The House Building Advance (HBA) scheme for Central Government employees is regulated by guidelines issued by the Ministry of Housing & Urban Affairs (MoHUA). HBA provides financial assistance at concessional interest rates for acquiring, constructing, or expanding residential property.
Key Highlights & Current Policy Parameters
| Parameter | Current Rule Position |
| Maximum Advance (New Construction/Purchase) | Up to 34 times Basic Pay, capped at ₹25,00,000 |
| Maximum Advance (Expansion/Enlargement) | Up to 34 times Basic Pay, capped at ₹10,00,000 |
| Current Interest Rate | 7.1% per annum (Simple Interest) |
| Maximum Cost Ceiling | 139 times Basic Pay or ₹1.00 Crore (whichever is lower) |
| Repayment Period | Maximum 20 years (180 principal + 60 interest installments) |
1. Eligibility Criteria
HBA is admissible to Central Government servants fulfilling any of the following conditions:
- Permanent Employees: All permanent Central Government officials.
- Temporary / Officiating Employees: Employees with at least 5 years of continuous service, provided they do not hold a permanent appointment with a State Government and the sanctioning authority certifies their likely retention until the property is mortgaged.
- All India Services (AIS): AIS officers on deputation to the Central Government, public sector undertakings, autonomous bodies, or international organizations.
- Special Categories: Employees governed by The Payment of Wages Act, 1936, employees under Union Territories/NEFA, and long-term contract Artistes/Staff of All India Radio.
- Deputation / Foreign Service: Processed through the Head of Office (HoO) of the parent department.
- Ex-Servicemen: Military service is counted toward the 5-year eligibility period provided HBA was not drawn during previous service.
Important Provisions:
- Both Spouses Employed: If both husband and wife are Central Government employees, both are individually/jointly eligible to draw HBA.
- Officials Under Suspension: Eligible subject to providing collateral security in the form of a mortgage bond signed by two permanent Central Government employees.
2. Permissible Purposes
HBA can be drawn for only one of the following purposes during the official’s entire service career:
- Constructing a new house on a plot owned individually or jointly with spouse.
- Purchasing a plot and constructing a house thereon.
- Purchasing a plot or acquiring a flat under Cooperative Schemes / Cooperative Group Housing Societies (CGHS).
- Outright purchase of a new, unlived ready-built house/flat from Housing Boards, Development Authorities, or registered private builders (purchases from private individuals are not permitted).
- Self-Financing Schemes (SFS) under Delhi (DDA), UP, Lucknow, Bangalore, etc.
- Expansion of living accommodation of an existing house owned individually or jointly with spouse.
- Home Loan Migration: Repayment/takeover of existing home loans taken from Banks/Financial Institutions.
- Construction of the residential portion on a shop-cum-residential plot in a residential colony.
3. Cost Ceiling Conditions
- Maximum Cost Limit: The total cost of the house/flat (excluding land cost) cannot exceed 139 times the basic pay, subject to a maximum cap of ₹1.00 Crore.
- Expansion Limit: For accommodation enlargement, the combined cost of the existing structure (excluding land) plus proposed additions must stay within the cost ceiling.
- Existing Property Restriction: Neither the employee nor their spouse/minor children should own a residential property in the same town/urban agglomeration.
- HUF Exception: If the official belongs to a Hindu Undivided Family (HUF) owning a house in the same town, HBA is restricted to 60% of normal entitlement.
- Combined Funding: If final withdrawal from the GPF is taken alongside HBA, the cumulative amount must not exceed the prescribed cost ceiling.
4. Repayment Capacity Rules
The maximum permissible HBA loan is calculated based on the employee’s remaining length of service and repayment capacity:
| Service Remaining at Retirement | Maximum Monthly Deduction / Capacity | Gratuity Adjustment |
| More than 20 Years | Up to 40% of Basic Pay | N/A |
| Between 10 and 20 Years | Up to 40% of Basic Pay | Up to 65% of DCR Gratuity adjustable |
| Less than 10 Years | Up to 50% of Basic Pay | Up to 75% of DCR Gratuity adjustable |
5. Disbursement Schedule
Disbursement depends on the nature of the property acquisition:
+----------------------------------------------------------------------+
| HBA DISBURSEMENT TYPES |
+-----------------------------------+----------------------------------+
|
+-----------------------------+-----------------------------+
| |
[ READY-BUILT FLAT / HOUSING ] [ NEW CONSTRUCTION ]
• Paid in 1 Lump Sum upon • 1st Installment (50%):
Agreement Execution After Mortgage Execution
• Mortgage must be completed • 2nd Installment (50%):
within 3 Months When construction reaches
Plinth Level
Plot Purchase + Construction Breakdown
- Single-Storeyed Construction:
- 40% (or actual plot cost): Disbursed on execution of Agreement & Surety Bond.
- 30%: Disbursed upon mortgage deed execution.
- 30%: Disbursed when construction reaches plinth level.
- Double-Storeyed Construction:
- 30%: Disbursed on execution of Agreement for plot cost.
- 35%: Disbursed upon mortgage deed execution.
- 35%: Disbursed when construction reaches plinth level.
6. Recovery & Interest Computation
- Recovery Order: Principal is recovered first in a maximum of 180 monthly installments, followed by interest in a maximum of 60 monthly installments (Total = 240 installments).
- Commencement of Recovery:
- Ready-Built Flat: Starts from the salary month following the drawal of advance.
- Construction Case: Starts from the salary month following house completion OR the 18th month after the 1st installment drawal (whichever is earlier).
- Plot Purchase + Construction: Starts from the salary month following completion OR the 24th month after the plot advance drawal (whichever is earlier).
- Interest Calculation: Simple interest calculated monthly on the outstanding balance.
- Death in Service: If an official dies while in service, no interest is charged beyond the date of death on the portion of the advance adjusted against DCR Gratuity.
7. Reconveyance Procedures
Upon full repayment of principal and interest:
In Case of Intestate Death: Reconveyance is executed in favor of legal heirs upon submission of a No Objection Certificate (NOC) affidavit from other legal heirs.
Release of Property: The mortgaged property is formally reconveyed to the official using Form No. 7.
Registration Mandatory: Registration of the reconveyance deed is compulsory, and expenses are borne by the employee.
Document Return: Original sale deeds, mortgage documents, and title certificates are handed back against a formal receipt.
8. Frequently Asked Questions (FAQs) on House Building Advance
Quick answers to the most common questions on HBA eligibility, loan amount, interest, repayment, and permitted uses.
Eligibility & Basic Rules
What is House Building Advance (HBA)?
House Building Advance (HBA) is a scheme regulated by the Ministry of Housing & Urban Affairs that provides financial assistance to Central Government employees for constructing, purchasing, or expanding a house.
Who is eligible for House Building Advance (HBA)?
Any permanent Central Government employee, and other employees with a minimum of 5 years of continuous service, employees on deputation, Members of All India Services, and employees of Union Territories.
Can both spouses apply for HBA if they are both Central Government employees?
Yes. If both spouses are Central Government employees, HBA can be granted to both of them either jointly or separately, provided both are eligible under the rules.
Can an employee under suspension apply for HBA?
Yes, an employee under suspension can apply for HBA, but must provide additional collateral security from two permanent Central Government employees.
Can I apply for a second HBA during my service?
No. Only one HBA is allowed to be sanctioned during the entire service period of a government employee.
Can I apply for HBA after superannuation/retirement?
No. HBA cannot be applied for after superannuation or retirement.
Loan Amount, Cost Ceiling & Interest Rate
What is the maximum loan amount under HBA?
For constructing or purchasing a new house/flat: 34 months of basic pay, subject to a maximum of ₹25 lakh or the cost of the house, whichever is lower. For expansion of an existing house: 34 months of basic pay, subject to a maximum of ₹10 lakh or the cost of expansion, whichever is lower.
What else, other than “Basic Pay,” counts as “Pay” when computing HBA and determining the cost ceiling and repaying capacity?
Family pension at normal rates drawn by a Government servant, and Non-Practising Allowance sanctioned for medical posts.
What is the cost ceiling for availing HBA?
The cost of the house to be built or purchased should not exceed 139 times the basic pay of the employee, subject to a maximum of ₹1 crore. The cost ceiling can be relaxed up to 25% in certain cases with approval from the Head of the Department.
What is the interest rate for HBA?
The current interest rate for HBA is 7.1% per annum, charged as simple interest. The rate is reviewed and notified annually by the Ministry of Housing & Urban Affairs.
Repayment, Recovery & Disbursement
How is repayment capacity calculated for HBA?
Repayment capacity is based on the employee’s remaining years of service: for employees retiring after 20 years, up to 40% of basic pay; for employees retiring in 10–20 years, up to 40% of basic pay with 65% of DCR Gratuity adjustable; for employees retiring in less than 10 years, up to 50% of basic pay with 75% of DCR Gratuity adjustable.
How is the HBA recovered?
For purchasing a ready-built house: recovery starts from the pay of the month following the one in which the advance is drawn. For constructing a house: recovery starts from the pay of the month following house completion, or after 18 months from the first advance, whichever is earlier. For purchasing land and constructing a house: recovery starts from the pay of the month after house completion, or after 24 months from purchase of the plot, whichever is earlier.
What is the repayment period for HBA?
The repayment period for HBA is 20 years: 180 monthly instalments (15 years) for repayment of the principal, followed by 60 monthly instalments (5 years) for repayment of interest.
What is the disbursement process for HBA?
For the purchase of a ready-built house, the advance is paid in one lump sum. For construction or expansion, HBA is disbursed in two instalments: 50% initially, and the balance when construction reaches plinth level. For purchase of a plot with construction — single-storeyed house: 40% initial advance, then 30% after mortgage execution and 30% at plinth level; double-storeyed house: 30% initial advance, then 35% after mortgage execution and 35% at plinth level.
Is there a provision for premature repayment of HBA?
Yes, premature repayment of HBA is allowed.
Permitted & Restricted Uses
Can HBA be used to repay an existing home loan?
Yes. HBA can be availed to repay home loans taken from banks or other financial institutions for the construction or purchase of a house/flat, subject to other extant conditions. However, the amount sanctioned will be limited to the outstanding loan amount.
Can I apply for HBA to build a second house if I already own one?
No. If an applicant or their spouse owns a house in the same town or urban area, they are not eligible for HBA. Exceptions are made for coparcenary or joint family properties, but in such cases the advance is limited to 60% of the admissible amount.
Can HBA be used for the purchase of a flat from a private individual?
No. HBA cannot be used to purchase a flat from a private individual. It can only be used for flats purchased from recognised entities such as housing boards, development authorities, or registered builders.
Is HBA available for the renovation or improvement of an existing house?
No. HBA is not available for minor renovation, repair, or improvement of an existing house. It is only available for expansion of living accommodation of an existing house owned by the employee, or jointly with their spouse.
Can I use HBA for the purchase of a plot alone?
No. HBA is not sanctioned for the purchase of a plot alone. It is only provided for purchase of a plot along with construction, or for constructing a house on a plot the employee already owns.
Can HBA be availed for the purchase of agricultural land?
No. HBA cannot be used for the purchase of agricultural land. It is strictly for the construction or purchase of residential houses or flats.
Can HBA be availed for construction of a residential portion on a shop-cum-residential plot?
Yes. HBA may be granted for construction of only the residential part of a building on a shop-cum-residential plot situated in a residential colony, subject to conditions: the cost ceiling accounts for the cost of land plus the superstructure (including the shop(s) and residential portion); the employee must mortgage the entire property; and the employee must insure the whole building.
Is a Government employee eligible for HBA to repay a home loan taken against purchase of resale property?
No. HBA can be granted neither for the purchase of, nor for repayment of a home loan taken against, resale property.
Combining Loans, Mortgage & Legal Formalities
Can I mortgage my house with another financial institution while availing HBA?
Yes. Employees can create a second charge to meet the balance cost of the house/plot from a recognised financial institution. However, the total loan from all sources should not exceed the cost ceiling defined under HBA rules.
Is insurance of the house mandatory?
Yes. The employee must insure the house against fire, flood, and lightning for at least the amount of the advance, until the loan is fully repaid. Failure to do so attracts penal interest of 2%.
Is there any priority for the sanction of HBA?
Yes. Priority is given to: construction cases where prior commitments have been made; employees nearing retirement; and purchase of ready-built flats where delay could result in cancellation of the offer or forfeiture of earnest money.
Can I combine HBA with loans from banks or other financial institutions?
Yes. Employees can combine HBA with loans from banks or financial institutions to meet the total cost of construction or purchase, provided the total amount does not exceed the cost ceiling. HBA is treated as the first charge on the property, and additional loans as a second charge.
What is the process for mortgaging the property to the government?
Once the house is purchased or constructed, it must be mortgaged in favour of the President of India as security for repayment of the HBA. This mortgage must be registered with the local registration authorities.
Who bears the stamp duty on the Mortgage Deed and Reconveyance Deed?
Stamp duty on the Mortgage Deed and Reconveyance Deed, wherever charged, has to be borne by the loanee Government servant.
Special Situations
What happens if an employee dies before repaying HBA?
If an employee dies before repaying the advance, the balance is adjusted against the death-cum-retirement gratuity (DCRG), and no interest is charged on the amount so adjusted.
Can an employee apply for a second loan if the HBA isn’t enough?
Yes. Employees can take a second loan from banks or other financial institutions after obtaining a No Objection Certificate (NOC) for the second charge, provided the total loan amount does not exceed the cost ceiling of the house.
What happens if the construction is not completed within the stipulated time?
The employee becomes liable to refund the entire amount advanced, together with interest, in one lump sum. An extension of the time limit may be allowed — up to one year by the Head of the Department, and for a longer period by the Government — where the delay was due to circumstances beyond the employee’s control.
Can I sell the house built or purchased with HBA before repaying the loan?
No. The house cannot be sold or transferred until the entire loan, including interest, is repaid in full. If an employee wants to sell the house, prior permission from the competent authority is required, and the outstanding amount must be cleared.
What happens if an employee is transferred after availing HBA?
If an employee is transferred after availing HBA, recovery of the advance continues from the new place of posting.
Related Staffcorner Guides
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