Lowest Home Loan Interest Rate In India 2025

Looking for the lowest home loan interest rate in India? Choosing the right lender can significantly reduce your overall repayment burden. In 2025, several banks are offering competitive rates based on your credit score, loan amount, and profile. 

Whether you're searching for the best home loan interest rates, want to know which bank has the lowest interest rate on home loan, or are comparing home loan lowest interest rate banks, this guide will help you make an informed decision.

Top 10 Banks Offering Lowest Home Loan Interest Rates in 2025 

Here are the top 10 banks offering cheapest home loan interest rates in India:

Interest rates are subject to change based on applicant profile, loan amount, and lender policies. You must check the official bank website for the most updated rates. 

Types of Home Loan Interest Rates

There are three main types of home loan interest rates in India:

Fixed Interest Rate

• Remains constant for a specific period (typically 2–10 years). 
• In 2025, most banks offer fixed-rate options with shorter lock-in periods and reset clauses.

Floating Interest Rate

• Varies with market trends and is linked to the RBI’s Repo Rate through RLLR (Repo Linked Lending Rate). 
• If RBI lowers the repo rate, your interest rate may reduce.

Hybrid Interest Rate

• Begins with a fixed rate (usually for 2–5 years) and then transitions to a floating rate. 
• Ideal if you plan to prepay early and want initial EMI stability.

How to Calculate Home Loan Interest?

Home loans are essentially extended over a longer period of time, which requires a clear understanding of the total interest liability from the outset. To find out, use one of the following methods:

Manual EMI Calculation Formula

To estimate how much interest you’ll pay, you can use the following formula: 
EMI = [P × r × (1 + r)^n] ÷ [(1 + r)^n – 1]
Where:

P = Principal amount

r = Monthly interest rate (annual rate ÷ 12 ÷ 100)

n = Loan tenure in months

For example: 
For ₹40 lakh at 8.25% for 20 years:

r = 8.25 ÷ 12 ÷ 100 = 0.006875

n = 240

EMI Calculator

Prospective borrowers can use ClearTax Home Loan EMI Calculator by entering basic details like home loan amount, loan repayment period and interest rate. After entering these details, click ‘Calculate’ to get a comprehensive breakdown defining the amount to be paid as interest and principal.

Factors Affecting Home Loan Interest Rates

Here are some factors that significantly impact your home loan interest rates. Hence, you need to check them out before applying for a loan: 

Credit Score

A numerical reflection of your credit history, a credit score (750 and above from CIBIL and other bureaus) signifies responsible credit behaviour, increasing home loan favourability. Lenders and financial institutions use credit scores to determine home loan interest rates, often offering lower rates to those with higher scores.

Income and Employment

Lenders assess home loan eligibility by considering income, type of employment and employer profile. Individuals employed by the government, PSUs or reputed private sector organisations are preferred due to higher job and income security, leading to lower home loan interest rates. Conversely, irregular or insufficient income can result in higher interest rates or difficulty securing a loan.

Type of Housing Loan

Different types of home loans attract different interest rates. Regular home loans have standard rates, while any special type of loans may have higher interest rates.

Loan Amount

The required amount of the loan affects the interest rates of the housing loan. Loans up to Rs.30 lakh usually have lower rates, and making a substantial down payment can further reduce the interest burden, resulting in a lower interest rate.

Interest Rate Type

The chosen type of interest rate (fixed or floating) affects repayment. Fixed-rate loans maintain a constant EMI throughout, while floating-rate loan EMI fluctuates depending on factors such as the repo rate. Fixed-rate home loans often have higher interest rates due to increased interest rate risk.

Concession on Interest Rate for Women

Some lenders offer female borrowers a 0.05% interest rate relief. Couples can improve eligibility and enjoy tax benefits by opting for a joint home loan with the spouse as the primary applicant.

Property Location

The location of your property greatly affects the interest rate on your home loan. Homes in desirable neighbourhoods with sufficient amenities tend to attract lower interest rates, while properties in less desirable areas can command higher rates. Lenders favour homes with good resale value, which impacts the interest rates assigned.

MCLR Rates

MCLR rates, or marginal cost of funds lending rates, are the minimum interest rates banks can offer a loan at. These rates, determined by factors such as operating costs, CRR and tenure premium, are not fixed and may change. Banks usually conduct an annual review on a designated reset date to assess the current home loan interest rate and adjust as needed.

How to Get the Lowest Interest Rate on Home Loan?

Interest rates on home loans depend on a lot of factors. Hence, you can follow these given tips to get the lowest home loan interest rate in India: 

• Maintain a credit score of 750 or higher
• Compare real-time rates using fintech marketplaces or aggregator portals
• Opt for a joint home loan with a female co-applicant to get concessions
• Make a higher down payment to reduce LTV ratio
• Consider a home loan balance transfer if your current rate is higher
• Check eligibility for special schemes offered to salaried professionals or first-time buyers

Note: Be sure to check for processing fees or foreclosure charges before opting for a home loan balance transfer.

Final Word

Finding the lowest home loan interest rate in India requires careful comparison of offers from various banks. Factors like credit score, income, and property location can impact the final rate offered. If you’re wondering which bank has the lowest interest rate on home loan, public sector banks like Union Bank and Bank of Maharashtra currently lead the chart in 2025. To secure the best home loan interest rates, maintain a strong credit profile and explore joint loan options or balance transfers where beneficial.

Banks Offering Home Loan and there Interest rates:
Home Loan Interest Rate
Yes Bank Home Loan Interest Rate
Punjab Bank Home Loan Interest Rate
ICICI Bank Home Loan Interest Rate
HDFC Bank Home Loan Interest Rate
Union Bank of India Home Loan Interest Rate
Central Bank of India Home Loan Interest Rate