Buying a house is one of the biggest financial decisions in life. And when you are planning to take a home loan, even a small difference in interest rate can affect your monthly EMI and total repayment amount. The good news is that in April 2025, several public sector banks in India have reduced their home loan rates, making it easier for home buyers to get loans at cheaper interest.
After the Reserve Bank of India (RBI) reduced the repo rate by 0.25% for the second time in a row, many banks followed the trend and revised their loan rates. Since most home loans are now linked to the repo rate, a cut in repo rate directly leads to cheaper home loans.
How Repo Rate Impacts Your Home Loan
The repo rate is the interest rate at which RBI lends money to commercial banks. When RBI reduces this rate, banks get money at a cheaper cost. This allows banks to offer loans, including home loans, to the public at lower interest rates.
So, if the repo rate goes down, the interest on home loans also goes down. This is exactly what has happened recently, and now some government banks are offering home loans starting at just 8.10% per annum.
These Banks Are Giving the Cheapest Home Loans in April 2025
If you are planning to take a home loan now, this is a great opportunity. Here are the top government banks offering the lowest home loan rates right now:
| Bank Name | Starting Interest Rate |
| Union Bank of India | 8.10% |
| Central Bank of India | 8.10% |
| Bank of Maharashtra | 8.10% |
| Canara Bank | 8.15% |
| Bank of Baroda | 8.15% |
| Punjab National Bank | 8.15% |
| State Bank of India | 8.25% |
| Punjab & Sind Bank | 8.25% |
| Bank of India | 8.40% |
Among these, Union Bank of India, Central Bank of India, and Bank of Maharashtra are giving the best deals with home loans starting at 8.10% annually. This makes them the top choices for those looking for cheaper home financing options.
Canara Bank, Bank of Baroda, and Punjab National Bank are not far behind, offering loans starting at 8.15%. Meanwhile, big banks like SBI and Punjab & Sind Bank have slightly higher starting rates at 8.25%.
It’s important to note that Bank of India is currently offering home loans at 8.40%, which is a bit higher compared to the other public sector banks.
What Affects Your Home Loan Interest Rate?
Even though these are the banks’ advertised starting rates, the actual interest rate you get will depend on several factors. These include:
1. Your Credit Score
Your credit score, or CIBIL score, plays a big role. If your score is 750 or above, you’re more likely to get a loan at the lowest rate offered. A lower score may result in a higher interest rate or even rejection.
2. Loan Amount
Higher loan amounts can sometimes come with slightly different rates depending on the bank’s internal policies.
3. Loan Tenure
The duration of your home loan (whether 10, 15, or 30 years) also affects the interest rate offered.
4. Income and Job Stability
Banks check your income level, job type (salaried or self-employed), and employment history before finalising the rate and approval.
Points to Remember Before You Take a Home Loan
Taking a home loan is not just about low interest. Here are a few important things to keep in mind before applying:
- Compare multiple banks before selecting. Don’t rush into choosing the first one you see.
- Check for processing fees and hidden charges. A low interest rate may be attractive, but high fees can increase your total cost.
- Make sure the EMI fits your budget. Don’t go for the maximum loan you’re eligible for. Choose what you can comfortably repay every month.
- Go for a loan with a floating rate if you think the interest rates will go further down. But if you expect rates to rise, consider a fixed rate loan.
- Always read the terms and conditions carefully before signing.
