Are there special home loan schemes for first-time homebuyers

Yes, there are several special home loan schemes and benefits available for first-time homebuyers in India. These schemes are offered by both the Government of India and housing finance companies to make purchasing your first home more affordable through subsidies, flexible loan terms, relaxed eligibility criteria and tax benefits.

If you're planning to buy your first home, understanding these schemes can help you save a significant amount over the loan tenure and make your homeownership journey much smoother.

First-Time Home Buyer Schemes in India

The Government of India has introduced several initiatives to encourage homeownership, particularly for middle- and low-income families.

One of the most popular initiatives is the Pradhan Mantri Awas Yojana (PMAY), which has made homeownership more accessible across the country.

PMAY Benefits and Credit Linked Subsidy Scheme (CLSS)

Under PMAY, eligible borrowers receive an interest subsidy through the Credit Linked Subsidy Scheme (CLSS), helping reduce the overall cost of borrowing and monthly EMIs.

1. Economically Weaker Section (EWS) and Low Income Group (LIG)

Families with annual incomes up to ₹3 lakh (EWS) and ₹6 lakh (LIG) are eligible for an interest subsidy of up to 6.5% on home loans up to ₹6 lakh.

2. Middle Income Group I (MIG-I)

Families earning between ₹6 lakh and ₹12 lakh annually may receive an interest subsidy of 4% on loan amounts up to ₹9 lakh.

3. Middle Income Group II (MIG-II)

Families with annual incomes between ₹12 lakh and ₹18 lakh may receive an interest subsidy of 3% on loans up to ₹12 lakh.

To qualify under PMAY, neither the applicant nor any family member should already own a permanent house anywhere in India.

General Eligibility Criteria for First-Time Buyers

1. Age

Applicants are generally expected to be above 21 years and below 65 years by the time the loan tenure ends.

2. Income

Applicants should have a stable monthly or annual source of income to demonstrate repayment capacity.

3. Credit Score

A credit score of 750 or above is generally preferred for securing better interest rates.

Property documents should also be legally valid and approved by the relevant authorities.

Salaried vs Self-Employed Applicants

Eligibility requirements vary based on employment type.

Salaried applicants generally require at least two years of work experience, with six months to one year in their current organisation. Salary slips, Form 16 and bank statements are typically required.

Self-employed applicants generally need a minimum of three years of business continuity. Lenders evaluate Income Tax Returns (ITRs), Profit & Loss statements and business cash flows to determine eligibility.

Understanding Down Payment and Loan-to-Value (LTV)

A down payment is the portion of the property's cost that you pay from your own savings, while the remaining amount is financed by the lender.

1. Loan Amount up to Rs. 30 Lakh

The maximum Loan-to-Value (LTV) ratio is 90%, meaning the borrower must contribute at least 10% as the down payment.

2. Loan Amount above Rs. 30 Lakhs up to Rs. 75 Lakhs

The maximum LTV ratio is 80%, requiring a minimum down payment of 20%.

3. Loan Amount above Rs. 75 Lakhs

The maximum LTV ratio is 75%, requiring the borrower to contribute at least 25% of the property's value.

Apart from the down payment, buyers should also budget for stamp duty, registration charges and other related expenses.

Tax Benefits Available for First-Time Homebuyers

Homebuyers can claim tax deductions under the Income Tax Act.

• Section 80C: Deduction up to ₹1.5 lakh on principal repayment.
• Section 24(b): Deduction up to ₹2 lakh per financial year on interest paid for a self-occupied property.
• Co-Borrowing Advantage: Joint borrowers can individually claim deductions under Sections 80C and 24(b), increasing overall tax savings.

Chola Home Loan Features for First-Time Buyers

1. Flexible Income Evaluation

Chola supports borrowers with irregular income patterns and limited formal documentation by offering flexible income assessment methods.

2. Customized Loan Solutions

Whether you are buying a ready-to-move-in property or constructing your own house, Chola offers home loan solutions tailored to your needs.

3. Longer Tenures

Home loans are available with repayment tenures of up to 25 years, helping reduce monthly EMI obligations.

4. Doorstep Service

Chola offers personalised doorstep assistance, including support with legal verification and technical evaluations throughout the loan journey.

Frequently Asked Questions (FAQs)

1. Can I get a 100% home loan in India?

No. Lenders generally finance up to 75%–90% of the property's value. The remaining amount must be paid as a down payment.

2. Do first-time buyers get lower interest rates?

Some lenders may offer promotional interest rate discounts or processing fee waivers, but these vary from one lender to another.

3. Is a co-applicant mandatory?

No. However, having a co-applicant can improve eligibility and increase tax benefits for joint borrowers.

4. Can I close my home loan before the tenure ends?

Yes. Most lenders allow borrowers to prepay or foreclose their home loan, subject to applicable terms and conditions.

5. What is the minimum credit score required for a home loan?

A credit score of 700 or above is generally considered favourable, while scores above 750 often improve your chances of obtaining better loan terms.

If you're planning to buy your first home, Chola Home Loans can help make the journey easier with flexible eligibility criteria, customised loan solutions and dedicated support.

Download the Chola One app and apply now: https://cutt.ly/CtBC8tK9