Government extends deadline for HBA Scheme | Fusion - WeRIndia

Government extends deadline for HBA Scheme

Government extends deadline for HBA Scheme

The House Building Advance (HBA) Scheme was launched to offer help to employees of the central government in acquiring houses or flats. Under this scheme, central government employees can take advance for the construction of a house on their own plot or their spouse’s.

The interest rate on the home loan under the scheme is 7.9 per cent. It is simple interest. The central government announced the interest rate on October 1, 2020. Due to the pandemic, the government extended the deadline till March 31st, 2022. Hence, employees can use this scheme during these 18 months to get a loan at a simple interest rate of 7.9 per cent.

The total amount of HBA given to an employee varies with his basic pay and repaying capacity.  An employee can borrow up to 34 months of the basic pay or the cost of the house, whichever is lesser. However, the amount is capped at ₹25 lakhs for the construction or purchase of a new house.

In case of expansion of the house, the maximum amount should not exceed ₹10 lakhs. All permanent employees of the central government can obtain loans under the scheme. Temporary employees also can get a loan after the completion of 5 years of continuous service. All eligible employees shall be granted a lump sum amount if applicable under the scheme.


Unlike normal loans that receive interest in the major portion, the HBA scheme recovers the principal amount in the first fifteen years. Interest will be collected in the next five years.

Recently the central government increased the Dearness Allowance (DA), Dearness Relief (DR) and House Rent Allowance (HRA) to the employees for July 2021. The government increased the DA from 17 per cent to 28 per cent. It came into effect in July.

Image by Devolk from Pixabay (Free for commercial use)


Image Reference: https://pixabay.com/photos/construction-house-new-house-1599629/

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