Table of Contents
Buying a house is a dream for many, and home loans help with fulfilling this dream. In 2025, home loans in India are more competitive than ever, as many banks offer attractive home loan rate of interest to suit different financial needs.
Knowing the latest home loan interest rates of all banks offer, and the factors that affect their rates, can help you with your decisions on home loans. This guide includes the most recent housing loan interest rate from major Indian banks, how to calculate them, the application process, and factors that determine your home loan interest rate.
For more updates check out Paisa Invest.
Home Loan Interest Rates of All Banks in 2025
The following table summarizes the home loan interest rates of all banks offered India in April, 2025. The table includes starting interest rates, processing fees, as well as other information:
| Bank | Starting Interest Rate (p.a.) | Processing Fees |
| Kotak Mahindra Bank | 8.65% p.a. onwards | Salaried: 0.5% Plus taxes; Self-Employed/Commercial: 1.0% Plus taxes |
| Union Bank of India | 8.35% p.a. onwards | 0.50% of the loan amount |
| Bank of Baroda | 8.40% p.a. onwards | No processing fee; discounted upfront fee |
| Central Bank of India | 8.10% p.a. onwards | 0.50% up to Rs.20,000 Plus GST (waived till 31 March 2024) |
| Bank of India | 8.15% p.a. onwards | Nil |
| State Bank of India | 8.00% p.a. onwards | 0.35% of the loan amount plus GST |
| HDFC Home Loans | 8.70% p.a. onwards | Up to 0.50% or Rs.3000 Plus taxes, whichever is higher |
| LIC Housing Finance | 8.25% p.a. onwards | Up to Rs.1 crore: 0.25% of the loan amount, capped at Rs.15,000 plus GST; additional slabs for higher amounts |
| Axis Bank | 8.75% p.a. onwards | Up to 1% or min. Rs.10,000 Plus GST |
| Canara Bank | 8.15% p.a. onwards | 0.50% of the loan amount |
How to Calculate Interest on a Home Loan?
Getting an understanding of the interest rate on your home loan is vital to your financial planning. There are two primary ways to calculate the home loan rate of interest:
Home Loan Interest Rates Calculator – This tool allows inputting of your loan amount, tenure and interest rate to provide a breakdown of your loan, including the total interest payable..
EMI Calculation Formula:
- EMI = [P × r × (1 + r)ⁿ] / [(1 + r)ⁿ – 1]
Where:
- P is the Principal Loan Amount
- r is the monthly interest rate (annual interest rate divided by 12)
- n is the number of monthly installments
How to Calculate the Effective Interest Rate (EIR)?
The effective interest rate EIR includes not only the base rate but also the bank’s markup(this is the actual cost of your home loan).
Formula:
Effective Interest Rate (EIR)=Base Rate + Markup
The EIR is the true cost of borrowing, including any processing fees, and other fees. The other component is the markup the lender added. When comparing EIRs between lenders, you are comparing the overall costs of your loan.
Types of Interest Rates in Home Loan
- Fixed Interest Rate – Remains constant throughout the loan term, ensuring predictability for you.
- Floating Interest Rate – Can increase or decrease based on market conditions, so you may have lower EMIs when the rates fall.
Pros and Cons:
- Fixed Rate: Predictable, but may be higher in the case where floating rates have fallen.
- Floating Rate: May allow for savings, but fluctuates based on the market.
How to Apply for a Home Loan?
- Research and Compare Lenders: Search for lenders that offer the optimum interest rates, processing fees, and repayment options that fit your paying back ability.
- Check Eligibility: The banks set different eligibility conditions according to age, income, employment status and credit history.
- Get Ready With Required Docs: The list of required documents generally includes:
- Proof of identity (Aadhaar, Passport, PAN Card)
- Proof of Address (utility bills, Rent agreement)
- Proof of income (salary slips, Bank statements, ITR forms)
- copy of property docs (Sale agreement, Title Deeds)
- Make Application: Make a full application either online or offline with all the necessary documentation.
- Verification and Permission of Loan: After properly making an application with all necessary documentation, the bank checks the documentation, reviews credit scores and inspects the properties.
- Sanction and Disbursement of Loan: After approval, loan is disbursed either in full or in stages.
Government Schemes for Home Loans
The Pradhan Mantri Awas Yojana (PMAY) is an initiative of the government to provide Interest Subsidy on home loans to eligible buyers, mostly first-time homebuyers and those from Economically Weaker Sections. The Credit Linked Subsidy Scheme (CLSS) also provides borrowers in an urban or rural area financial assistance to buy or build homes with lower interest rates.
If you can take advantage of these schemes, you can reduce your housing loan interest rate and make the repayment easier.
Prepayment and Foreclosure of Home Loans
If you’re able to pay off your loan earlier than expected, this is called prepayment, and it may provide you with substantial interest savings in the long run. Note that some banks may charge you to prepay, especially if it is a fixed-rate loan. In the other sense, foreclosure is the term used to pay off the whole loan before the term ends.
While prepayment and foreclosure may save you interest overall, you need to also examine any penalties and processing charges before you make early repayments.
Step-by-Step Guide to Use a Home Loan Interest Rates Calculator
A Home Loan Interest Rates Calculator is a good tool for demonstrating what your EMIs will look like. You do the following:
- Enter Loan Amount: This is the principal amount you intended to borrow.
- Select Tenure: This is the time you would take to repay that loan, whether years or months.
- Select Interest Rate: This is the applicable interest rate for your selected home loan.
- Calculate: This is when the home loan interest rates calculator will give you the monthly EMI’s and total interest you will be paying.
This is another good tool that can help you decide which home loan bank interest rate offers the best EMI plan for your budget.
Comparing Fixed vs. Floating Home Loan Interest Rates with Real Examples
| Bank | Fixed Interest Rate | Floating Interest Rate |
| SBI | 8.00% | 8.25% |
| HDFC | 8.35% | 8.50% |
| ICICI Bank | 8.40% | 8.60% |
The table above illustrates how the rates will vary. Fixed rates provide certainty whereas floating ones will change with the market price changes so your EMIs will also change as time goes on.
Top 5 Tips to Secure the Lowest Home Loan Interest Rates
- Improve Your Credit Score: Usually a higher credit score also means better home loan rate of interest offers. Aim to maintain your score above 750.
- Opt for a Shorter Loan Tenure: Shorter tenures will often also attract lower interest rates because they reduce the lender’s risk.
- Maintain a Stable Income: Being able to demonstrate consistent and (hopefully) higher income will help you obtain advantageous loan terms.
- Consider a Joint Loan: If you are eligible, applying for a joint loan would be a good idea and it may further reduce your interest rate because the bank sees this as lower risk.
- Negotiate with Your lender: Always ask to see if there is a discount or any promo offers available for first time home buyers or any special rate they may offer.
Impact of RBI Repo Rate Changes on Housing Loan Interest Rates
The RBI (Reserve Bank of India) changes the repo rate from time to time, which leads to changes in home loan rates. When the RBI decreases the repo rate, banks will often decrease the interest rates for housing loans and allow borrowers more benefit accordingly. However, when the RBI increases the repo rate, there is a chance that the home loan interest increases.
Special Offers and Festival Discounts
During festive periods or when a bank has special offers or promotions, many Indian banks advertise the lowest rates for home loans and waive processing fees. It is prudent to watch for offers that allow you to save even more on your home loan.
Home Loan Balance Transfer Benefits
If you are paying interest at a higher rate than the current market rate then you can transfer your loan to another bank with a better home loan rate of interest. This could help you reduce the EMIs and reduce the total repayment amount however, you may want to check if there are any fees or charges for the transfer before you proceed.
Digital Home Loan Process
In 2025, a lot of the home loan process is moving to digital formats as numerous banks are providing online home loan applications, paperless processing and instant loan sanctioning. With the use of AI-based credit assessment tools, banks can determine whether you are eligible to receive a home loan in real time, which makes the process faster and more transparent.
Conclusion
Home loans in 2025 will be offered at competitive interest rates, so it is the right time for homebuyers to arrange their funding for their next dream property. Just like you should know the type of interest, how interest is calculated and what factors may influence certain interest rates, if you understand these components of a loan you will be in a good position to make an informed choice.
You will also want to stay on top of what the current interest rate is and be aware of any government programs. In any case, continuing to compare interest rates and read recent information in financial news will help you get a good deal. Having solid research and planning will help you find your most advantageous home loan solution. Home Loan Interest Rates Calculators will help you even further review the applicable best options available to ensure you get the lowest home loan interest rates of all banks.
For more updates visit Paisa Invest.
FAQs
- What is the current home loan interest rate in India for 2025?
The home loan interest rate varies by bank, beginning at 8.00% p.a. for chief lenders.
- How does my credit score affect my home loan interest rate?
Typically, a higher credit score can lead to the lowest home loan interest rates, as it indicates overall good financial health.
- Is it better to choose a fixed or floating interest rate?
This depends on your risk aversion and expectations from the market. A fixed rate provides a more stable rate, while a floating rate may provide savings if rates in the market drop.
- Can I switch from a fixed to a floating interest rate during the loan period?
Yes, most banks will allow a switch from fixed to floating rate, and may charge a nominal fee as well.
- Are there processing fees for home loans?
Yes, processing fees vary by bank, and can be anywhere from 0.25% to 1% of the loan amount.
- How often do home loan interest rates change?
Home loan rate of interest will change based on the RBI’s guidelines, and also market conditions. Generally, banks revisit rates quarterly.
