Introduction
Buying a house in India is a major life decision and usually requires reliable home loan financing. Leading financial institutions such as LIC Housing Finance (LIC HFL), Housing Development Finance Corporation (HDFC), PNB Housing Finance, Tata Capital Housing Finance, Bajaj Housing Finance, Aavas Financiers, and Indiabulls Housing Finance offer a wide range of home loan options to meet the diverse needs of homebuyers, thereby promoting inclusive and sustainable housing development across the country.
Today, borrowers have multiple home loan options to fulfil different housing goals—whether it is purchasing a new home, constructing a house, renovating an existing property, or transferring a home loan for better terms. These flexible loan products help individuals manage finances efficiently while working towards long-term homeownership.
In this article, we explore the various types of home loans available in India in 2026, along with their key benefits.
Documents Required for a Home Loan
The documentation for a home loan generally includes:
Identity proof: Aadhaar Card, PAN Card, Passport
Address proof: Electricity bills, Passport, Aadhaar Card
Income proof: Salary slips, bank statements, Income Tax Returns (ITR)
Property documents: Sale deed, property tax receipts
Loan application form along with passport-sized photographs
Additional documents may be required depending on the specific case and lender.
Eligibility Criteria for Taking a Home Loan
Home loan eligibility in 2026 depends on several key factors:
Age of the applicant (usually between 21 and 65 years)
Employment status (salaried or self-employed)
Minimum monthly income
Credit score
Loan-to-Value (LTV) ratio of the property
Before approving a loan, lenders assess the borrower’s repayment capacity based on these parameters.
How Is Home Loan Eligibility Calculated?
Home loan eligibility mainly depends on the borrower’s income and repayment capability. Other important factors include:
Age
Financial stability
Credit history and credit score
Existing financial obligations
All these elements collectively determine the maximum loan amount a person can qualify for.
Formula to Determine Home Loan EMI Amount
Equated Monthly Instalment (EMI) is a fixed amount that borrowers repay every month until the loan tenure ends.
For first-time borrowers, calculating EMI manually can be confusing. A home loan EMI calculator simplifies this process and gives quick and accurate results.
EMI Formula
The formula used to calculate EMI is:
E = [P × R × (1 + R)^N] / [(1 + R)^N – 1]
Where:
E = EMI amount
P = Principal loan amount
R = Monthly interest rate
N = Loan tenure in months
Example
If a borrower takes a home loan of ₹1 crore for 15 years at an interest rate of 12%, the EMI calculated using an online EMI calculator would be approximately ₹1,10,108 per month.
Initially, the interest portion of the EMI is higher and the principal portion is lower. Over time, the interest component decreases while the principal repayment increases.
Illustration: Salary-Based Loan Eligibility
Pratham Kumar works in a reputed company in India. His salary structure is as follows:
| Income Component | Amount (₹) | Deductions | Amount (₹) |
|---|---|---|---|
| Basic Salary | 32,000 | Income Tax | 3,300 |
| HRA | 900 | Provident Fund | 2,200 |
| Conveyance | 10,000 | – | – |
| LTA | 9,000 | – | – |
| Special Allowance | 55,000 | – | – |
| Medical Expenses | 2,000 | – | – |
| Total | 1,08,900 | Net Income | 1,03,400 |
Banks do not consider LTA and medical allowance while calculating loan eligibility, as these are reimbursement-based.
So, revised income =
₹1,03,400 – (₹9,000 + ₹2,000) = ₹92,400
Maximum loan eligibility =
₹92,400 × 60 = ₹55,44,000
Most banks allow EMI up to 40%–50% of net income, which means Pratham can comfortably opt for a home loan EMI of around ₹46,000 per month.
Home Loan Post Budget 2026
With upcoming policy changes, it is an ideal time to reassess your home-buying strategy.
Current Interest Rate Trends
As of 2026, the RBI repo rate stands at 6.25%, directly influencing home loan interest rates. Most banks and NBFCs offer floating rates between 8.4% and 9.5%, linked to the Repo Linked Lending Rate (RLLR).
Loan-to-Value (LTV) generally remains:
80%–90% for properties under ₹75 lakh
Lower for high-value properties
Loan Approval Requirements
CIBIL score of 760+ for best rates
FOIR (Fixed Obligation to Income Ratio) capped at 50%
Processing fees between 0.25%–0.5%
Budget 2026: Expected Changes for Homebuyers
Higher Tax Deduction on Interest
The current Section 24(b) limit of ₹2 lakh may be increased, potentially offering higher tax savings.
PMAY Benefits
PMAY-Urban 2.0 is expected to continue, with enhanced benefits for first-time buyers.
Affordable Housing Redefined
Property price caps may be revised to reflect rising urban prices.
EMI Relief for First-Time Buyers
Interest subvention schemes could lower EMIs in initial years.
Stamp Duty Simplification
Digitization and state-level discounts may reduce transaction costs.
Conclusion
A home loan is not just a financial product—it is a long-term commitment. In the evolving lending environment of 2026, small mistakes can result in significant losses. By maintaining a good credit score, preparing proper documentation, selecting the right property, and comparing lenders, you can make smarter borrowing decisions.
If you are looking for a simple and hassle-free home loan, Indian Shelter offers loan amounts ranging from ₹5 lakh to ₹70 lakh, along with features like customer support and balance transfer options at competitive interest rates.
Making the right home loan choice today can secure your financial future tomorrow.
