Lowest Home Loan Interest Rates in India – January 2026

Choosing a home loan with the lowest home loan interest rates is one of the most important financial decisions for Indian homebuyers. Even a small difference of 0.25%-0.50% in interest rate can change your total repayment by several lakhs over a 20-25 year tenure.

As of January 2026, home loan interest rates in India are at relatively competitive levels, especially among public sector banks. However, the lowest advertised rate is not always the rate you finally get. Your credit score, income stability, loan size, and property profile play a major role.

This guide explains:

• Which banks are offering the lowest home loan interest rates in 2026
• Why rates differ across lenders
• How interest rates actually work
• How you can realistically get the best possible rate

Home Loan Interest Rates in India – January 2026: Key Highlights

• Home loan interest rates in January 2026 start from 7.35% p.a.
• Public sector banks continue to offer the lowest starting rates
• Final interest rates vary based on credit score, LTV, income type, and risk profile
• Floating-rate loans linked to RBI repo rate benchmarks remain the most common

Lowest Home Loan Interest Rates in India – 2026 (Top Banks)

The following banks are offering the lowest starting home loan interest rates as of January 2026:

Bank Name	Interest Rate (p.a.)*
Central Bank of India	7.35% onwards
Bank of India	7.35% onwards
Bank of Maharashtra	7.35% onwards
Indian Overseas Bank	7.35% onwards
Canara Bank	7.40% onwards
Indian Bank	7.40% onwards
UCO Bank	7.40% onwards
Bank of Baroda	7.45% onwards
Union Bank of India	7.45% onwards
Saraswat Bank	7.50% onwards

Important Note:
These are base rates applicable mainly to borrowers with:

• Credit score 750+
• Stable salaried income
• Lower loan-to-value (LTV) ratio

Your actual rate may be higher depending on your profile.

Home Loan Interest Rate Ranges Across Major Banks 2026

Banks publish rate slabs, not one fixed rate. The higher end of the slab applies to borrowers with higher risk.

Bank	Interest Rate Range (p.a.)	Processing Fee
State Bank of India	7.50% – 10.75%	0.35% (₹2,000-₹10,000)
HDFC Bank	7.90% – 13.20%	Up to 0.50%
ICICI Bank	8.75% – 11.80%	Up to 2%
Axis Bank	8.35% – 11.90%	Up to 1%
Kotak Mahindra Bank	7.99% onwards	Up to 2%
IDFC First Bank	8.85% onwards	Up to 3%

Rates are indicative and subject to lender policies.

Why Home Loan Interest Rates Differ Across Lenders

Home loan interest rates are risk-based, not uniform. Banks assess each borrower individually.

By Lender Type

Lender Category	Typical Rate Range	Key Characteristics
Public Sector Banks	7.35% – 9.50%	Lowest base rates, stricter eligibility
Private Banks	7.80% – 12.00%	Faster processing, wider rate variation
Housing Finance Companies (HFCs)	8.20% – 13%+	Flexible income norms, higher risk pricing

Types of Home Loan Interest Rates in India

1. Floating Interest Rate

• Linked to RBI repo rate via RLLR / EBLR
• EMI changes when RBI policy changes
• Most common and usually cheaper long-term

2. Fixed Interest Rate

• Rate stays constant for a fixed period
• Usually higher than floating rates
• Often includes reset clauses

3. Hybrid Interest Rate

• Fixed rate initially (2-5 years)
• Converts to floating later
• Useful for borrowers planning early prepayment

How Home Loan Interest Rates Impact Your EMI

Even small rate differences matter over long tenures.

Example (20-year loan, ₹40 lakh):

• At 7.50% → EMI ≈ ₹32,300
• At 8.25% → EMI ≈ ₹34,100

Difference:
Over ₹4 lakh extra interest over full tenure.

Factors That Affect Your Home Loan Interest Rate

Banks consider multiple factors before finalising your rate:

• Credit Score: 750+ gets the best pricing
• Income Stability: Salaried borrowers get lower rates
• Loan Amount & LTV: Lower LTV = lower risk
• Property Location: Approved urban projects preferred
• Employment Type: Govt/PSU/private MNC favoured
• Women Borrowers: Some banks offer 0.05% concession

How to Get the Lowest Home Loan Interest Rate in 2026

You can improve your chances by:

• Maintaining a credit score above 750
• Making a higher down payment
• Applying jointly with a female co-applicant
• Comparing repo-linked rates, not just headlines
• Opting for balance transfer if current rate is high
• Checking processing fees and reset clauses carefully

How to Apply for a Home Loan

1. Choose the lender and loan variant
2. Submit application with income & KYC documents
3. Bank checks credit score and eligibility
4. Legal & technical verification of property
5. Loan sanction and agreement signing
6. Processing fee payment
7. Loan disbursement and EMI schedule issuance

How to Calculate Home Loan EMI

EMI Formula

EMI =
$P × r × (1 + r)^n$P×r×(1+r)n ÷ $(1 + r)^n – 1$(1+r)n–1

Where:

• P = Loan amount
• r = Monthly interest rate
• n = Loan tenure in months

Home Loan EMI calculator by LoanNestHub is recommended for accurate planning.

Pros and Limitations of Choosing the Lowest Rate

Advantages

• Lower EMI
• Reduced total interest
• Better long-term affordability

Limitations

• Lowest rates apply only to top credit profiles
• PSU banks may have slower processing
• Processing fees and reset clauses matter

Final Takeaway

Finding the lowest home loan interest rate in India in January 2026 requires more than checking advertisements. Public sector banks currently offer the most competitive starting rates, but your final rate depends on your financial profile.

Focus on:

• Credit score improvement
• Realistic EMI affordability
• Long-term interest impact

A well-chosen home loan can save lakhs over time.