The Narendra Modi government has introduced an attractive scheme for government employees in India, enabling them to receive up to ₹25 lakh to build a house. If the employee's spouse is also a government employee, they too are eligible for the same amount, effectively doubling the benefit. The government states that this scheme offers employees the opportunity to build their homes at a low-interest rate. This order is effective immediately and incorporates all amendments up to 31 July 2025.
The central government has simplified and enhanced the existing House Building Advance (HBA) scheme for its employees. Any central government employee can now avail an advance of up to ₹25 lakh for building or purchasing a house. This amount is available at an annual interest rate of 7.44% (approximately 7.5%). Significantly, if both spouses are central government employees, they can each apply individually and receive up to ₹25 lakh, totaling ₹50 lakh.
Under the new arrangement, a government employee will receive the House Building Advance only once during their service. The maximum limit for the construction/purchase of a new house or flat is set at 34 months' basic pay or ₹25 lakh, whichever is lower. For house expansion, this limit is ₹10 lakh. If both spouses are government employees, they can each avail the maximum advance amount in their respective names. The basic pay will include Non-Practising Allowance (NPA) and family pension, potentially increasing eligibility and the advance amount.
1; All permanent central government employees
2; Temporary employees with at least 5 years of continuous service
3; Members of All India Services working under the central government
4; Employees of Union Territories
5; Officers on deputation
6; Eligibility extends to those under suspension, provided bail is granted
1; Building a new house on land owned individually or jointly with a spouse.
2; Purchasing a plot and building a house.
3; Purchasing a new house/flat from a government-approved builder.
4; Expanding an existing house.
5; Repaying an existing home loan (subject to conditions).
The interest rate for the financial year 2025-26 is set at 7.44%, subject to annual revision. The repayment process involves paying the principal amount within the first 15 years and the interest over the subsequent 5 years. Home/flat insurance is mandatory; otherwise, an additional 2% will be added to the interest rate.
The total cost of the house (excluding land) cannot exceed 139 times the employee's basic pay or ₹1 crore (whichever is lower). The departmental head may grant a discount of up to 25% on this limit if necessary.
