay much less interest (and you are debt-free in 15 years!).

Q6: Can I get a tax benefit for a home loan for an under-construction property?

A: Yes, but you can only claim the tax benefit after you get possession of the house. You can claim the “pre-construction interest” in 5 equal parts after you move in.

External Links (For Your Own Research)

We want you to be 100% informed. Please check these official websites.

Reserve Bank of India (RBI) – EBLR Rules:This is the official RBI circular on the new “External Benchmark” (floating) rates.
(https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11697&Mode=0)
Pradhan Mantri Awas Yojana (PMAY) – Urban:The official government portal for the PMAY scheme.
(https://pmay-urban.gov.in/)
TransUnion CIBIL:The official CIBIL website. You can check your score and learn how it is calculated.
(https://www.cibil.com/)
SBI Home Loan (Example):This is an example of a bank’s home loan page. You can see their current interest rates and use their EMI calculator.
(https://sbi.co.in/web/personal-banking/loans/home-loans)