In this article
Home loans are not hard to understand. What makes them feel hard is that the information is scattered and every bank says something slightly different.
This guide covers the basics — so you can walk into a bank and ask the right questions.
1. Eligibility — what the bank looks at
- Your income and how stable it is
- Loans and EMIs you already carry
- Credit history (a report such as CIBIL)
- Your age and the loan term
- The property's papers — the bank checks the property too
The most useful thing here: understand your position with the bank before you fall in love with a property. You will then look within that range and save yourself time.
2. Down payment
The bank does not lend the full price — a part comes from you. How much depends on the bank, the property and your position, which is why there is no percentage here.
Registration, stamp duty and other costs are also yours, on top of the down payment. Plan with all of it included.
3. How the EMI is built
An EMI comes from three things: the loan amount, the interest rate, and the term.
- Longer term → smaller EMI, more total interest
- Shorter term → larger EMI, less total interest
Put your own numbers in:
EMI Calculator
This is only an estimate. Your actual EMI depends on your bank or lender's terms.
This is an estimate. Your actual EMI depends on your bank's interest rate, tenure and charges — confirm with them.
To understand EMIs in more depth: How an EMI works
4. Fixed and floating interest
- Fixed — the rate stays the same for a set period. The EMI is predictable.
- Floating — it moves with the market. It can fall, and it can rise.
Which suits you depends on how much uncertainty you can carry. Ask the bank for the current terms on both.
5. Charges — the ones people miss
The cost of a loan is not only the interest. Ask about:
- Processing fee
- Legal and technical valuation
- Documentation
- Rules on prepayment or foreclosure
- Late payment charges
One question worth asking: "What will this loan cost in total?" — not just the EMI.
6. How much to borrow
You do not have to take everything you are offered. Keep the EMI at a level that would survive a few months of income stopping.
The usual document list
- Identity and address
- Proof of income (salary slips / ITR)
- Bank statements
- Property papers
- Employment papers
Every bank's list differs a little — ask yours for it in writing.
Frequently asked questions
- Loan first or property first?
- Understand your position with the bank first, then look within that range. Doing it the other way wastes time and goodwill.
- Will I get a loan with a low CIBIL score?
- That depends on the bank and your overall position. Asking your bank directly is the only real answer.
- Should I prepay?
- Prepaying early reduces total interest. Check your loan's rules and charges first.
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