House Building Advance interest rate for FY 2026-27 announced; check details

Central employees can avail a cheaper House Building Advance (HBA) in FY 2026-27 as the government has decided to reduce the interest rate.

According to an Office Memorandum of the Ministry of Housing & Urban Affairs (MOHUA) dated May 13, 2026, the interest rate applicable on HBA sanctioned to employees for FY 2026-27 will be 7.1%.

"In pursuance of Department of Economic Affairs, Ministry of Finance O.M. No. 5(3)/-B(PD)/2026 dated 09.04.2026, the new rate of interest applicable on House Building Advance sanctioned to Central Government Employees for the financial year 2026-27 will be 7.10% from 1st April 2026 to 31st March 2027 or until further orders," the ministry said.

What was the previous interest rate?

There was no change in the HBA interest rate in the previous financial year.

In FY 2025-26, the interest rate for the HBA sanctioned to Central Government employees was 7.44%. This rate was applicable from April 1, 2025 till March 31, 2026.

"In pursuance of Department of Economic Affairs, Ministry of Finance OM No 5(2)-B(PD)/2025 dated 24.03.2025, the interest rate applicable on House Building Advance sanctioned to Central Government Employees for the financial year 2025-26 (from 1st April 2025 to 31st March 2026) will remain unchanged at 7.44°/o until further orders," MOHUA had said in an Office Memorandum dated March 27, 2025.

How much HBA is allowed?

Central Government employees can avail HBA for buying or constructing a new house. It can also be availed for expanding an existing house.

The maximum amount allowed as HBA is as follows:

• For a new house: 34 months' basic pay subject to a maximum of ₹25 lakh, or cost of the house/flat, or the amount according to repaying capacity, whichever is the least for the construction/purchase of a new house/flat.

• For expansion of existing house, the amount of HBA is limited to 34 months basic pay, subject to a maximum of ₹10 lakh only or the cost of the expansion, or the amount according to repaying capacity, whichever is the least.

The amount of HBA is restricted to 80% of the true cost of the land and construction of the house, or the cost of expansion of living accommodation in the case of construction in rural areas. However, it may be relaxed up to 100% if the Head of the Department certifies that the concerned rural area falls within the periphery of town or city.

As per the official rules, the cost of the house to be built/purchased (excluding the cost of the plot) should not exceed 139 times the basic pay of the employee, subject to a maximum of ₹1 crore. However, in individual cases, the Head of Department may raise the cost ceiling by up to 25%.