With several public and private sector banks in India slashing home loan interest rates this month, September 2025 emerges as a prime opportunity for property buyers and existing homeowners looking to refinance. Interest rates starting at 7.35% per annum signal not only affordability but also strong competition among lenders to attract high-quality borrowers.
Whether you’re buying your first home, constructing a house, refinancing a high-interest loan, or transferring your existing home loan for better terms, this blog brings you everything you need to know.
Home Loan Interest Rates in September 2025
The tables below provide updated interest rate ranges from major public sector banks, private banks, and housing finance companies (HFCs). Rates are categorized based on loan amount slabs.
Public Sector Banks Home Loan Rate Sep 2025
| Bank | Up to ₹30 Lakh | ₹30–75 Lakh | Above ₹75 Lakh |
| State Bank of India | 7.50% – 8.95% | 7.50% – 8.95% | 7.50% – 8.95% |
| Bank of Baroda | 7.45% – 9.25% | 7.45% – 9.25% | 7.45% – 9.50% |
| Union Bank of India* | 7.35% – 10.00% | 7.35% – 10.00% | 7.35% – 10.00% |
| Punjab National Bank | 7.50% – 9.35% | 7.45% – 9.25% | 7.45% – 9.25% |
| Bank of India | 7.35% – 10.10% | 7.35% – 10.10% | 7.35% – 10.35% |
| Canara Bank** | 7.50% – 10.25% | 7.45% – 10.25% | 7.40% – 10.15% |
| UCO Bank*** | 7.40% – 9.50% | 7.40% – 9.50% | 7.40% – 9.50% |
| Bank of Maharashtra | 7.35% – 10.15% | 7.35% – 10.15% | 7.35% – 10.15% |
| Punjab & Sind Bank | 7.55% – 10.75% | 7.55% – 10.75% | 7.55% – 10.75% |
| Indian Overseas Bank | 7.35% onwards | 7.35% onwards | 7.35% onwards |
| Indian Bank | 7.40% – 9.40% | 7.40% – 9.40% | 7.40% – 9.40% |
| Central Bank of India | 7.35% – 9.40% | 7.35% – 9.40% | 7.35% – 9.40% |
Concessions Available:
- Union Bank: 0.05% concession with insurance bundling
- Canara Bank: Extra discount for CRG and ready-to-move properties
- UCO Bank: Rate benefits for women and takeover borrowers
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Private Sector Banks Home Loan Rate Sep 2025
| Bank | Up to ₹30 Lakh | ₹30–75 Lakh | Above ₹75 Lakh |
| Kotak Mahindra Bank | 7.99% onwards | 7.99% onwards | 7.99% onwards |
| ICICI Bank | 7.70% onwards | 7.70% onwards | 7.70% onwards |
| HDFC Bank | 7.90% onwards | 7.90% onwards | 7.90% onwards |
| Axis Bank | 8.35% – 11.90% | 8.35% – 11.90% | 8.35% – 9.35% |
| HSBC Bank | 7.70% onwards | 7.70% onwards | 7.70% onwards |
| City Union Bank | 8.25% – 9.50% | 8.50% – 10.00% | 8.75% – 10.50% |
Housing Finance Companies (HFCs) Home Loan Rate Sep 2025
| HFC | Up to ₹30 Lakh | ₹30–75 Lakh | Above ₹75 Lakh |
| LIC Housing Finance | 7.50% onwards | 7.50% onwards | 7.50% onwards |
| Bajaj Housing Finance | 7.45% onwards | 7.45% onwards | 7.45% onwards |
| Tata Capital | 7.75% onwards | 7.75% onwards | 7.75% onwards |
| PNB Housing Finance | 8.25% – 11.50% | 8.25% – 11.50% | 8.25% – 10.85% |
Note: The actual rate offered depends on the credit profile, loan tenure, location, and borrower type (salaried/self-employed).
Steps to Apply for a Home Loan
The application process for a home loan in 2025 has become largely digital, especially among top banks. Here’s how you can proceed:
- Check Credit Score: Use CIBIL, Experian, or CRIF High Mark to check your score. Aim for 750+ for the best rates.
- Compare Lenders: Use official websites or aggregators to compare offers, interest rates, and fees.
- Submit Documents: You’ll need:
- Identity & address proof (PAN, Aadhaar)
- Income proof (salary slips, ITRs, Form 16)
- Property documents (title deed, plan approval)
- Bank statements (6 months)
- Identity & address proof (PAN, Aadhaar)
- Submit Application: Apply via the bank’s website or visit the nearest branch with documents.
- Loan Sanction: The bank will assess your profile, credit history, and property value. Upon approval, a sanction letter is issued.
- Disbursement: Once legal and technical checks are completed, funds are disbursed either in stages (for construction) or fully (for ready property).
Home Loan EMI Calculator
Understanding your Equated Monthly Installment (EMI) is crucial for avoiding over-borrowing and planning your finances effectively. You can use an online housing loan EMI calculator to understand how much you can afford.
Let’s look at a real-life scenario to see how it works.
Rahul, a 32-year-old IT professional, plans to buy his first flat in Bengaluru priced at ₹65 lakh. He arranges ₹15 lakh from his savings for the down payment and applies for a home loan of ₹50 lakh.
- Loan Amount: ₹50 lakh
- Interest Rate: 7.35% p.a. (floating)
- Loan Tenure: 20 years
EMI Calculation
- Estimated EMI: ₹39,770 per month
- Total Interest Payable: ₹45.45 lakh
- Total Repayment (Principal + Interest): ₹95.45 lakh
What This Means for Rahul
- Monthly Budget Impact
Rahul’s monthly take-home salary is ₹1.2 lakh. With an EMI of ₹39,770, about 33% of his income will go toward the loan, which is considered safe by lenders. - Interest Burden
Over 20 years, Rahul will pay nearly the same amount in interest (₹45.45 lakh) as his principal (₹50 lakh). If he can prepay even ₹5–10 lakh in the early years, he can save several lakhs in interest. - Tenure Flexibility
- If Rahul chooses a 15-year tenure instead, his EMI rises to ~₹46,000, but his total interest drops by ~₹13 lakh.
- If he extends to 25 years, EMI falls to ~₹36,000, but his interest shoots up to ~₹65 lakh.
- Long-Term Planning
By aligning his EMI with his income growth, Rahul can increase prepayments in future years, close the loan early, and save big on interest.
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Top Mistakes to Avoid When Taking a Home Loan
Borrowers often lose money or face complications due to avoidable errors. Here are the most common mistakes:
- Not Checking Your Credit Score: Loan rejection or higher rates often result from weak scores. Always check and correct discrepancies in advance.
- Ignoring Prepayment or Foreclosure Charges: Some banks impose fees for early repayment—this can offset your savings if refinancing.
- Choosing a Lender Based Only on Interest Rate: Low interest may come with high processing fees, rigid terms, or poor service. Always evaluate the total cost of borrowing.
- Overlooking Loan Reset Terms: Floating-rate loans reset periodically based on RLLR or EBLR benchmarks. Read terms carefully to avoid rate shocks.
- Overstretching Your EMI: Financial advisors recommend keeping EMIs within 40–45% of your net monthly income. Don’t exceed that even if you’re eligible for a higher loan.
Government Schemes & Subsidies Available (PMAY-CLSS)
If you’re a first-time homebuyer, the Indian government offers interest subsidies under the Pradhan Mantri Awas Yojana-Urban (PMAY-U).
PMAY Credit-Linked Subsidy Scheme (CLSS)
| Category | Annual Income | Interest Subsidy | Max Loan Amt (Eligible for Subsidy) | Max Subsidy |
| EWS | Up to ₹3 lakh | 6.5% | ₹6 lakh | ₹2.67 lakh |
| LIG | ₹3 – 6 lakh | 6.5% | ₹6 lakh | ₹2.67 lakh |
| MIG-I | ₹6 – 12 lakh | 4.0% | ₹9 lakh | ₹2.35 lakh |
| MIG-II | ₹12 – 18 lakh | 3.0% | ₹12 lakh | ₹2.30 lakh |
Eligibility Criteria for PM Awas Yojana
- Must not own a pucca house anywhere in India
- First-time homebuyer only
- Aadhaar is mandatory for all adult family members
- Women’s co-ownership is required for EWS/LIG groups
- Loan tenure up to 20 years
Conclusion
With interest rates starting at 7.35%, September 2025 presents one of the best opportunities in recent years to secure a home loan on favorable terms. Whether you’re buying or refinancing, taking the time to understand rates, calculate EMIs, avoid common mistakes, and explore government subsidies can save you several lakhs over your loan tenure. Always compare lenders thoroughly, read the fine print, and seek out hidden charges before making your decision.
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