Federal Bank Home Loan Interest Rates
At Federal Bank, we offer attractive Home Loan interest rates that are tailored to your needs. Whether you’re purchasing a new home, constructing your dream house, or transferring your existing loan from another bank, our competitive interest rates ensure affordability and long-term savings.
Tenure: Up to 30 years
Loan Amount: Based on property value and income eligibility
Processing Fee: Nominal, with periodic offers and waivers
Special Home Loan Rates
Federal Bank offers Special Home Loan Interest Rates for specific customer segments with exclusive benefits:
- For Women Borrowers: Concession on interest rates for Mahilamitra Plus savings accountholders.
- Salaried Class Offers: Higher eligibility, fast-track approvals
- NRIs: Specially designed NRI Home Loans with seamless documentation
These offers may vary from time to time, based on internal campaigns and RBI guidelines.
Home Loan Balance Transfer
You can transfer your existing home loan from another bank to Federal Bank and enjoy lower EMIs
Top-Up Home Loans
We also offer additional funding over your existing home loan at attractive rates
Quick Sanction: Fast processing and digital documentation
Benefits of Home Loan Interest Rate
✅ Affordable Ownership: Competitive interest rates reduce your overall borrowing cost
✅ Tax Benefits: Under Sec 80C (principal) and Sec 24(b) (interest) of Income Tax Act
✅ Improved Eligibility: Better credit profile can get you even lower rates
✅ Long Repayment Periods: Spread your repayment over up to 30 years
✅ Flexible EMI Options: Step-up and step-down EMI plans available
Types of Home Loan Interest Rates
There are mainly two types of home loan interest rates:
1. Floating Interest Rate:
- Varies with changes in the bank’s repo-linked lending rate
- May reduce or increase during the tenure
- Suitable for long-term borrowers expecting advantages due to rate cuts
2. Fixed Interest Rate:
- Constant for a fixed period (or entire tenure, if opted)
- Offers stability in EMIs
- Ideal for those who prefer predictable payments
Which Type of Home Loan Interest Rate Should You Choose?
Here’s a quick guide:
Scenario |
Suggested Interest Rate Type |
Expecting interest rates to fall |
Floating Rate |
Prefer EMI stability |
Fixed Rate |
First-time buyers with tight budget |
Fixed, for better planning |
Factors That Affect Home Loan Interest
Several factors influence the home loan interest rate you are offered:
- Credit Score (CIBIL): Higher score → Lower interest
- Income and Employment: Stable, high income → Better rates
- Loan Amount and Tenure: Higher amounts/longer tenure may increase rate
- Type of Property: Approved projects may get concessions
- Borrower Profile: Women borrowers or salaried professionals may get special rates
- External Benchmarks: RBI repo rate, market trends, and bank's cost of funds
How to Reduce Home Loan Interest Rate?
Looking to bring down your home loan burden? Here's how:
- Maintain a High Credit Score: Aim for 750+
- Choose a Shorter Tenure: Less interest accumulation
- Make Prepayments: Reduce principal faster
- Opt for Balance Transfer: Shift to a lower-rate lender like Federal Bank
- Track Repo Rate Trends: Switch between fixed and floating if needed
Frequently Asked Questions
1. What is a Home Loan interest rate?
A Home Loan interest rate is the percentage charged by the bank on the loan amount you borrow for purchasing, constructing, or renovating a home. It determines how much extra you pay over the loan tenure in addition to the principal amount.
2. What factors affect home loan interest rates?
Several factors influence your home loan interest rate, including:
- RBI policy rates (like the Repo rate)
- Loan amount and tenure
- Type of interest rate (fixed or floating)
- Applicant’s credit score
- Income and employment status
3. How is the interest rate calculated?
Home loan interest is generally calculated on a reducing balance basis, where interest is applied only on the outstanding principal. The formula for EMI includes both interest and principal components and is adjusted monthly as you repay the loan.
4. Will the interest rate change during my Home Loan tenure?
Yes, if you have opted for a floating interest rate, it may change during the loan tenure based on market conditions or changes in the bank’s benchmark rate. However, with a fixed-rate loan, the interest remains constant throughout the tenure.
5. Does a credit score impact the interest rate on a Home Loan?
Yes, your credit score has a significant impact on the interest rate offered. A higher score (typically above 750) reflects strong creditworthiness and may help you secure a lower interest rate.
6. How frequently do Home Loan interest rates fluctuate?
For floating rate loans, interest rates may fluctuate as per changes in the benchmark rate, which can happen periodically (e.g., quarterly). However, any change is usually subject to bank policies and regulatory guidelines.
7. What are the main factors that influence my Home Loan interest rate?
Key factors include:
- Repo Linked Lending Rate or other benchmark rates
- Applicant’s credit profile and score
- Income and debt-to-income ratio
- Loan-to-Value (LTV) ratio
- Loan tenure and amount
- Type of employment (salaried/self-employed)
8. How can I save on my Home Loan interest payment?
To reduce your total interest outgo, consider:
- Opting for shorter loan tenure
- Prepaying the loan whenever possible
- Maintaining a high credit score
- Transferring the loan to a lender with lower interest rates (balance transfer)
- Choosing a part-payment friendly loan product
9. Can Home Loan interest rate be changed?
Yes, your home loan interest rate can be revised:
- Automatically, if linked to floating rate benchmarks
- Manually, through conversion options offered by the bank
10. What is the formula to calculate Home Loan interest rate?
The Home Loan EMI, which includes interest, is calculated using the formula:
EMI = [P × R × (1+R)^N] / [(1+R)^N – 1]
Where:
P = Principal loan amount
R = Monthly interest rate (annual rate ÷ 12 ÷ 100)
N = Number of monthly installments
While the rate itself is set by the bank (based on internal/external benchmarks), this formula helps compute your monthly outflow.
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