Buying a home is a dream for many people in India. But with rising property prices, arranging a large amount of money becomes difficult for the average person. That’s where home loans come into play. And if you are looking for lower EMI (Equated Monthly Instalment) options, then choosing a loan from a government bank can be a smart decision. These banks are known for trust, lower interest rates, and better customer service.
In this article, we’ll explain how you can buy a house at a low EMI, and which government banks are currently offering home loans at the lowest interest rates in India.
Why Choose a Government Bank for Home Loan?
Government banks like SBI, Bank of Baroda, PNB, etc., are often preferred for home loans because:
- Lower interest rates compared to private banks
- Transparent processing charges
- Flexible repayment tenures (up to 30 years)
- Trusted and stable institutions
- Easy documentation process
They also offer special interest rates for women, salaried professionals, and government employees.
List of Government Banks Offering Lowest Home Loan Interest Rates (as of June 2025)
Bank Name | Interest Rate (per annum) | Processing Fee | Maximum Tenure | EMI (for ₹30 lakh/20 years) |
SBI Home Loan | 8.40% – 9.00% | 0.35% of loan | Up to 30 years | ₹25,867 approx. |
Bank of Baroda | 8.40% – 9.15% | ₹8,500 max | Up to 30 years | ₹25,894 approx. |
Punjab National Bank (PNB) | 8.50% – 9.10% | ₹10,000 max | Up to 30 years | ₹26,054 approx. |
Union Bank of India | 8.50% – 9.25% | ₹7,500 max | Up to 30 years | ₹26,087 approx. |
Canara Bank | 8.45% – 9.15% | ₹10,000 max | Up to 30 years | ₹25,975 approx. |
Indian Bank | 8.50% – 9.30% | ₹5,000–₹10,000 | Up to 30 years | ₹26,075 approx. |
Note: Rates may vary based on your credit score, loan amount, income, and property type.
How Can You Get Low EMI?
EMI depends on three main factors:
- Loan amount
- Interest rate
- Loan tenure
To reduce EMI:
- Choose a longer tenure: For example, 25–30 years instead of 15 years.
- Improve your CIBIL score: A score above 750 can get you the lowest interest.
- Make a bigger down payment: Borrow less, pay less EMI.
- Compare different banks before choosing one.
Example – EMI Comparison for ₹30 Lakh Loan (20 years)
Interest Rate | EMI per month |
8.40% | ₹25,867 |
8.60% | ₹26,195 |
9.00% | ₹27,000 |
9.25% | ₹27,500 |
As you can see, even a small difference in interest rate can save you thousands of rupees every month, and lakhs over 20 years.
Documents Required for Government Bank Home Loan
- Identity proof (Aadhaar/PAN/Passport)
- Address proof (Utility bill, rent agreement)
- Income proof (Salary slips, IT returns)
- Property documents
- Bank statements (6 months)
- Passport-size photos
Tips to Get the Best Deal
- Compare all government bank offers online before applying.
- Apply jointly with your spouse to get lower interest (for women borrowers).
- Negotiate processing fees and hidden charges.
- Take help from home loan aggregators like Paisabazaar, BankBazaar, etc.
- Avoid defaults or delays in your current EMIs – it affects your credit score.
Government Schemes to Support You
If you are a first-time home buyer, check if you are eligible under PMAY (Pradhan Mantri Awas Yojana). Under this scheme:
- You can get interest subsidy up to ₹2.67 lakh
- Applicable for income groups under ₹18 lakh/year
- Must be buying your first home
This scheme reduces EMI further and brings down your total interest burden.
Final Words
If you’re planning to buy a home but worried about high EMIs, don’t worry. Several government banks in India are offering home loans at competitive interest rates starting as low as 8.40%, with long repayment tenures and minimal charges. All you need to do is compare your options, maintain a good credit score, and choose smartly.