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PF Withdrawal for Home Loan: Process, Rules, Eligibility and More

April 02, 2024
PF Withdrawal for Home Loan: Process, Rules, Eligibility and More

PF withdrawal for home loans provides financial assistance for individuals aiming to buy or pay off a home loan using their saved Provident Fund (PF) money. This involves taking out a portion of one's PF savings to support home purchase or loan repayment. It is important to understand the rules, who can qualify, and the amount that can be withdrawn. While using PF for a home loan helps in the short term, it is vital to think about its impact on future financial stability and long-term savings goals.

This guide breaks down the process, eligibility, rules, and factors to consider when withdrawing PF for home loan interest rates and other purposes.

What is a Provident Fund (PF)?

The Employees’ Provident Fund (EPF) is a savings scheme where employees, employers, and sometimes the government contribute. In India, it is administered by the Employees’ Provident Fund Organisation (EPFO), a social security program aimed at providing financial support during retirement. The contributions accumulate over time, get interest, and are then either given to the employee in one go or are given small funds in regular intervals of time, after retirement.

What are the Rules for a Provident Fund Withdrawal?

Withdrawal from the PF for home loan purposes follows specific guidelines set by the government and the EPFO.

To utilise PF funds for a home purchase or loan repayment, certain eligibility criteria must be met, such as having completed a minimum period of service. Also, the amount that can be withdrawn is subject to limitations, typically capped at a certain percentage of the total PF balance. While using PF withdrawal for home loans can provide immediate financial assistance, it is essential to be aware of the rules to follow them and consider the long-term implications on retirement savings and financial security

Concept of PF Withdrawal for Home Loan

If your workplace has over 20 employees, you're entitled to PF benefits. Joining the EPF is a must if you earn below INR 15,000 monthly, but those earning more can also opt in. Typically, both you and your employer contribute 12% of your salary to the PF. You can contribute extra, but your employer won't match this additional amount. EPF members receive pension and insurance benefits, too. Remember, EPF withdrawals are tax-free only after 5 years of continuous service. In case of your demise, your nominee can withdraw your PF. Premature withdrawals above INR 50,000 attract a 10% TDS. Leaving before 5 years are completed will also lead to a tax penalty.

Step-by-Step Guide to Withdraw PF for Home Loan

  • Check if you're eligible by completing the minimum service period.
  • Get the PF withdrawal form and mark "Home Loan Repayment" as your withdrawal reason.
  • Attach the required documents, like your home loan repayment proof or purchase agreement.
  • Submit the form and documents to your employer or the EPFO office.
  • Wait for verification and approval of your application.
  • Once approved, the withdrawal amount will be sent to your account or given as a cheque.
  • Remember to consider any tax implications from withdrawing your PF for a home loan.
  • Keep an eye on your application status via the EPFO portal or through your employer.
  • Make sure your nominee information is current.

Must Read - How To Plan To Buy A House In Delhi In 2024

What is the Eligibility for a Provident Fund Withdrawal for a Home Loan?

Obtaining a PF withdrawal for a home loan involves following specific rules to ensure proper usage of saved funds. You can withdraw up to 90% of your EPF balance for home purchases, provided you've completed a minimum service period of 5 years. Early withdrawals of more than INR 50,000 incur a 10% TDS on the withdrawal. Joint purchases with your spouse are allowed, and the new house must be jointly owned by either of you.

Withdrawals should be done in installments, with construction commencing within 6 months and completion within 12 months of the final installment. Property transactions should occur within 6 months of PF withdrawal, and such withdrawals are allowed only once in a lifetime. Following these rules ensures that PF funds are used responsibly for important financial investments, such as buying a home.

What are the Documents Required for a Provident Fund Withdrawal for a Home Loan?

  • PF Withdrawal form: This form can be obtained from your employer or at the EPFO website. Mark “home loan repayment” as the reason for withdrawal.
  • Identification: These include an Aadhar card, PAN card, account details, and a cancelled cheque.
  • Proof of employment: This can be your employment ID card, appointment letter, or any other document verifying your employment status.
  • Form 15G/15H (if applicable): If your withdrawal amount exceeds a certain threshold and you're eligible for tax exemption, you may need to submit Form 15G (for individuals below 60 years) or Form 15H (for senior citizens).
  • Universal Account Number (UAN) of your PF/EPF account: The UAN is a 12-digit number given to EPF contributors. It helps in managing PF accounts.
  • Account details: This information transfers the amount you withdraw from your PF account to your account.
  • Phone number: This is used for any necessary communication.

What are the Limits of Provident Fund Withdrawal for a Home Loan?

Understanding the limits of Provident Fund (PF) withdrawal for a home loan is very important. Typically, individuals can withdraw up to 90% of their EPF balance for home purchases or loan repayments. This option provides immediate financial assistance in acquiring a home or settling a loan, but it's essential to weigh its long-term effects.

While accessing PF funds for a home loan may offer short-term relief, it's important to assess its impact on future financial stability and retirement savings. Considering alternative options or seeking financial advice can help you make informed decisions about using your PF savings for housing needs while ensuring overall financial well-being.

How to Make a Provident Fund Withdrawal for a Home Loan?

  • Check eligibility: Ensure you meet the criteria, typically involving a minimum service period.
  • Obtain withdrawal form: Get the PF withdrawal form from your employer or the EPFO website.
  • Specify reason: Indicate "Home Loan Repayment" as the withdrawal purpose.
  • Attach documents: Include necessary documents like proof of home loan repayment or purchase agreement.
  • Submit form: Submit the completed form and documents to your employer or the EPFO office.
  • Verification and processing: Your application will undergo verification before processing.
  • Disbursement: Once approved, the withdrawn amount will be disbursed.

Things to Know to Withdraw PF Amount to Repay Home Loan

When withdrawing PF to repay a home loan, certain key points are vital to consider. Firstly, check your eligibility based on the duration of your service. This is the most important step, since for home loans, it is generally 5 years of service but can be different in different areas.

Next, obtain the withdrawal form and specify the purpose of loan repayment. Make sure you gather all necessary documents, like proofs of loan repayment. Submit the filled form and documents to either your employer or directly to the EPFO. Your application will undergo verification, and then the withdrawn amount will be disbursed upon approval. Be mindful of the tax implications if you are making an early withdrawal.


Following the above steps will guide you in using your Provident Fund (PF) for home loan repayment efficiently. The PF not only serves as a retirement fund but also as a potential financial aid for significant life milestones, such as purchasing a home. Remember, while tapping into your PF offers immediate financial relief, it's crucial to weigh this decision against your long-term retirement goals.

Looking to finance a home purchase without dipping into retirement savings? SMFG Grihashakti offers a variety of home loan options. With competitive home loan interest rates and flexible repayment terms of up to 30 years*, we're here to help you secure your dream home.

Disclaimer: *Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG Grihashakti. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG Grihashakti’s policy at the time of loan application. If you wish to know more about our products and services, please contact us.

SMFG India Home Finance Co. Ltd. (Formerly Fullerton India Home Finance Co. Ltd.)
CIN number: U65922TN2010PLC076972

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