Purchasing a home is often one of the largest financial choices you’ll ever face. Although home loans have made buying property easier than ever before, they’re frequently shrouded in myths and misunderstandings some of which could actually cost you dearly in terms of time, money, and unnecessary stress.
As we move through 2025, the world of home loans has changed quite a bit, but several old beliefs still linger. It’s high time we clear up the confusion and distinguish truth from fiction.
Let’s tackle some of the most widespread home loan myths that are worth leaving behind this year:
Myth:
You Need a 20% Down Payment to Secure a Home Loan
Truth:
This is definitely an outdated idea. In India, most lenders will typically fund anywhere from 75% to 90% of a property’s value. This suggests you might only need to come up with 10% to 25% upfront for your down payment.
Advice:
You might find special programs particularly for first-time buyers or women applying for loans—that offer even more favorable terms, like reduced down payment requirements or extra financial support.
Myth:
The Loan with the Lowest Interest Rate Is Always the Best Choice
Truth:
While a low interest rate sounds appealing, it isn’t the only thing that matters. Lenders advertising extremely low rates might actually have hidden fees, higher processing charges, or strict repayment rules that could end up costing you more.
What’s really important:
- The total cost of the loan (APR)
- How flexible the loan is if you want to pay it off early
- How well the lender is known for treating customers
Myth:
You Can’t Get a Home Loan with a Low Credit Score
Reality:
While having a top-notch credit score (750 or higher) definitely helps you get approved for a home loan, don’t automatically assume a lower score closes the door. It doesn’t mean you’re out of luck! Some lenders are still willing to work with borrowers who have less-than-perfect credit, although they might offer loans with:
- Higher interest rates
- The need for a guarantor
- A smaller loan amount
And here’s something to watch for in 2025: many online and tech-focused lenders are starting to use different methods, beyond the traditional credit score, to assess borrowers.
Myth:
Only Men Can Be Primary Home Loan Applicants
Reality:
It’s absolutely false that only men can apply for a home loan as the main borrower. Women are definitely eligible to be primary applicants! In fact, many banks actually offer special advantages to women borrowers, such as lower interest rates, benefits on stamp duty, and even faster approval processes. If you’re thinking about applying for a loan together with someone else, consider having a female co-applicant to potentially enjoy these perks.
Myth:
You Can’t Prepay Your Home Loan Without Penalty
Reality:
The good news is, thanks to guidelines from the Reserve Bank of India (RBI), individual borrowers generally don’t have to pay penalties for prepaying or paying off their floating-rate home loans early. For fixed-rate loans, there might still be some fees involved, but many lenders are now offering options where you can prepay without any penalties. Paying extra or paying your loan off sooner can really make a difference by cutting down the total amount of interest you’ll pay over time.
Myth:
The Loan Process Takes Forever
Reality:
Forget those old days of endless paperwork and waiting around for months! In 2025, the loan process is much faster. Many lenders now offer:
- Quick digital loan approvals
- Instant online identity checks (eKYC)
- Approvals within just 48 to 72 hours
Plus, some non-banking finance companies (NBFCs) and fintech firms even let you get pre-approved loan offers right online.
Myth:
Self-Employed Individuals Can’t Get a Home Loan Easily
Reality:
It’s true that self-employed folks might need to submit a bit more paperwork, but most banks and NBFCs now have loan options specifically designed for them. They look at things like:
- Income Tax Returns (ITRs)
- Bank account statements
- How much business they do (turnover)
Modern lenders also pay attention to cash flow and digital transaction history when assessing applications.
Thus hereon, don’t let these myths dictate your homebuying journey
Believing home loan myths could really hold you back it might even cost you your chance to buy a home or delay your dream of homeownership.
These days, in 2025, getting a loan is more straightforward, digital, and open to everyone than ever before. Whether you’re on a salary, self-employed, male, female, or buying for the first time, there’s likely a loan product out there that’s perfect for you.
Still not sure which home loan is the right fit for you? If you’re feeling confused, reach out to MagiXland or chat with a financial advisor you trust. They can help you explore your options and make a smart choice.
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