India Housing Loan Market By Type (Home Purchase, Land/ Plot Purchase, Home Construction, Home Improvement, Home Extension, Others), By Customer Type (Salaried, Self-Employed), By Source (Bank, Housing Finance Companies (HFCs)), By Interest Rate (Below 10%, Above 10%), By Tenure (Below 5 Years, 5 to below 10 Years, 10 to 20 Years, Above 20 Years), By Region, Competition, Forecast & Opportunities, 2020-2030F

Market Overview

India Housing Loan Market was valued at USD 329.88 billion in 2024 and is anticipated to grow USD 561.47 billion by 2029 with a CAGR of 9.33% through 2030. The India housing loan market has seen remarkable growth in recent years, driven by factors such as increasing urbanisation, government initiatives, rising disposable incomes, and a growing middle class. The demand for housing has surged, particularly in urban areas, as individuals aspire to own homes, leading to an uptick in housing loan disbursements.

However, this is evident in rising property prices in key cities and increased non-performing assets (NPAs) in the sector, particularly among low-income borrowers. Despite this, the outlook remains positive due to ongoing government efforts, rising housing demand, and the emergence of smart cities, making the housing loan market a key contributor to India's financial ecosystem and real estate development.

Key Market Drivers

Government Initiatives

The Indian government has implemented several schemes and regulations to boost the housing sector, with a specific focus on affordable housing. These initiatives have been a cornerstone for the growth of the housing loan market, particularly for low and middle-income groups.

One of the most impactful programs is the Pradhan Mantri Awas Yojana (PMAY), launched in 2015, which aims to provide affordable housing to all by 2022. The scheme offers credit-linked subsidies on home loans for low- and middle-income borrowers, significantly reducing their overall loan burden. This initiative has been crucial in driving home loan disbursements, especially in rural and semi-urban areas. The credit-linked subsidy under PMAY has made home loans more affordable, encouraging first-time buyers to enter the market. For instance, in the 2024 Union Budget, Finance Minister Nirmala Sitharaman announced the construction of 3 crore additional houses under the Pradhan Mantri Awas Yojana (PMAY), encompassing both urban and rural areas. This initiative includes an investment of USD 120 billion, with USD 26 billion allocated for central assistance over the next five years. The scheme aims to address the housing needs of USD 1.1 million urban poor and middle-class families, incorporating provisions for interest subsidies to facilitate affordable loans. 

Rising Urbanization and Housing Demand

India’s rapid urbanization is a critical driver of the housing loan market. The country’s urban population has grown substantially over the past few decades, and this trend is expected to continue. According to World Bank data, around 35% of India’s population lives in urban areas, and this figure is projected to reach 40% by 2030. This shift from rural to urban living has created an enormous demand for residential properties, particularly in metropolitan and Tier 1 cities such as Mumbai, Delhi, Bengaluru, and Hyderabad.

With the influx of people into cities, there is increasing demand for housing infrastructure. Urban residents, particularly young professionals and nuclear families are increasingly looking to buy homes rather than rent. The surge in nuclear families and the aspiration for homeownership have been significant drivers of housing loans. This urban housing demand has led to a significant rise in home loan applications, with financial institutions meeting this growing need through a range of loan products tailored to urban homebuyers.

The development of smart cities under the Smart Cities Mission has also contributed to housing demand in urban areas. As infrastructure improves and new employment opportunities emerge in these cities, demand for residential properties increases, leading to higher housing loan disbursements.

Growth of Housing Finance Companies

While traditional banks continue to dominate the housing loan market, the rise of housing finance companies (HFCs) has significantly contributed to the sector's growth. HFCs, such as LIC Housing Finance and Indiabulls Housing Finance, have carved out a niche by catering to underserved segments of the market, particularly low-income and informal sector borrowers. PNB Housing Finance has launched a fixed-rate non-home loan product with an interest rate of 10%. This new offering aims to provide greater financial flexibility, targeting both new and existing customers seeking affordable loan options outside the home loan segment.

HFCs typically offer more flexible loan terms compared to traditional banks, allowing individuals with non-salaried incomes or poor credit histories to access home loans. Many HFCs also specialize in offering smaller loan amounts for affordable housing projects, which banks might not prioritize. This focus on niche markets has allowed HFCs to grow rapidly and increase their share in the overall housing loan market.

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Key Market Challenges

Rising Property Prices

One of the most pressing challenges in the India housing loan market is the ongoing rise in property prices, particularly in metropolitan cities and other urban centres, which is steadily stretching affordability for middle-income and lower-income households in markets such as Mumbai, Delhi, Bengaluru, and Hyderabad. For instance, the National Housing Bank’s NHB RESIDEX for Oct to Dec 2024 reports that all eight major metros recorded annual appreciation, including Bengaluru 12.5, Mumbai 6.0, Hyderabad 5.9 and Pune 7.4, while the 50-city composite index based on valuation prices increased 7.2 year on year and 47 of 50 cities registered growth.

The high cost of land acquisition, coupled with delays in project approvals and construction, contributes to escalating property prices and raises the ticket size that borrowers must finance, increasing down payment burdens and tightening eligibility for many applicants. This trend disproportionately affects first-time homebuyers and those seeking affordable housing options, where demand is high but price headroom is limited. For many potential buyers, rising property prices result in postponing purchases, choosing smaller units, or shifting to peripheral locations to fit within loan eligibility and EMI constraints.

Increasing Non-Performing Assets (NPAs)

The rise in non-performing assets (NPAs), particularly in the affordable housing loan segment, is another major challenge for the India housing loan market. NPAs are loans for which the borrower has stopped making payments, resulting in default. Over the years, several banks and HFCs have experienced rising NPAs, especially among low-income borrowers and in semi-urban and rural areas.

The rise in NPAs can be attributed to various factors, including job losses, reduced incomes, and economic slowdowns, particularly after events such as the COVID-19 pandemic. Many low and middle-income households that had taken loans during favorable economic conditions found themselves unable to meet repayment obligations when faced with unexpected financial hardships.

Affordable housing projects, which cater primarily to low-income households, have been particularly affected by rising NPAs. These borrowers often have less financial security and are more vulnerable to economic shocks, increasing their risk of default. Moreover, some HFCs and NBFCs that focus on lending to informal sector workers or those with irregular

Key Market Trends

Growth of Green Home Loans

As environmental sustainability becomes a more prominent concern, the India housing loan market is seeing a rise in green home loans, which are designed to encourage the purchase or construction of energy-efficient, eco-friendly homes, and are increasingly supported by the financial system’s green-finance plumbing. For instance, the Reserve Bank of India issued the Framework for acceptance of Green Deposits on April 11, 2023, made it effective from June 1, 2023, and explicitly includes green buildings and energy-efficiency improvements in buildings as eligible categories for deploying green-deposit proceeds, creating a clearer pathway for lenders to mobilize and earmark funds for sustainable housing and building upgrades.

Green homes typically incorporate features such as energy-efficient lighting, rooftop solar, rainwater harvesting, and sustainable materials that reduce operating energy and the property’s overall environmental footprint, and green home loans provide a practical incentive for eco-conscious buyers to choose such projects. Reflecting this financing pull, HDFC has reported that as of December 23, 2020 it had disbursed over ₹14,000 crore of retail loans to homebuyers in 310 certified green building projects across India, illustrating measurable borrower uptake where certification-linked supply is available.

Banks such as SBI and HDFC have introduced green-focused housing finance propositions for eco-conscious buyers, and these products are generally positioned around benefits such as preferential terms and smoother processing for homes meeting recognised green building certifications such as IGBC or LEED, indicating a growing, policy-aligned trend within India’s housing finance landscape.

Expansion of Co-Living and Shared Housing Financing

A newer trend emerging in the India housing loan market is the expansion of financing options for co-living and shared housing spaces. With urbanization, the influx of young professionals into cities, and the rising cost of property ownership in metropolitan areas, there has been a surge in demand for co-living spaces. These are shared living arrangements that offer affordable housing options, especially for millennials and young professionals who may not be ready to purchase a home.

Financial institutions are beginning to offer financing options to developers and operators of co-living spaces, recognising this segment as a growing part of the broader real estate market. Co-living spaces provide an alternative to traditional homeownership, where residents rent furnished rooms in shared housing complexes with amenities like communal kitchens, recreational areas, and coworking spaces. This model is particularly popular in cities like Bengaluru, Mumbai, and Delhi, where property prices are high.

Some NBFCs and fintech companies also offer personal loans or rental deposit loans to individuals seeking to rent co-living spaces, making it easier for tenants to afford the upfront costs of moving into shared housing.

Segmental Insights

Type Insights

The home purchase segment was the dominated in the India housing loan market, driven by increasing urbanization, rising disposable incomes, and the aspiration for homeownership among India’s growing middle class. The demand for home loans has surged, particularly in metropolitan areas and Tier 2 and Tier 3 cities, where real estate development is booming. Home purchase loans constitute a major share of the housing loan market, as they are essential for both first-time buyers and those looking to upgrade to larger or more modern homes.

Government initiatives such as Pradhan Mantri Awas Yojana (PMAY), which provide subsidies for affordable housing, have also boosted demand for home purchase loans, especially among low- and middle-income households. Additionally, banks and Housing Finance Companies (HFCs) have made the loan process more accessible with attractive interest rates and digital lending platforms. As a result, home purchase loans continue to dominate the Indian housing finance market.

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Regional Insights

The North region was the dominated in the housing loan market, accounting for a significant share of overall housing finance. Key cities like Delhi, Gurugram, Noida, and Chandigarh drive this growth, fueled by robust real estate development, urbanization, and a rising middle class. The North region benefits from various government initiatives, including the Pradhan Mantri Awas Yojana (PMAY), which promotes affordable housing and makes home loans more accessible.

In addition, favourable employment opportunities in industries and the IT sector attract a steady influx of migrants, further increasing housing demand. The presence of established banks and Housing Finance Companies (HFCs) offering competitive interest rates and diverse loan products also supports this trend. As consumer preferences shift towards homeownership, the North region remains at the forefront of the housing loan market, solidifying its position as the dominant segment in India.

Recent Developments

• In September 2025, BASIC Home Loan launched HOM-i, an AI-powered home-loan assistant/platform aimed at delivering instant lender matching and quicker loan decisions for borrowers.
• In July 2025, EQT announced completion of the acquisition of Indostar Home Finance and stated the company would operate as Niwas Housing Finance with INR 5 billion of growth capital to support expansion and digital capabilities.
• In February 2026, housing-loan developments in India have centered on housing finance M&A, lender rebranding/strategy resets, and new “green” and AI-led origination offerings.
• In July 2024, Bajaj Housing Finance has announced its entry into the affordable housing finance sector with the launch of Sambhav Home Loans, specifically designed for unserved and underserved customer segments. Under this initiative, the income eligibility for first-time homebuyers begins at USD 119.36 per month, with loan amounts starting at USD 0.012 million. This product aims to provide accessible financing options for prospective borrowers across a diverse spectrum of income levels.

• In Aug 2024, LIC Housing Finance Limited has introduced a home loan scheme titled 'Griha Rakshak' specifically for armed forces personnel. This initiative offers discounted interest rates and exclusive benefits to both serving and retired military members.

• In August 2023, Prime Minister Narendra Modi unveiled a new government initiative to support small urban homebuyers through a USD 7.2 billion subsidy program. The scheme aims to provide subsidised home loans over the next five years, offering annual interest subsidies ranging from 3% to 6.5% on loans up to USD 10538.94.

• In May 2023, In May 2023, LIC Housing Finance announced plans to expand its branch network into new regions, focus on high-yielding loan against property (LAP) products, and strengthen recovery efforts to solidify its position as India's leading housing finance company following the merger of Housing Development Finance Corp with its banking arm.

Key Market Players

• HDFC Bank Ltd
• LIC Housing Finance Limited
• L&T Finance Limited
• Tata Capital Limited
• PNB Housing Finance Limited
• State Bank of India
• Bajaj Housing Finance Limited
• IIFL Home Finance Limited
• Sammaan Capital Limited
• Can Fin Homes Limited

Report Scope:

In this report, the India Housing Loan Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• India Housing Loan Market, By Type:

o   Home Purchase

o   Land/ Plot Purchase

o   Home Construction

o   Home Improvement

o   Home Extension

o   Others

• India Housing Loan Market, By Customer Type:

o   Salaried

o   Self-Employed

• India Housing Loan Market, By Source:

o   Bank

o   Housing Finance Companies (HFCs)

• India Housing Loan Market, By Interest Rate:

o   Below 10%

o   Above 10%

• India Housing Loan Market, By Tenure:

o   Below 5 Years

o   5 to below 10 Years

o   10 to 20 Years

o   Above 20 Years

• India Housing Loan Market, By Region:

o   North

o   South

o   East

o   West

Competitive Landscape

Company Profiles: Detailed analysis of the major companies presents in the India Housing Loan Market.

Available Customizations:

India Housing Loan Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).