What is a Home Loan?

A home loan is a secured loan provided by financial institutions to help individuals purchase, construct, or renovate a residential property. The property itself acts as collateral.

Types of Interest Rates

• Fixed Rate: Interest remains constant throughout the tenure
• Floating Rate: Varies with market rates (linked to repo or MCLR)
• Hybrid: Fixed for initial years, then floating

Eligibility Criteria

• Age: Typically 21 to 65 years
• Income stability (salaried/self-employed)
• Good credit score (750+ recommended)
• Existing debt and EMI obligations

Tax Benefits

• Section 80C: Up to ₹1.5 lakh deduction on principal repayment
• Section 24(b): Up to ₹2 lakh on interest paid annually
• Additional ₹1.5 lakh under Section 80EEA (first-time buyers)

Tax savings subject to property ownership and occupancy conditions.

Loan to Value (LTV) Ratio

Indicates how much of the property value can be financed:

• Up to 90% for properties below ₹30 lakh
• 75-80% for higher property values
• Down payment covers the rest

Processing and Other Charges

• Processing fee: 0.25%–1% of loan amount
• Legal and technical evaluation fees
• Prepayment/foreclosure charges (only on fixed rate loans)

Co-Applicants and Co-Ownership

• Co-applicant improves eligibility and tax benefits
• Common among spouses or close family members
• Joint ownership required to claim individual tax benefits

EMI Planning

• Ideally, EMIs should not exceed 40% of monthly income
• Use home loan EMI calculators to plan affordability
• Opt for step-up EMIs if expecting future income growth