Home Loan Interest Rates 2026: Getting the Best Mortgage Deal

Your parents bought their house at 12% interest and thought it was a great deal.

Your friend just got 8.5% and is bragging about it at every dinner.

You're seeing ads for 8.25%. Your bank is offering 8.75%. Online aggregators are screaming "8.15% LOWEST RATE EVER!"

And you're sitting here trying to figure out: What's the real rate I can actually get in 2026?

Here's the thing about home loans—the advertised rate is NEVER the rate you'll get. That "8.15%" has 47 conditions attached. You need 850 CIBIL, 40% down payment, salaried from Fortune 500 company, blood type O positive, and your astrologer's approval.

Real people? Real rates are 8.4-9.2%. And that's okay. But you need to know how to get the best rate YOU can qualify for, not the imaginary rate in the ad.

Let me break down exactly how home loans work in 2026, what rates you can realistically expect, and how to save lakhs of rupees by negotiating properly (yes, you can negotiate—most people don't know this).

Current Home Loan Interest Rates (February 2026)

According to Reserve Bank of India data, National Housing Bank guidelines, and latest bank disclosures as of February 19, 2026, here are the actual rates:

Major Banks (As of February 19, 2026)

ICICI Bank (Lowest Rate Alert!)

• Starting from: 7.45% p.a. (pre-approved customers)
• For whom: Pre-approved online customers, CIBIL 800+
• Actual range: 7.45% - 9.00%
• Processing fee: 0.50% of loan amount + GST (currently waived in promotional campaigns)

SBI (State Bank of India)

• Starting from: 8.25% p.a.
• For whom: CIBIL 750+, salaried, loan < ₹75 lakhs
• Actual range: 8.25% - 9.00%
• Processing fee: 0.35% of loan amount (min ₹2,000, max ₹10,000) + GST - Currently waived!

HDFC Bank

• Starting from: 8.35% p.a.
• For whom: Premium customers, CIBIL 800+
• Actual range: 8.35% - 9.10%
• Processing fee: 0.50% or ₹3,300 (whichever is higher) + GST

Axis Bank

• Starting from: 8.50% p.a.
• Actual range: 8.50% - 9.25%
• Processing fee: Up to 1% of loan amount

Kotak Mahindra Bank

• Starting from: 8.45% p.a.
• Actual range: 8.45% - 9.20%
• Processing fee: ₹10,000 + GST

Housing Finance Companies (HFCs)

LIC Housing Finance

• Starting from: 8.30% p.a.
• Actual range: 8.30% - 9.10%
• Processing fee: Often waived in promotions

HDFC Ltd (HFC, not bank)

• Starting from: 8.35% p.a.
• Actual range: 8.35% - 9.15%

PNB Housing Finance

• Starting from: 8.40% p.a.
• Actual range: 8.40% - 9.20%

Bajaj Housing Finance

• Starting from: 8.50% p.a.
• Actual range: 8.50% - 9.30%

Check our Bajaj Finance stock analysis to understand the NBFC/HFC sector better.

Small Finance Banks & NBFCs

Typically: 9.0% - 10.5%

• Higher rates but easier approval
• Good for: Self-employed, lower CIBIL scores

My Take: Everyone sees "7.45% starting from" and thinks that's what they'll get. Reality? Most people get 8.5-9.0%. The "starting from" rate (like ICICI's 7.45%) is for pre-approved customers with perfect profiles—top 5% of borrowers. The realistic range for good borrowers is 8.25-8.75% in Feb 2026, which is still excellent compared to last year. Know where you actually stand.

Why Home Loan Rates Improved in February 2026

Good news: Rates have dropped 0.20-0.35% from early 2026. Here's what happened:

RBI Kept Repo Rate Unchanged at 5.25%

According to the February 2026 RBI Monetary Policy Committee meeting, the central bank unanimously decided to:

• Hold repo rate at 5.25% (no change from December 2025)
• Maintain neutral stance (not hawkish, not dovish)
• Keep SDF (reverse repo) at 5.00% and MSF at 5.50%

Why this matters: When RBI holds rates steady while maintaining neutral stance, banks interpret this as stability. Combined with benign inflation (around 3.2% in Q4 FY26), banks became more comfortable reducing lending rates to compete for customers.

Improved Inflation Outlook

RBI's projection:

• Q4 FY26 inflation: 3.2% (well below RBI's 4% comfort zone)
• Q1 FY27: 4.0%
• Q2 FY27: 4.2%

Translation: Lower inflation = banks can afford to lend cheaper. Your EMI benefits from macro stability.

GDP Growth Revised Upward

RBI raised FY26 GDP growth projection to 7.4% (from 7.2%). Strong economy + stable inflation = ideal environment for competitive home loan rates.

Bank Competition Intensified

SBI waived processing fees (saving you ₹25,000-50,000 on ₹50L loan). ICICI launched 7.45% pre-approved rates to grab market share. LIC Housing and others followed with 8.30-8.40% rates.

This is rate war territory—and you benefit. Banks are fighting for your business.

PMAY 2.0 Push

Government relaunched Pradhan Mantri Awas Yojana 2.0 in September 2024 with enhanced subsidy:

• ₹2.67 lakh interest subsidy on loans up to ₹12 lakh (urban)
• 4% interest subsidy on first ₹8 lakh for 12 years
• Target: 1 crore urban homes in 5 years

Banks are aggressively pushing affordable housing loans to align with government schemes. If your property qualifies (under ₹45 lakhs, < 60 sq.m.), you get subsidy + low rates—double benefit.

Bottom line: Feb 2026 is genuinely a good time to lock home loan rates. The macro environment (stable repo rate, low inflation, bank competition) won't stay this favorable forever. If you were waiting for "the right time," this might be it.

Factors That Affect YOUR Interest Rate

Advertised rate is not your rate. Here's what actually determines what you pay:

1. CIBIL Score (Credit Score)

800+: Best rates (7.45-8.4%) - Pre-approved territory 750-799: Excellent rates (8.25-8.6%) 700-749: Average rates (8.6-8.9%) 650-699: Higher rates (8.9-9.3%) Below 650: Rejection or 10%+ rates

Check your CIBIL free once a year: CIBIL Official

Quick wins to improve score:

• Pay all credit card bills on time (most important)
• Keep credit utilization < 30%
• Don't apply for multiple loans simultaneously
• Clear any outstanding dues

2. Employment Type

Salaried (MNC/Large company): Best rates

• Stable income = lower risk for bank

Salaried (Small company/startup): +0.15-0.30% higher

Self-employed professional (CA, doctor, lawyer): +0.25-0.40% higher

• Banks verify income more strictly

Self-employed business: +0.40-0.75% higher

• Highest perceived risk
• Need 3 years of ITR (learn about ITR filing deadlines)

My friend is a CA with ₹20 lakh annual income. He got 9.1%. His colleague working at Deloitte with ₹18 lakh income? 8.6%. Same bank, same month. Employment type matters.

3. Loan-to-Value (LTV) Ratio

LTV = Loan Amount / Property Value

LTV < 70%: Best rates (you're putting 30%+ down payment) LTV 70-80%: Standard rates LTV 80-90%: Higher rates (+0.15-0.25%)

Example:

• Property value: ₹80 lakhs
• Loan needed: ₹56 lakhs
• LTV: 70% → Best rate
• Loan needed: ₹72 lakhs
• LTV: 90% → Higher rate

The more you put down, the better rate you get. Banks love low-risk loans.

4. Loan Amount

< ₹35 lakhs (Affordable housing): Lower rates (government subsidy schemes) ₹35-75 lakhs: Standard rates > ₹75 lakhs: May get negotiation leverage (banks want your business)

5. Relationship with Bank

Existing customer with:

• Salary account → -0.05% to -0.10% discount
• Credit card → Negotiation leverage
• Existing deposits/investments → -0.10% to -0.25% discount

New customer: Standard rates

This is where most people miss out. Banks give better rates to existing customers. But you need to ASK. They won't volunteer it.

6. Property Location & Type

Metro city (Mumbai, Delhi, Bangalore): Best rates (high demand, easy resale) Tier-2 city: Standard rates Tier-3/Rural: Higher rates or rejection

Property type:

• Apartment (approved project): Best rates
• Independent house: Standard rates
• Under-construction: Higher rates (more risk)
• Plot/land: Highest rates or rejection

7. Gender (Yes, Really)

Women borrowers: -0.05% concession at many banks

• Government push for women homeownership

Joint application (husband + wife as co-applicant):

• Higher loan eligibility
• Potentially better rate
• Wife should be primary applicant to get women's discount

Fixed vs Floating Rate: Which One?

This is the most confusing decision.

Floating Rate (Most Common)

What it is:

• Interest rate changes with market conditions
• Linked to bank's MCLR (Marginal Cost of Funds based Lending Rate) or repo rate
• When RBI cuts rates, your rate falls (eventually)
• When RBI hikes rates, your rate rises

Current scenario (Feb 2026):

• RBI repo rate: 5.25% (held unchanged in Feb 2026 MPC meeting)
• Stance: Neutral (unanimous decision)
• Expected trend: Stable through H1 2026, possible rate cut in H2 if inflation stays benign

Pros:

• Lower starting rate (8.5-9.0%)
• Benefits if interest rates fall
• Most banks push this (their preference)

Cons:

• EMI can increase if rates rise
• Uncertainty in long-term planning

Fixed Rate (Less Common)

What it is:

• Interest rate locked for specific period (typically 3-5 years)
• After fixed period, converts to floating
• No change regardless of market

Rates (Feb 2026):

• Typically 0.5-1.0% HIGHER than floating
• Current: 8.75-9.25% for fixed (vs 8.25% floating at SBI)

Pros:

• EMI certainty (budget planning easier)
• Protection if rates rise
• Peace of mind

Cons:

• Higher rate initially
• No benefit if rates fall
• Limited banks offer true fixed rates

My Honest Take: Floating vs Fixed

Take floating rate in 2026. Here's why:

1. RBI stance is neutral with dovish tilt According to RBI's latest Feb 2026 monetary policy, rates are likely to remain stable through H1 2026, with possible rate cuts in H2 if inflation stays benign. Inflation is well-controlled (3.2% in Q4 FY26, target 4.0%), growth is strong (7.4% GDP projection).

No rate hike expected in 2026. Possible 0.25% cut in H2 2026.

2. Fixed rate premium is not worth it Paying 0.5-1% extra for "certainty" when rates are unlikely to spike? Bad math.

Example:

• ₹50 lakh loan
• Fixed @ 9.0% vs Floating @ 8.25%
• Extra cost over 20 years: ₹7-8 lakhs

That's too much to pay for insurance against something that probably won't happen.

3. You can always shift later Most banks allow floating-to-fixed conversion (with fee). So you're not locked in.

Exception: If you're super conservative and can't handle EMI uncertainty, fixed might give you peace of mind. But financially, floating makes more sense in Feb 2026—especially with repo rate at 5.25% and stable inflation.

For detailed budget analysis and economic outlook, read our Union Budget 2026 breakdown.

How Home Loan Interest is Actually Calculated

This is where banks make their money and you lose yours if you don't understand.

Reducing Balance Method (Standard)

What it means: Interest calculated on outstanding principal, not original amount.

Example:

• Loan: ₹50 lakhs at 8.75% for 20 years
• Month 1:
  • Principal outstanding: ₹50,00,000
  • Interest for month: (₹50,00,000 × 8.75% / 12) = ₹36,458
  • EMI: ₹44,350
  • Principal repayment: ₹44,350 - ₹36,458 = ₹7,892
• Month 2:
  • Principal outstanding: ₹49,92,108 (reduced by ₹7,892)
  • Interest: ₹36,400
  • Principal repayment: ₹7,950

Key point: In initial years, 80% of EMI goes to interest, only 20% reduces principal.

By Year 10: 50-50 split By Year 15: 30% interest, 70% principal

This is why prepayment in early years saves MASSIVE money. Prepaying ₹1 lakh in Year 2 saves ~₹2-2.5 lakhs in total interest.

Total Interest Over 20 Years

₹50 lakh loan @ 8.5%:

• EMI: ₹43,390/month
• Total EMIs paid: ₹1,04,13,600 (20 years × 12 × ₹43,390)
• Total interest paid: ₹54,13,600

You pay MORE in interest than the loan amount itself.

At 8.25%: Total interest = ₹52,36,000 (saves ₹1.77 lakhs vs 8.5%) At 8.75%: Total interest = ₹56,00,000 (costs ₹1.87 lakhs extra vs 8.5%)

0.25% rate difference = ₹1.8+ lakhs difference over 20 years. This is why negotiating matters. In today's competitive market (Feb 2026), banks are willing to negotiate—don't leave money on the table.

How to Negotiate Better Rate (Most People Don't Do This)

Banks won't volunteer discounts. You need to ask. Here's how:

Step 1: Apply to 3-4 Banks Simultaneously

Don't be loyal to one bank. Apply to:

• Your salary account bank
• 2-3 other major banks
• 1 HFC

Get formal sanction letters from all.

Step 2: Compare & Pit Them Against Each Other

Example conversation:

"SBI is offering me 8.55%. Can you match or beat that?"

Bank will either:

• Match it
• Offer something else (waive processing fee, lower rate by 0.1%)
• Say no (then you know to go with SBI)

I've seen people save 0.2-0.3% this way. On ₹50 lakh, that's ₹3-4 lakhs saved.

Step 3: Negotiate Processing Fee

Standard processing fee: 0.35-1% of loan amount

On ₹50 lakh:

• 0.5% = ₹25,000 + GST
• 1% = ₹50,000 + GST

UPDATE (Feb 2026): Many banks are currently waiving processing fees in competitive campaigns:

• SBI: Processing fee WAIVED (saves you ₹17,500-50,000)
• ICICI: Fee waived for pre-approved customers
• LIC Housing: Promotional waiver on select cases

Negotiation points:

• "SBI is waiving processing fee. Can you match?"
• "Can you reduce it to 0.25%?"
• "I'll transfer my salary account here if you waive the fee."

Success rate in Feb 2026: 75-80% if you ask (banks are desperate for business). 0% if you don't ask.

Step 4: Ask for Rate Reduction After 2-3 Years

Most people don't know this: You can request rate reduction from existing lender.

Process:

1. Check current market rates (if they've fallen)
2. Get quotes from other banks
3. Email your bank: "I've been a good customer, current market rate is 8.5%, I'm at 8.9%. Can you reduce my rate to 8.6%?"

They might:

• Reduce rate by 0.1-0.2% (small, but saves ₹50,000-1,00,000 over loan tenure)
• Refuse (then consider refinancing)

No harm in asking. Worst case: They say no.

Tax Benefits: Don't Miss These

Home loans have the BEST tax benefits in Indian tax code.

Section 24(b): Interest Deduction

Deduction: Up to ₹2 lakh/year on interest paid

Conditions:

• Self-occupied property only (not rented out)
• No limit if rented out (full interest deductible)

Example:

• First year interest: ₹4.3 lakhs
• Deduction: ₹2 lakhs (max limit)
• Tax saved (30% bracket): ₹60,000

That's ₹60,000 in your pocket vs government's pocket.

Section 80C: Principal Deduction

Deduction: Up to ₹1.5 lakh/year on principal repayment

This is PART of overall 80C limit (ELSS, PPF, LIC also share this).

Example:

• Principal repayment: ₹95,000 (first year)
• 80C from ELSS: ₹1,00,000
• Total 80C: ₹1,95,000
• Deduction allowed: ₹1,50,000 (max limit)
• Tax saved (30% bracket): ₹45,000

Read our complete Section 80C guide for all tax-saving options.

Section 80EEA: First-Time Home Buyers

Additional deduction: ₹1.5 lakh on interest (over and above Section 24)

Conditions:

• First-time home buyer
• Property value < ₹45 lakhs
• Loan sanctioned between 2019-2026 (check latest Finance Act for extension)

Total interest deduction: ₹2 lakh (24) + ₹1.5 lakh (80EEA) = ₹3.5 lakhs

Tax saved: ₹1,05,000/year (30% bracket) for initial years

This is HUGE. Take advantage if eligible.

PMAY 2.0 Subsidy (New in 2024-26)

If you're buying affordable housing, you get direct interest subsidy under Pradhan Mantri Awas Yojana 2.0:

Subsidy amount:

• Up to ₹2.67 lakh on home loans for properties < ₹12 lakh (urban)
• 4% interest subsidy on first ₹8 lakh of loan for 12 years

Eligibility:

• First-time home buyer
• Annual household income < ₹18 lakh
• Property size < 60 sq.m. (urban) or 100 sq.m. (rural)
• You/spouse don't own any pucca house in India

Example:

• Property: ₹40 lakhs
• Loan: ₹30 lakhs @ 8.25%
• PMAY subsidy: ₹2.35 lakh (credited upfront, reduces principal)
• Effective loan: ₹27.65 lakhs
• You just saved ₹2.35 lakhs + lower EMI for 20 years

This subsidy STACKS with Section 80C and 80EEA tax benefits. First-time buyers under ₹45 lakh property can save ₹5+ lakhs through tax + subsidy combined.

Total Tax Benefit (First-Time Buyer)

Scenario:

• Loan: ₹40 lakhs @ 8.75%
• First year interest: ₹3.48 lakhs
• First year principal: ₹84,000

Deductions:

• Section 24: ₹2 lakhs
• Section 80EEA: ₹1.48 lakhs
• Section 80C: ₹84,000

Total deduction: ₹4.32 lakhs Tax saved (30% bracket): ₹1,29,600

Your effective interest rate drops to ~6.5% after tax benefits. This is why home loans are smart debt.

EMI Affordability: Don't Overstretch

Banks will approve you for 6x your annual income. That doesn't mean you should take it.

The 40% Rule

Home loan EMI should NOT exceed 40% of monthly take-home.

Example:

• Monthly take-home: ₹1,00,000
• Max EMI you should take: ₹40,000
• Remaining: ₹60,000 for everything else (rent till possession, expenses, SIPs, savings)

Most people take 50-60% EMI burden. Then they become "house poor"—own a house but can't afford to live.

Realistic EMI Calculation

Take-home: ₹80,000/month Max EMI (40% rule): ₹32,000

Loan you can afford:

• EMI ₹32,000 @ 8.75% for 20 years
• Loan amount: ₹36 lakhs

But bank will approve: ₹60+ lakhs (they don't care if you struggle)

Be realistic. Don't overstretch.

Hidden Costs People Forget

Beyond EMI:

• Property tax: ₹5,000-15,000/year
• Maintenance (if apartment): ₹2,000-5,000/month
• Home insurance: ₹5,000-10,000/year
• Repairs/furnishing: ₹2-5 lakhs (one-time)

Add 15-20% to your EMI budget for these costs.

For complete financial planning beyond home loans, check our Emergency Fund guide—you need 6-12 months of expenses before taking ₹50 lakh debt.

Should You Prepay Home Loan or Invest?

The eternal debate.

When to Prepay

Prepay if:

• Interest rate > 9%
• You're risk-averse
• You hate debt psychologically
• Loan tenure < 10 years remaining (significant interest savings)
• You don't have better investment options

Impact of ₹1 lakh prepayment (₹50L loan, 8.75%, Year 2):

• Interest saved: ₹2.1 lakhs
• Tenure reduced: 2.5 years

That's 2.1x return, guaranteed, tax-free.

When to Invest Instead

Invest if:

• Interest rate < 8.5%
• You can earn 12%+ returns (equity, mutual funds)
• Tax benefits still available (early years)
• You have high risk appetite
• Loan tenure > 15 years remaining

Math:

• Home loan interest (after tax benefit): ~6-6.5% effective
• Equity mutual funds expected return: 12-14%
• Net benefit: 5.5-8% by investing

Example:

• Prepay ₹1 lakh: Save ₹2.1 lakhs over 18 years
• Invest ₹1 lakh in equity SIP: Grow to ₹5-6 lakhs in 18 years @ 10-12%
• Quality stocks like NTPC or TCS have delivered 12-15% CAGR historically

Investing wins financially.

But: Requires discipline. Most people spend the money instead of investing.

Check our SIP investment guide to understand long-term wealth creation.

My Take

First 5 years: Invest > Prepay

• Tax benefits are high
• Effective interest is low
• Time to grow wealth

Years 5-15: Mix of both

• Prepay when you get bonus/windfall
• Keep investing via SIPs

Last 5 years: Prepay aggressively

• Interest savings are maximum
• Debt-free before retirement

Goal: Clear home loan by age 50-55, not 60.

Home Loan Mistakes to Avoid

I've seen these ruin people financially:

1. Buying More House Than You Can Afford

"Bank approved ₹80 lakhs, so let's buy ₹90 lakh house (with ₹10L savings)."

Result: EMI eats 65% of salary. No savings. Living paycheck to paycheck.

Correct approach: Buy house at 3-4x annual income, not 6-8x.

2. Taking Loan for Full Tenure (30 Years)

30-year loan at 8.75%?

You'll pay 2.5x the loan amount in total interest.

Better: Take 15-20 years. EMI is higher but total interest is 40% lower.

3. Ignoring CIBIL Score Before Applying

Applied with CIBIL 680. Got rejected. Now 3 rejections on record, score drops further.

Fix CIBIL first (6 months), then apply.

4. Not Shopping Around

"I bank with HDFC, so I'll take HDFC home loan."

You left ₹2-3 lakhs on the table. Always compare 3-4 banks.

5. Buying Under-Construction Without Research

Builder delays by 3 years. You're paying rent + EMI + mental torture.

Buy ready-to-move or from reputed builders only (Lodha, Godrej, DLF, Prestige). Always verify RERA registration before booking under-construction property.

6. Taking Top-Up Loan for Consumption

Home loan at 8.5% paid off, you take top-up at 9.5% for car/vacation.

Bad idea. Home loan is for home. Don't convert cheap debt to expensive consumption.

7. Not Reading Fine Print

"Prepayment allowed after 6 months" (you thought no restrictions).

Prepayment penalty: 2% of principal.

Read loan agreement. All of it. Yes, boring. Do it anyway.

Frequently Asked Questions

Can I get home loan without income proof?

Difficult. Banks need salary slips (salaried) or 3 years IT returns (self-employed). Some NBFCs may consider 6-12 months bank statements showing regular deposits, but rates will be 10-12% (vs 8.5% for documented income). If you're salaried but at small company, ask employer for salary certificate on letterhead - some banks accept this. Self-employed without ITR filing? Consider getting compliant first, then apply for better rates.

What if I lose my job during loan tenure?

Inform bank immediately - don't wait. Some banks offer EMI moratorium (3-6 months payment pause, interest still accrues). Use emergency fund (should have 12+ months expenses before taking ₹50 lakh debt). If extended unemployment, options: (1) Rent out property, use rent for EMI, (2) Partial prepayment from savings to reduce EMI, (3) Sell property before default (last resort). Read our job layoff survival guide for managing EMIs during unemployment.

Should I take joint loan with spouse?

Yes, if it helps eligibility or reduces rate. Benefits: Combined income = higher loan amount (both salaries considered), Wife as primary applicant = 0.05% women's discount at most banks, Both get tax benefits (₹2L interest + ₹1.5L principal each = ₹7L total vs ₹3.5L single). Downside: Both credit scores affected if default. Ideal for couples with stable dual income.

Fixed or floating for 2026?

Floating. RBI held repo rate at 5.25% in Feb 2026 with neutral stance, unlikely to spike in 2026 (inflation benign at 3.2%). Fixed rates are 0.5-0.75% higher (8.75-9.0% vs 8.25% floating) = extra ₹3-4 lakh over 20 years on ₹50L loan. Not worth paying premium for "certainty" when rate hikes unlikely—if anything, there might be a rate CUT in H2 2026 if inflation stays low, and floating rate will benefit. Exception: If you're extremely risk-averse and cannot handle EMI uncertainty, fixed gives peace of mind (financial cost but psychological benefit).

Can I switch banks mid-loan (refinance)?

Yes, called "Balance Transfer" or "Loan Refinancing." Do it if: New bank offers 0.5%+ lower rate (saves ₹2-3L over tenure), Tenure remaining > 10 years (meaningful savings), Switching costs (processing 0.5%, legal ₹15-25k, stamp duty ₹5-10k) are less than interest savings. Process takes 30-45 days. Most effective in first 5-7 years of loan when interest component is highest.

How much down payment do I actually need?

Banks finance 75-90% (LTV ratio). So for ₹50 lakh property: ₹5-12.5 lakh down payment (10-25% of value) + ₹2-3 lakh registration/stamp duty/legal fees. Keep 20-25% of property value ready as total upfront cash. Higher down payment (30%+) gets you better interest rate. Never take 90% LTV - if property value falls 10%, you're underwater (owe more than house worth).

Can NRIs get home loans in India?

Yes! NRIs can get home loans from most Indian banks (SBI, HDFC, ICICI, Axis) at rates typically 0.25-0.50% higher than resident Indians (8.75-9.25% vs 8.5%). Requirements: Valid passport + visa/work permit, NRE/NRO account in India, Income proof from abroad (salary slips, tax returns), Indian co-applicant optional but helps get better rate. LTV up to 80%, tenure up to 30 years. Some banks require 6 months India visit during loan processing.

What happens if property prices fall after taking loan?

Your loan obligation doesn't change - you still owe full amount regardless of property value. Example: Bought ₹80L house with ₹60L loan. If property value falls to ₹65L, you owe ₹60L on ₹65L asset = barely any equity. This is why down payment matters. If you put 30% down (₹24L), property can fall 25% and you still have equity. Never take 90% LTV in uncertain markets - 2008 USA housing crisis saw people abandon homes when underwater. India hasn't seen this yet, but risk exists.

Can NRIs get home loans in India?

Yes! NRIs can get home loans from most Indian banks at rates typically 0.25-0.50% higher than resident Indians. You'll need:

• Valid passport + visa/work permit
• NRE/NRO account in India
• Income proof from abroad
• Indian co-applicant (optional but helps)

Major NRI home loan providers: SBI, HDFC, ICICI, Axis Bank. Loan tenure up to 30 years, LTV up to 80%.

What happens if property prices fall after taking loan?

Your loan obligation doesn't change—you still owe the full amount regardless of property value. This is why down payment matters. If prices fall 20% but you put 30% down, you still have equity. Never take 90% LTV loans in uncertain markets.

My Honest Take: Should You Take Home Loan in 2026?

Taking a home loan is not just financial. It's emotional, psychological, and social.

Financially: At 8.5-8.75% (post-tax effective 6-6.5%), home loans are among the cheapest debts available. If you can invest the saved capital at 10-12%, you come out ahead.

Psychologically: Debt is stressful. 20 years of EMI commitment is heavy. Some people sleep better owning a smaller house debt-free than bigger house on EMI.

Socially: In India, renting is seen as "wasting money." Home ownership is life goal #3 (after marriage and kids). This pressure makes people buy when they shouldn't.

My rule:

• Under 30: Rent. Build career. Don't lock yourself to one city for 20 years.
• 30-35: If settled in career + city, consider buying. But don't overstretch.
• 35+: Buy if financially ready. But 40% EMI rule still applies.

Real estate in India is NOT a great investment anymore. 5-7% appreciation is typical. Stock market does 12-14%. Even gold has historically given better returns than residential real estate. Buy home for living, not for returns.

Bottom line: If you're financially ready (stable income, emergency fund, 20% down payment), home loan at 8.5% is reasonable. But don't buy ₹1 crore house when ₹60 lakh is sufficient.

For broader financial context, read our Union Budget 2026 analysis to understand how government policy affects real estate and home loans.

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Disclaimer: This article is for educational purposes only and should not be construed as financial, investment, legal, or tax advice. Home loan interest rates vary by lender, borrower profile, and market conditions. Rates mentioned are indicative as of February 2026 and subject to change. Tax benefits depend on individual tax situations and applicable laws. Loan approval, terms, and conditions are at the sole discretion of lenders. Please consult with a certified financial advisor, tax consultant, and legal expert before making any home loan or property purchase decisions. The author and publisher are not responsible for any financial decisions made based on this information.

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Sources:

• Reserve Bank of India - Policy Rates
• RBI Monetary Policy February 2026
• National Housing Bank - Housing Finance
• Ministry of Housing & Urban Affairs - Government of India
• PMAY Urban 2.0 - Pradhan Mantri Awas Yojana
• Home Loan Interest Rates February 2026 - PaisaBazaar
• Current Home Loan Rates - BankBazaar
• RERA India - Real Estate Regulatory Authority
• SBI Home Loans
• HDFC Bank Home Loans
• ICICI Bank Home Loan Interest Rates
• Income Tax Department - India
• CIBIL - Credit Information Report