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    Rural Home Loan

    Mahatma Gandhi once said, “The future of India lies in its villages”. Majorly an agricultural country, with over 7 lakh villages, India can see a development of real sense only when she sees her villages growing. The Government of India, sensing the need of the hour to develop housing in rural areas thus fueling development, came up with a multi-pronged approach to achieve “Affordable Housing to all”. Several private and public banks now offer exclusively crafted loan deals for people in rural areas and farmers. People who want to build a house or purchase a plot in their native place can also avail a rural home loan. Special features of rural housing loan include less or no processing fee, minimum documentation requirements and flexible income criteria.

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    Eligibility and Documentation for Rural Home Loan:

    • Generally, Indian residents aged at least 21 years are eligible to apply for a rural housing loan.
    • Please note that different banks have different income requirements for rural home loans. However, the applicant must be earning a steady and regular income.
    • Individuals can apply for this loan either singly or jointly with immediate family members like father, mother, spouse or children.
    • Rural home loans can be availed by different sections of people like agriculturalists, entrepreneurs, businessmen, self-employed people and also salaried professionals.


    • Applicants must submit a proof of income and a proof of identity. Valid passport, voter ID, Aadhar card, PAN Card and other KYC documents can be submitted.
    • Agriculturalists applying for a rural home loan must submit the last 6 months’ bank statements, copy of title documents of agricultural land as a proof of land holding and copies of title documents of agricultural land as a proof of crops being cultivated as income proof.
    • Salaried applicants must submit income proof like PAN card, last 3 months salary slips, latest IT returns, form 16 and also the last 6 months bank statement.
    • Self-employed applicants must submit PAN Card, IT assessment for the last 3 years, Profit and loss statement for the business, account statements for business and self as income proof.

    Documents required may vary depending on the applicant’s nature of income and type of employment. Do enquire with the bank offering the rural home loan about a comprehensive list of documents required before applying.

    Features and Benefits of Rural Home Loan:

    • Rural housing loan products that is designed specially to cater to the needs of farmers and other members of rural community come with no processing fee and an interest rate concession.
    • Some banks like SBI also offer free personal accident insurance cover along with rural home loans.
    • The margin requirements are comparatively low when compared to other loan products in the market. The loan margin requirements vary from 10% to 20% depending on the type of project and the cost.
    • Banks offering rural home loans also offer longer tenures and flexible repayment options.
    • For the benefit of weaker section, the banks also offer other services like personalized documentation assistance and door-to-door servicing.
    • There is no penalty for prepaying the loan.
    • Certain banks also offer a moratorium period of up to 18 months for rural home loans.

    Loan Tenure and Quantum:

    • For rural housing loans, most of the private and public sector offer a flexible tenure option where the borrower can choose to repay the loan in 3 to 20 years.
    • The quantum of rural home loan is between Rs.5 lakh and Rs.15 lakh depending on the income and repayment capacity of the applicant and also the project cost.

    Rural Home Loan Interest Rate:

    • Currently, banks like ICICI are offering loans up to Rs.15 lakh for rural community people at the base rate.
    • The base rate currently stands at 9.70% and generally, banks and home financing companies offer a floating interest rate of 9.75% for rural home loans.

    Interest rates may differ from bank to bank, depending on the housing loan scheme.

    Rural home loans comes as a boon for weaker sections of the society in rural areas. Rural borrowers can make use of this scheme to purchase, renovate or construct their homes.

    Rural Home Loan MCLR Rate:

    Currently, banks like ICICI are offering loans up to Rs. 15 lakh for the rural community at floating rates. The rate of interest is based on the Marginal Cost of Funds-based Lending Rate (MCLR) from April 1, 2016. ICICI’s MCLR is 9.2% for 1 year. Most banks have set a MCLR of around 9.2-9.5%.

    Interest rates may differ from bank to bank, depending on the housing loan scheme.

    Rural Home Loan Reviews

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