Buying a home is one of the biggest financial decisions you will ever make. Whether you are a first-time buyer or looking to upgrade, understanding Home Loan Rates in 2025 is critical to making an informed choice. The question that matters most is: should you take a home loan from a bank or an NBFC (Non-Banking Financial Company)?
This comprehensive guide will help you compare the Best Home Loan Interest Rates 2025, understand the key differences in Bank vs NBFC Home Loan offerings, and discover the Lowest Home Loan Rate in India. We will also cover eligibility criteria, processing fees, prepayment charges, and much more to help you save lakhs of rupees over your loan tenure.
With CreditCares as your financial partner, you don’t have to analyze the market alone. This guide offers a deep dive into Home Loan Rates in 2025, comparing the pros and cons of Bank vs NBFC Home Loan options. We will explore how CreditCares optimizes your profile to meet eligibility criteria, minimize processing fees, and secure the Best Home Loan Interest Rates 2025, ultimately saving you lakhs over the life of your loan.
What Are Home Loan Rates in 2025?
Home loan rates refer to the interest charged by lenders on the principal amount borrowed for purchasing or constructing a residential property. In 2025, home loan interest rates in India start as low as 7.35% per annum, depending on the lender, loan amount, and borrower profile.
The Reserve Bank of India’s monetary policy and the current Repo Rate Linked Home Loan 2025 structure directly influence these rates. As of now, the RBI repo rate stands at 6.50%, which has a cascading effect on both bank and NBFC lending rates.
Understanding how these rates work is the first step toward choosing the right lender for your home loan journey. For more details on RBI’s latest monetary policies, visit the Reserve Bank of India official website.
Why Home Loan Interest Rates Matter
Even a small difference of 0.25% to 0.50% in interest rates can result in significant savings over a 20 or 30-year loan tenure. For instance, on a loan amount of ₹50 lakhs over 20 years, a difference of just 0.5% can save you nearly ₹3 to ₹4 lakhs in total interest paid.
This is why comparing Home Loan Interest Rate Comparison 2025 across multiple lenders is essential. You need to evaluate not just the interest rate but also other factors like processing fees, prepayment penalties, and customer service quality.
Bank vs NBFC Home Loan: What’s the Difference?
When it comes to home loans, borrowers have two primary options: banks and NBFCs. While both offer similar products, there are distinct differences in their approach, eligibility criteria, and interest rates.
Banks
Banks are financial institutions regulated by the Reserve Bank of India under the Banking Regulation Act, 1949. They offer a wide range of financial loan services including savings accounts, fixed deposits, and loans.
Some of the top banks offering home loans in 2025 include State Bank of India, Bank of Baroda, Central Bank of India, and Union Bank of India. Banks typically have stricter eligibility norms, lower Loan to Value ratios, and longer processing times.
However, they are perceived as safer and more stable, especially for salaried professionals with good credit scores. For a detailed understanding of banking regulations, check out the Banking Regulation Act information.
NBFCs
NBFCs, or Non-Banking Financial Companies, are regulated by the RBI under the Reserve Bank of India Act, 1934. They provide credit and loan facilities but do not hold a banking license.
Popular NBFCs and Housing Finance Companies offering home loans include Bajaj Housing Finance, LIC Housing Finance, Tata Capital Housing Finance, and PNB Housing Finance. NBFCs are known for faster approvals, flexible eligibility criteria, and higher Loan to Value ratios, making them ideal for self-employed professionals or individuals with lower CIBIL scores.
To learn more about NBFCs and their regulatory framework, visit Investopedia’s guide on NBFCs.
Which Bank Offers the Lowest Home Loan Interest Rate in 2025?
As of early 2025, the Lowest Home Loan Rate in India is being offered by select public sector banks. Here’s a verified comparison based on official lender websites:
Public Sector Banks:
- Central Bank of India: Starting at 7.35% per annum (for women borrowers under Cent Grih Lakshmi scheme; standard rates start at 7.65%)
- Bank of Baroda: Starting at 7.45% per annum
- State Bank of India Home Loan: Starting at 7.50% per annum
- Union Bank of India: Starting at 8.60% per annum
These rates are applicable for home loans with varying Loan to Value ratios and are subject to the borrower’s credit profile, employment type, and loan tenure. The lowest advertised rates typically require a CIBIL score of 750 or above.
Important Note: Central Bank of India offers the competitive 7.35% rate specifically for women borrowers. For other applicants, standard rates begin around 7.65% to 8.50%. Always verify current rates on official bank websites or consult with CreditCares for personalized assistance.
For official SBI home loan rates, visit SBI’s official website. For Bank of Baroda rates, check Bank of Baroda’s retail loans page.
NBFC Home Loan Rates: Are They Competitive?
NBFCs and Housing Finance Companies have emerged as strong competitors to traditional banks, especially for self-employed individuals and those with unconventional income sources. Here are verified NBFC and HFC rates for 2025:
Housing Finance Companies:
- Bajaj Housing Finance: Starting at 7.45% per annum
- LIC Housing Finance: Starting at 7.50% per annum (for CIBIL scores ≥ 800)
- Tata Capital Housing Finance: Starting at 7.75% per annum
- PNB Housing Finance: Starting at 8.25% per annum (for CIBIL scores ≥ 825, loans up to ₹35 lakh)
While some NBFC rates are comparable or even competitive with banks (like Bajaj Housing Finance at 7.45%), they compensate with faster processing, minimal documentation, and higher approval rates for self-employed or freelance professionals. To understand more about housing finance companies, read this article from Economic Times Housing Finance.
For Bajaj Housing Finance rates, visit Bajaj Finserv Housing Finance. For LIC Housing Finance, check LIC HFL official website.
Verified Interest Rate Comparison 2025
Here’s a comprehensive comparison of verified rates from official sources:
| Institution |
Category |
Starting Rate |
Special Conditions |
| Central Bank of India |
Bank |
7.35% |
Women borrowers only |
| Bank of Baroda |
Bank |
7.45% |
Linked to BRLLR |
| Bajaj Housing Finance |
HFC |
7.45% |
Strong credit profile |
| State Bank of India |
Bank |
7.50% |
High CIBIL scores |
| LIC Housing Finance |
HFC |
7.50% |
CIBIL ≥ 800 |
| Tata Capital Housing Finance |
HFC |
7.75% |
Standard offering |
| PNB Housing Finance |
HFC |
8.25% |
CIBIL ≥ 825 |
| Union Bank of India |
Bank |
8.60% |
Standard rate |
Note: Rates are subject to change based on RBI policy decisions and individual lender updates. Always verify with official sources before applying.
Is It Safe to Take a Home Loan from an NBFC?
This is one of the most frequently asked questions by borrowers. The short answer is: yes, it is safe, provided the NBFC is registered with the RBI and has a strong track record.
NBFCs are required to maintain capital adequacy ratios, comply with lending norms, and undergo regular audits. Companies like Bajaj Housing Finance, LIC Housing Finance, and Tata Capital Housing Finance have excellent credit ratings and millions of satisfied customers.
However, before finalizing your loan, always check the lender’s RBI registration status, customer reviews, and complaint history. You can verify NBFC registration on the RBI’s official portal. Learn more about NBFC regulations from RBI.
Floating vs Fixed Interest Rate: Which One Should You Choose?
Another critical decision is choosing between a floating or fixed interest rate structure.
Floating Interest Rate
Floating Home Loan Rates are linked to an external benchmark such as the RBI repo rate or MCLR (Marginal Cost of Funds Based Lending Rate). When the repo rate changes, your EMI also adjusts accordingly.
Floating rates are ideal if you expect interest rates to decline in the near future. They offer transparency and are typically 0.5% to 1% lower than fixed rates. For understanding MCLR better, visit this detailed guide on MCLR.
Fixed Interest Rate
Fixed interest rates remain constant throughout the loan tenure, providing stability and predictability in EMI payments. However, they are usually higher than floating rates and may not benefit you if market rates drop.
For borrowers seeking stability and ease of financial planning, fixed rates are a safer bet. Learn more about home loan EMI calculation.
Home Loan for Self-Employed: What Are Your Options?
Self-employed professionals, freelancers, and business owners often face challenges in securing home loans due to irregular income proof. However, both banks and NBFCs now offer specialized products for this segment.
Eligibility Criteria for Self-Employed
NBFCs are more lenient compared to banks when it comes to Home Loan for Self-Employed individuals. Lenders like Bajaj Housing Finance and LIC Housing Finance offer loans based on cash flow analysis rather than just ITR.
For more details on self-employed loan eligibility, check out CIBIL’s official guide. Also read our guide on business loan eligibility in India.
CIBIL Score for Home Loan: How Much Do You Need?
Your CIBIL score plays a crucial role in determining your home loan eligibility and interest rate. A higher score not only increases your chances of approval but also helps you negotiate better rates.
CIBIL Score Ranges
- 750 and above: Excellent – Eligible for lowest rates and best offers
- 700 to 749: Good – Eligible with moderate rates
- 650 to 699: Fair – May require co-applicant or higher down payment
- Below 650: Poor – Difficult to get approval; may need to improve score first
Many lenders now offer their best rates only to borrowers with CIBIL scores of 800 or above (like LIC Housing Finance) or 825+ (like PNB Housing Finance). If you have a Home loan for low CIBIL score requirement, consider applying through NBFCs or opt for a joint home loan with a co-applicant who has a better credit profile.
You can check your free CIBIL score at CIBIL official website or learn how to check credit score for free.
Will Home Loan Interest Rates Decrease in 2025?
This depends largely on the Reserve Bank of India’s monetary policy decisions. As inflation stabilizes and economic growth remains steady, there is a possibility of a rate cut in the second half of 2025.
However, predicting exact rate movements is challenging. If you are waiting for rates to drop further, consider locking in a Repo Rate Linked Home Loan 2025, which automatically adjusts when the RBI changes the repo rate. This ensures you benefit from any future rate cuts without needing to refinance.
Stay updated with RBI’s policy announcements on their official monetary policy page.
Home Loan Balance Transfer Offers: Should You Switch?
If you have an existing home loan at a higher interest rate, you can consider a Home Loan Balance Transfer to a lender offering lower rates. This can significantly reduce your EMI or loan tenure.
Benefits of Balance Transfer
Things to Consider
- Processing Fee Waiver availability
- Pre-payment Charges on existing loan
- Overall cost-benefit analysis
Many lenders, including Bajaj Housing Finance and Bank of Baroda, offer attractive balance transfer schemes with minimal processing fees. Use an EMI calculator to compare your savings before switching.
Loan to Value (LTV) Ratio: What Does It Mean?
The Loan to Value ratio determines how much loan amount you can get against the property value. In India, the RBI has set the following LTV limits:
- Up to ₹30 lakhs: 90% LTV
- ₹30 lakhs to ₹75 lakhs: 80% LTV
- Above ₹75 lakhs: 75% LTV
For example, if the property cost is ₹50 lakhs, you can get a maximum loan of ₹40 lakhs (80% LTV), and you must arrange ₹10 lakhs as a down payment.
Learn more about property valuation for loans.
Processing Fee Waiver and Other Charges
Most lenders charge a processing fee ranging from 0.25% to 1% of the loan amount. However, during festive seasons or special campaigns, banks and NBFCs offer Processing Fee Waiver schemes.
Other Charges to Watch Out For
Always read the loan agreement carefully and clarify all charges upfront to avoid surprises later. Check our guide on hidden costs of loans.
Home Loan for Salaried vs Self-Employed: Key Differences
| Parameter |
Salaried |
Self-Employed |
| Income Proof |
Salary slips, Form 16 |
ITR, P&L statement |
| Approval Time |
7-10 days |
10-15 days |
| Interest Rates |
Lower |
Slightly higher |
| Loan to Value |
Up to 90% |
Up to 80% |
| Lender Preference |
Banks |
NBFCs |
Understanding these differences helps you approach the right lender and prepare the necessary documents in advance.
Top Lenders for Home Loans in 2025
Here’s a quick overview of the top lenders offering competitive home loan products:
Public Sector Banks
Housing Finance Companies
- Bajaj Housing Finance (7.45%)
- LIC Housing Finance (7.50%)
- Tata Capital Housing Finance (7.75%)
- PNB Housing Finance (8.25%)
Each lender has unique benefits, so compare multiple options before making a decision. For detailed reviews, visit BankBazaar or Paisabazaar.
How CreditCares Can Help You Get the Best Home Loan
At CreditCares, we simplify the home loan process by offering:
Whether you are looking for a Home Loan for Self-Employed, need advice on Bank vs NBFC Home Loan, or want to explore Home Loan Balance Transfer Offers, our expert team is here to guide you every step of the way.
Interested in becoming a loan partner? Explore our DSA program and join India’s trusted loan consultancy network.
Frequently Asked Questions (FAQs)
Which bank offers the lowest home loan interest rate in 2025?
Central Bank of India offers the lowest rate starting at 7.35% per annum specifically for women borrowers under the Cent Grih Lakshmi scheme. For other borrowers, Bank of Baroda and Bajaj Housing Finance offer competitive rates starting at 7.45%, while State Bank of India offers 7.50% for applicants with a good CIBIL score for home loan.
Is it safe to take a home loan from an NBFC?
Yes, it is safe to take a home loan from RBI-registered NBFCs and Housing Finance Companies like Bajaj Housing Finance, LIC Housing Finance, and Tata Capital Housing Finance. Always verify their credentials and RBI registration before proceeding. Read more about NBFC vs Bank loans.
Will home loan interest rates decrease in 2025?
While it’s difficult to predict with certainty, experts believe there may be a rate cut in the second half of 2025 if inflation remains under control and the RBI reduces the repo rate. Stay updated with our latest loan updates.
What is the difference between Bank and NBFC home loan?
Banks have stricter eligibility norms and sometimes lower rates, while NBFCs offer faster approvals, flexible criteria, and cater better to self-employed individuals and those with lower credit scores. However, some NBFCs like Bajaj Housing Finance now offer rates as competitive as banks at 7.45%.
What CIBIL score is needed for a home loan?
A CIBIL score of 750 and above is ideal for securing the Best Home Loan Interest Rates 2025. However, many lenders now require scores of 800 or even 825+ for their lowest advertised rates. Scores between 700-749 are also acceptable, but may result in slightly higher rates. Learn how to improve your CIBIL score.
Can I get a home loan for low CIBIL score?
Yes, some NBFCs and cooperative banks offer home loans to individuals with lower CIBIL scores, usually with a co-applicant, higher down payment, or collateral.
Conclusion: Make the Right Choice in 2025
Choosing between a bank and an NBFC for your home loan depends on your financial profile, income type, and urgency. While banks like Central Bank of India, Bank of Baroda, and State Bank of India offer competitive interest rates and stability, Housing Finance Companies like Bajaj Housing Finance, LIC Housing Finance, and Tata Capital Housing Finance provide flexibility and faster processing.
The landscape has evolved where NBFCs are now offering rates as competitive as banks. Bajaj Housing Finance at 7.45% matches Bank of Baroda’s rate, making the choice less about the rate alone and more about service quality, approval speed, and eligibility criteria.
Compare the Lowest Home Loan Rate in India, evaluate Processing Fee Waiver options, understand Pre-payment Charges, and make an informed decision that saves you money over the long term.
Ready to find the perfect home loan? Contact CreditCares today and let our experts help you secure the best deal tailored to your needs. Visit our blog section for more financial insights and guides.
Disclaimer: Interest rates mentioned are based on official verification as of the document date and are subject to change based on lender policies and RBI guidelines. Rates are indicative and may vary based on individual credit profiles, loan amounts, and tenure. Please verify current rates with respective lenders before applying.
