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Home Loan Interest Rates July 2025

By Mayashree Acharya

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Updated on: Jul 2nd, 2025

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7 min read

Home loan interest rates is an essential factor to check before going for a home loan. However, different banks have different home loan interest rates. Additionally, interest rates constantly change due to market fluctuations and RBI policies. 

This guide will help you compare the latest home loan interest rates for July 2025 and the processing fees charged by various banks helping you choose the best option that fits your financial needs.

Home Loan Interest Rates for All Banks 2025:

Name of the Bank

Interest Rate*

Processing Fee

Bank of Baroda7.50% to 9.20% p.a. ₹5,000 onwards (Depends on the loan amount and variant)
ICICI Bank8.50% to 11.80% p.a.Up to 2% of the loan amount
HDFC Bank8.15% to 9.60% p.a.Up to 0.50% of the loan amount or ₹3,300, whichever is higher
Axis Bank8.75% to 12.55% p.a.Up to 1.00% of the loan amount or ₹10,000 (whichever is higher)
Punjab National Bank7.50% to 11.20% p.a.0.35% of the loan amount (minimum ₹2,500 and maximum ₹15,000) 
State Bank of India7.50% p.a. to 10.50% p.a.0.35% of the loan amount (minimum ₹2,000 and maximum ₹10,000)
Kotak Mahindra Bank8.20% p.a. onwards2% of the loan amount
Union Bank of India7.35% p.a. to 12.65% p.a.0.50% of the loan amount (maximum ₹15,000)
Central Bank of India7.35% p.a. to 9.40% p.a.0.50% of the loan amount (maximum ₹20,000)
Bank of India7.45% p.a. to 12.20% p.a.0.25% to 0.50% of the loan amount
Yes Bank9.00% p.a. to 11.50% p.a.1.5% of the loan amount or ₹10,000, whichever is higher 
IDBI Bank7.75% p.a. to 12.25% p.a.0.50% of the loan amount
HSBC Bank8.25% p.a to 13.25%1% of the loan amount or ₹10,000, whichever is higher
IDFC First Bank8.85% p.a. onwardsUp to 3% of the loan amount
Punjab & Sind Bank7.55% p.a. to 10.75% p.a.0.15% to 0.25% of the loan amount (minimum ₹1,000 and maximum ₹15,000)
Canara Bank7.40% p.a. to 10.25% p.a.0.50% of the loan amount (minimum ₹1,500 and maximum ₹10,000) 
Indian Bank7.40% p.a. to 9.40% p.a.Minimum ₹1,500 and maximum ₹15,000 (Depends on the loan amount and variant)
IndusInd Bank8.25% p.a. to 10.13% p.a.Up to 1.00% of the loan amount 
UCO Bank7.50% p.a. to 9.50% p.a.0.50% of the loan amount (minimum ₹1,500 and maximum ₹15,000)
Indian Overseas Bank7.35% p.a. to 8.85% p.a.Get in touch with the bank branch
Bank of Maharashtra7.35% p.a. to 9.90% p.a.0.25% of the loan amount
Bandhan Bank8.41% p.a. to 12.58% p.a.Up to 1% of the loan amount
Karur Vysya Bank8.45% p.a. to 11.40% p.a.Minimum ₹2,500 to maximum ₹7,500
Saraswat Bank7.50% p.a. to 8.90% p.a.Minimum ₹2,500 to maximum ₹7,500
Jammu and Kashmir Bank8.75% p.a. to 9.85% p.a.0.25% of the loan amount (Minimum ₹2,000 to maximum ₹50,000)
South Indian Bank8.30% p.a. to 10.60% p.a.0.50% of the loan amount (Minimum ₹10,000)
Federal Bank9.15% p.a. onwards0.50% of the loan amount (Minimum ₹3,000 to maximum ₹7,500)
Karnataka Bank8.60% p.a. to 11.45% p.a.Get in touch with the bank branch
Dhanlaxmi Bank9.35% p.a. to 10.50% p.a.1.00% of the loan amount (Maximum ₹10,000)
Tamilnad Mercantile Bank 8.15% p.a. to 9.50% p.a.0.50% of the loan amount

*Interest rates are as of 2 July 2025

Highlights of Home Loan Interest Rates for 2025

Home Loan Amount 

Up to 90% of property cost

Lowest Home Loan Interest Rate

7.35% p.a. (Bank of Maharashtra, Central Bank of India, Indian Overseas Bank, Union Bank of India)

Highest Home Loan Interest Rate

13.25% p.a.(HSBC Bank)

Lowest Processing Fees

0.15% of the loan amount (Punjab & Sind Bank)

Highest Processing Fees

Up to 3% of the loan amount (IDFC First Bank)

Home Loan Interest Rates for Women 

A concession of 0.05% is given to women

Loan Tenure

Up to 30 years

How to Calculate Home Loan Interest Rate?

You can calculate your current home loan interest rates by following any of the below methods:

Manual Calculation Using EMI Formula

Banks and financial institutions use a standard formula to determine your home loan EMI:

[P X r X {(1+r)^n}] / [{(1+r)^n} - 1]

Where:

  • P = Loan amount/Principal
  • r = Interest rate
  • n = Loan tenure

This formula can help you manually calculate your EMIs, but it requires consideration.

EMI Calculator for Quick Estimation

You can use an online home loan interest rate calculator on most bank websites for a hassle-free approach by providing the following information:

  • Interest rate
  • Loan amount
  • Repayment tenure

The calculator instantly provides your monthly EMI, total interest payable, and overall repayment amount, making it easier to plan your finances.

How to Calculate the Effective Interest Rate?

Your home loan interest rate comprises two key elements: the base rate and the markup rate. Together, these determine the final interest rate you will pay on your loan.

Base Rate

The bank’s standard lending rate applies to all retail loans. It fluctuates based on various economic factors and regulatory changes.

Markup Rate

A small percentage is added to the base rate to calculate the Effective Interest Rate (EIR) for specific types of home loans. The markup varies depending on the loan type.

Effective Interest Rate (EIR) = Base Rate + Markup

In April 2016, the Reserve Bank of India (RBI) introduced the Marginal Cost of Funds-based Lending Rate (MCLR) to replace the base rate system. This method ensures banks set interest rates more transparently by considering factors like the repo rate, deposit rates, and borrowing risks. The MCLR-based rates are generally lower than the previous base rate system, making home loans more affordable.

Types of Interest Rates in Home Loan

When applying for a home loan, you can choose between two types of home loan interest rates in India. Understanding how each interest rate works will help you make an informed decision.

Fixed Interest Rate

With a fixed interest rate, the loan's interest remains unchanged throughout the tenure. This makes it easier to calculate your total repayment amount and plan your finances accordingly.

Opting for a fixed rate is beneficial when interest rates rise in the future. However, if the market trends indicate a drop in interest rates, a fixed rate might not be the best choice, as you will not benefit from potential reductions.

Floating Interest Rate

Unlike fixed rates, floating interest rates fluctuate based on the market. The benchmark rates set by housing finance lenders are based on the RBI's repo rate. Your EMIs may increase or decrease depending on these changes.

Choosing a floating rate can be a great option when interest rates are expected to decline. However, the market is highly unpredictable, and you might face the risk of rising interest rates, leading to higher repayment amounts over time.

How to Apply for a Home Loan?

Here is a step-by-step guide to applying for a home loan:

Step 1: Submit the Home Loan Application

Visit the bank where you want to avail a home loan and obtain the home loan application form. Fill in the following details on the application form:

  • Your personal information, such as your name, contact details, current residential address, etc.
  • Educational qualifications
  • Your monthly income
  • Employment history (current and previous)
  • Details of the property you wish to purchase
  • Estimated property cost
  • Method to finance the home

You must make sure all details are accurate to avoid delays or rejection.

Step 2: Verification and Processing

Once you submit the home loan application with the required documents, the bank will process your request. They will review your credit score and, depending on your credit history, assess your eligibility. Any inaccurate or false information can result in the rejection of your application. 

Step 3: Legal and Technical Assessment

Before disbursing the loan, the bank conducts legal and technical evaluations of the property.

  • If the property is under construction, they will check the progress and quality of construction.
  • They will assess its condition, age, and maintenance history if it is a resale property.
  • The bank will also verify ownership details and check if the property has any existing mortgage or disputes.

Step 4: Loan Sanction

After the verification of application and submitted documents, the bank will sanction the loan. The process can last up to two days. An in-person meeting may be required so the bank can assess your financial capabilities before approving the loan. 

Step 5: Pay the Processing Fee

After completing all verifications, you must pay the home loan processing fee. This fee helps cover administrative costs and varies between 0.15% to 3% of the loan amount.

For example, if you apply for a ₹30 lakh loan:

  • At 0.15%, the fee will be ₹4,500
  • At 3%, the fee will be ₹90,000

Step 6: Loan Disbursement

Once you meet the bank's requirements, they will issue a formal agreement letter. After signing the agreement, your loan amount will be credited to your bank account. You will also receive an email with a detailed EMI schedule outlining your repayment plan.

Factors Affecting Your Home Loan Interest Rate

Lenders evaluate multiple factors when applying for a home loan to determine your eligibility and applicable interest rate. Understanding these factors can help you improve your chances of securing a loan at a lower rate.

Credit Score

Your credit score reflects your financial discipline and repayment history. Lenders prefer applicants with a score of 750 or above, as it signals responsible credit behaviour, including timely EMI and bill payments and lower credit usage.

A higher credit score can help you secure better interest rates, while a low or nonexistent score may lead to higher rates or loan rejection. If you have a low credit score, using a secured credit card can help you rebuild it over time.

Interest Rate Type

Your choice of interest rate impacts your repayment costs. Fixed-rate loans have fixed EMIs but usually come at a higher price. Floating rates fluctuate with the market, potentially lowering costs but carrying the risk of rising EMIs. Choose based on your financial stability and risk preference. 

Income and Employment Stability

Lenders will evaluate your income level, employment stability, and employer's reputation to determine your capacity to repay a loan. Those who work in PSUs, government offices, and established private companies are usually provided with lower interest rates because their income is stable. Those with an irregular income or self-employed individuals tend to be scrutinized more strictly and charged higher interest rates.

Loan Amount

The amount you borrow directly impacts the interest rate. Loans up to ₹30 lakh usually have lower interest rates than higher loan amounts. A larger down payment can reduce your loan requirement, lowering your overall interest burden.

Loan-to-Value (LTV) Ratio

LTV represents the percentage of a property’s market value that a lender is willing to finance. A higher LTV means a bigger loan, increasing the lender’s risk and leading to a higher interest rate. To secure a lower rate, consider making a larger down payment and reducing the loan amount.

Property Location and Condition

Your property's location, age, and amenities influence its resale value. A well-maintained home in a prime area has better resale potential, making lenders more likely to offer lower interest rates. Older properties or those in less desirable locations may attract higher rates.

Repayment Tenure

The length of your loan term affects both EMIs and interest rates. A shorter tenure means higher EMIs but lower total interest costs, while a longer tenure reduces monthly payments but increases overall interest costs. Lenders often charge higher rates for extended repayment periods due to increased risk.

Understanding the home loan interest rate is crucial before applying for a loan. Knowing the factors that impact your interest rate can help you decide whether you opt for a fixed or floating rate. With the help of our EMI calculator can also simplify financial planning, giving you a precise estimate of your monthly debt obligations. Check the additional charges and the lender's reputation before applying for a home loan. 

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Frequently Asked Questions

What is the home loan interest rate for women?

Women applicants usually have a concession of up to 0.50% among different banks in India. The loan amounts start from 2 lakhs up to 10 crores. They will also have a better chance at eligibility, and tax benefits. 

What is the minimum home loan interest rate?

The lowest home loan interest rate offered by banks as of 2025 is 7.35% p.a. 

What is the interest rate on home loans?

The interest rates on home loans vary from bank to bank, depending on various factors such as credit score, loan amount, income, etc. However, currently, banks are offering home loans at an interest rate starting from 7.35% p.a. to 13.25%.

What is the current interest rate for home loans?

Currently, banks are offering home loans at an interest rate starting from 7.35% p.a. to 13.25% p.a.

Which bank has the lowest interest rate on home loans?

The Union Bank of India, Bank of Maharashtra, Central Bank of India and Indian Overseas Bank offer the lowest interest rate on home loans, at 7.35% p.a.

How to reduce home loan interest rate?

Here are the tips to reduce home loan interest rates:

  • Improve your credit score
  • Research and compare lenders
  • Negotiate with your lender
  • Switch to a better lender
  • Maintain a stable income and employment record
  • Add a woman as the primary applicant
  • Switch to a floating interest rate
  • Monitor market trends for interest rate changes
How to get lowest home loan rates in India?

You can get the lowest home loan rates by keeping your credit utilisation ratio low, not opening many credit accounts and not applying for too many loans simultaneously. Also, track your credit score and take measures to maintain a good credit score (750+) to lower your interest rate. 

How is home loan risk weightage linked to the LTV Ratio?

The risk weightage is the amount of capital that banks must set aside for a loan. A higher Loan-to-Value (LTV) ratio indicates a riskier loan, resulting in a higher risk weight. Therefore, the risk weight of a home loan is directly linked to its LTV ratio.

Can I switch from a fixed rate of interest to a floating rate and are there any associated charges?

Yes, you can switch from a fixed to a floating interest rate. However, banks typically charge a switch/ conversion fee on the outstanding loan amount, ranging from 0.25% to 2%, depending on their terms and conditions.

How can I check the total interest payout for my housing loan?

You can use Cleartax Home Loan EMI Calculator, and you will find out the total interest you need to pay after inputting your loan amount, loan tenure and the interest rate determined by the bank. 

How is the processing fee for a home loan determined?

The processing fee for different banks ranges from 0.15% to 3% of the loan amount.

What are the primary factors affecting my home loan interest rate?

Here are the primary factors that affect your home loan interest rates:

  • Credit score
  • Income and employment
  • Loan amount
  • Interest rate concession for women borrowers
  • Type of interest rate
How often will the interest rates on my home loan, based on EBLR, change throughout the tenure?

The change in the interest rates of your home loan based on EBLR depends on the external benchmark interest rates used by the bank and its reset schedule. Banks are usually required to reset their EBLR-linked interest rates at least once every three months.

Can the component of the credit risk premium of my home loan rate of interest change during the loan tenure?

The component of the credit risk premium of your loan interest rate can change during the tenure of your loan, as your creditworthiness changes. Your change in income, credit score or employment status can influence your creditworthiness.these adjustments are allowed under the guidelines of EBLR rates.

About the Author
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Mayashree Acharya

Senior Content Writer
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I am an advocate by profession and have a keen interest in writing. I write articles in various categories, from legal, business, personal finance, and investments to government schemes. I put words in a simplified manner and write easy-to-understand articles. Read more

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