Table of Contents
Quick Summary
- In February 2026, borrowers can choose between competitive home loan offers from banks and NBFCs across India.
- The article explains how even small differences in home loan interest rate can impact long term repayment costs.
- It compares starting rates from major banks and leading housing finance companies.
- Key differences in pricing benchmarks, approval speed, and borrower flexibility are outlined.
- Special benefits available under home loan for women schemes are highlighted.
- Practical tips help borrowers compare lenders beyond just headline interest rates.
- A checklist is included to improve eligibility and secure better loan terms.
For most Indian homebuyers, the home loan interest rate you secure determines how affordable your home will be over the next 20–30 years. Even a difference of 0.25% can significantly change your monthly EMI and the total interest paid over the loan tenure.
As of February 2026, lenders across India, including banks and non-banking financial companies (NBFCs), are offering competitive housing loan products. However, their pricing models, approval processes, and borrower flexibility differ.
This article compares top banks and NBFCs, explains how their rates work, and helps you choose the right lender.
Why Comparing Home Loan Interest Rates Matters in 2026
Interest rates in India are closely influenced by the policy decisions of the Reserve Bank of India. When the repo rate changes, banks usually adjust their lending rates accordingly.
However, the impact is not always uniform across lenders. Below are some key reasons to compare lenders carefully:
- Small rate differences add up: A Rs. 50 lakh loan over 20 years can see savings of several lakhs if the rate is lower by even 0.30%.
- Different pricing structures: Banks link loans to external benchmarks, while NBFCs often use internal benchmarks.
- Eligibility flexibility: Some lenders are stricter with documentation, while others offer flexible underwriting.
Understanding these differences can help you secure a more affordable loan.
Banks vs. NBFCs: Key Differences in Home Loan Pricing
Before comparing rates, it is useful to understand how banks and NBFCs price housing loans.
Banks
Banks generally offer loans linked to external benchmarks such as the repo rate. This means:
- Faster transmission of policy rate changes
- More transparent pricing structure
- Often lower starting home loan interest rate for borrowers with strong credit profiles
However, banks may have stricter documentation requirements.
NBFCs and Housing Finance Companies
NBFCs and housing finance companies usually price loans based on their internal lending benchmarks. Advantages often include:
- Faster approval processes
- Flexible income assessment
- Customised repayment structures
Even if the home loan interest rate is slightly higher initially, many borrowers prefer NBFCs for their faster processing and flexible eligibility.
Top Banks Offering Home Loans in February 2026
Below are some major banks offering competitive housing loans:
| Bank | Starting interest rate (p.a.)* |
| State Bank of India | 7.25% onwards |
| Bank of Baroda | 7.20% onwards |
| Union Bank of India | 7.15% onwards |
* As of February 25, 2026
What Makes Banks Attractive
- Faster rate transmission: Because loans are linked to external benchmarks, reductions in the repo rate may quickly reduce your home loan interest rate.
- Lower spreads for strong profiles: Borrowers with a credit score above 750, stable income, and lower loan-to-value (LTV) ratios often receive the best rates.
- Transparent pricing: External benchmark-linked lending rates (EBLR) make pricing easier to understand.
However, approval timelines can sometimes be longer compared with NBFCs.
Leading NBFCs and Housing Finance Companies
Many borrowers also consider NBFCs and housing finance companies due to their flexible loan structures:
| Lender | Starting interest rate (p.a.)* |
| Bajaj Housing Finance | 7.15% onwards |
| Tata Capital Housing Finance | 7.50% onwards |
| PNB Housing Finance | 7.75% onwards |
* As of February 25, 2026
Why NBFCs Remain Popular
- Flexible eligibility evaluation: Self-employed borrowers, freelancers, and small business owners may find approvals easier.
- Faster processing: Many NBFCs use digital onboarding, reducing approval time.
- Customised repayment options: Some lenders offer step-up EMIs, moratorium periods, or structured repayment plans.
Even if the home loan interest rate begins slightly higher, flexibility often makes NBFCs attractive for complex financial profiles.
Special Benefits: Home Loan for Women Borrowers
Many lenders in India encourage female property ownership by offering concessions on interest rates. A home loan for women often includes:
- Interest rate concessions of 0.05% to 0.10%
- Higher eligibility in some cases
- Reduced stamp duty in certain states
- Better approval prospects for joint loans
Why Lenders Offer Women-Specific Loans
Encouraging property ownership among women promotes financial inclusion and asset creation. As a result, many lenders design products tailored specifically as a home loan for women.
In joint applications where the woman is the primary borrower or co-owner, lenders may offer better terms. This makes a home loan for women a useful option for families planning to purchase property together.
How to Compare Lenders Effectively
Choosing a lender should not depend solely on the advertised home loan interest rate. Consider these factors before applying:
- Benchmark and spread: Learn about the benchmark the loan is linked to and the spread applied over it.
- Processing fees: Compare processing charges, legal and valuation fees, and administrative charges. Remember that lower fees can reduce the initial borrowing cost.
- Prepayment rules: Floating-rate loans usually allow free prepayment, but always confirm the lender’s terms before signing.
- Loan tenure flexibility: Longer tenures reduce EMIs but increase total interest. Choose a tenure that balances affordability and long-term cost.
As quoted by Rajesh Mehta, Mumbai based property consultant,
“Choosing the right home loan interest rate can save families several lakhs over time. I always advise buyers to compare both banks and NBFCs carefully before signing.”
Quick Checklist Before Applying
Before submitting a home loan application:
- Check your credit score and correct any errors.
- Maintain consistent salary or income records.
- Reduce credit card utilisation if possible.
- Save for a higher down payment to improve eligibility.
- Compare lenders rather than choosing the first offer.
If the property is jointly owned by a female borrower, applying for a home loan for women may also help secure a slightly better rate.
Conclusion
In February 2026, borrowers have several competitive options across both banks and NBFCs. Banks often offer faster interest rate transmission and lower starting pricing, while NBFCs provide flexibility and faster approvals.
The right choice depends on your financial profile, property type, and documentation strength. By comparing lenders carefully, understanding the benchmark structure, and evaluating the overall cost (not just the headline home loan interest rate), you can make a smarter borrowing decision and save significantly over the life of your loan.
Also Read: Transform Your Home: How a Home Renovation Loan Can Make It Happen
FAQs – Home Loan Interest Rate
1. What is the average home loan interest rate in February 2026?
Most leading banks and NBFCs are offering housing loans starting from around 7.15 percent to 7.75 percent per annum, depending on borrower profile and credit score.
2. Are banks cheaper than NBFCs for home loans?
Banks often offer lower starting rates, but NBFCs may provide more flexible eligibility and faster approvals. The best option depends on your financial profile.
3. How does credit score affect home loan interest rate?
A credit score above 750 usually helps secure lower interest rates and better loan terms. Lower scores may result in higher pricing.
4. Do women get lower home loan interest rates?
Yes, many lenders offer concessions of 0.05 percent to 0.10 percent under home loan for women schemes.
5. Should I choose a longer tenure to reduce EMI?
A longer tenure lowers your EMI but increases total interest paid. It is important to balance affordability with overall loan cost.
Disclaimer
Interest rates mentioned in this article are indicative as of February 2026 and are subject to change at the discretion of the lender. The applicable home loan interest rate may vary based on the borrower’s credit score, income profile, loan amount, property type, loan tenure, and prevailing market conditions. Readers are advised to check with the respective bank or NBFC for the most updated rates and terms before applying.
Author & Expert Review
Written By: 
Gaurav Mishra | Civil Engineer & Content Writer
| Credentials: B.E. (Mahavir Swami College, Surat), Registered with Bhagwan Mahavir University (BMU). Experience: Civil Engineer with 5+ years of content writing experience, currently writing impactful articles for Gharpedia, part of SDCPL. Expertise: Specializes in writing well-researched content on residential construction, construction materials, design planning, on-site practices, and safety, blending technical accuracy with everyday clarity. Find him on: LinkedIn |
Verified By Expert: 
Vaidehi Desai | Owner – Gharpedia | MBA (Finance), PGDHRM
This article has been reviewed for financial, operational, and content quality accuracy by Vaidehi Desai, Owner and Operations Lead of Gharpedia, a venture of Sthapati Designers & Consultants Pvt. Ltd. With over 10 years of experience in managing an educational and media platform in architecture, construction, and home-building, along with a strong background in finance, business operations, and human resource management, she ensures the content meets organizational standards, factual reliability, and overall quality benchmarks.
Find him on : LinkedIn
