Home loan against fixed deposit is a smart way to raise funds to purchase a new home. Typically, FD issuers offer you loans for up to 90% value of your FD.

The loan amount you can avail against your FD depends on whether it is a cumulative FD or a non-cumulative FD and varies for every issuer.

An important thing to keep in mind about availing a home loan this way is that you may not be able to avail of the loan immediately. You can confirm the terms for this with your FD issuer.

Benefits of Choosing a Home Loan Against FD

Here are the various advantages:

Secured Loan Option

A home loan against FD is a secured form of credit. This is because the fixed deposit serves as collateral against the loan amount. Interest rates are hence lower. In case you fail to repay the loan am Read Moreount, the lender has the legal right to recover the amount through your fixed deposit. Read Less

Tax Benefits

You can claim a deduction of up to ₹50,000 on the home loan interest payable in a financial year, according to Section 80EE. Note that only first-time home buyers are eligible for these tax benefits. 

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As per Section 24 (b), you can claim deductions of up to ₹2 Lakhs on the interest amount you pay towards the loan.


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No Need to Break FD

To purchase a new home or to renovate your existing home, you can get funds against your fixed deposit easily. This way, you do not need to break your investment to purchase your dream home.

No Processing Fees

You do not need to pay any processing fees for a housing loan against FD. This helps you reduce the overall cost of your home loan.

Flexible Loan Amount

Based on your fixed deposit investment, you can get ample funding to purchase a home. Most lenders offer a loan amount of up to 90% of the fixed deposit.

How to Apply for a Home Loan Against FD

You can get a home loan against a fixed deposit by following these steps:

  • Assess the Eligibility Parameter

    Check the eligibility criteria set by the fixed deposit provider that you need to meet to get the required funds against your FD.

  • Check the Loan Amount Eligibility

    If you are eligible for a loan, check the loan amount that the lender is offering against your FD. Most lenders offer up to 90% of the FD amount as a loan.

  • Gather Documents

    Check the documents that you need to submit to avail of the loan and keep them handy.

  • Verification Process

    Submit your loan application along with the required documents to the lender for verification.

  • Offer Acceptance and Signing the Agreement

    After the verification process, the lender will approve or reject your application. Once the lender approves your application, you need to accept the offer and sign the agreement.

How to Apply for home loan against fd


The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort. 

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products. 

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FAQs on the Home Loan Against FD

What is the loan tenure available for a home loan against FD?

The repayment tenure for a home loan against a fixed deposit is generally the term of the fixed deposit. This means that you need to repay the home loan amount before the maturity of your fixed deposit.

What are the interest rates for a home loan against FD?

Generally, the interest rates are 1-2% higher than the interest rates of the FD.

Can I avail tax benefits on the interest paid for this loan?

Yes, first-time home buyers can claim a deduction of up to ₹50,000 on the home loan interest payable in a financial year. Additionally, you can enjoy deductions of up to ₹2 Lakhs every year on the interest paid.

What happens if I am unable to repay the loan on time?

If you fail to repay a home loan against a fixed deposit on time, the lender can legally recover the home loan amount by foreclosing your FD.

Can I prepay the loan before the tenure ends?

Yes, you can repay your home loan against a fixed deposit before the tenure ends without incurring any prepayment charges.

Is it possible to withdraw the fixed deposit during the loan tenure?

No, you cannot withdraw a fixed deposit if you have a home loan against a fixed deposit. This is because the fixed deposit is pledged as collateral against the home loan. You cannot withdraw it till you repay the entire home loan.

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