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House Building Advance Rules (HBA)

The grant of House Building Advance (HBA) to Central Government employees is regulated by the Ministry of Housing & Urban Affairs (erstwhile Ministry of Urban Development) as per the rules and regulations prescribed from time to time.

Introduction to HBA

The House Building Advance (HBA) is a financial assistance program for Central Government employees, managed by the Ministry of Housing and Urban Affairs. This scheme aids employees in acquiring or constructing residential properties under specific conditions outlined in the rules and regulations.

Purpose of HBA

HBA can be utilized for:

Construction of a New House: On land owned by the employee or jointly with a spouse.
Purchase and Construction: Of a plot and subsequent construction of a house.
Co-operative Housing Schemes: Buying plots and constructing houses through co-operative housing societies.
Self-Financing Schemes: Purchase or construction of houses under schemes in cities like Delhi, Bangalore, and Lucknow.
Ready House/Flat Purchase: From housing boards, development authorities, and registered builders (excluding private individuals).
Extension of Existing House: Adding to an existing house, provided costs are within the prescribed limits.
Repayment of Existing Loans: Loans taken from Government, HUDCO, or private sources, with certain conditions.
Migration from Bank Loans: Existing employees with bank loans can migrate to this scheme.
Residential Portion on Shop-Cum-Residential Plot: Subject to cost limits.

Eligibility Criteria

Permanent Government Employees: Eligible for HBA.
Other Employees: With at least 5 years of continuous service, and those not holding permanent State Government appointments.
Members of All India Services: Deputed to Central Government or associated bodies.
Union Territories and North East Frontier Agency Employees.
Employees/Artists of All India Radio: With long-term contracts extended up to the age limit.
Central Government Employees on Deputation: Processed by the head of the parent department.

Note: If both spouses are eligible Central Government employees, they can avail of HBA jointly or separately.

Cost Ceiling Conditions

The maximum cost of the house (excluding the plot) should not exceed:

139 Times Basic Pay: Up to Rs. 1.00 crore, with possible relaxation up to 25% for exceptional cases.

Amount of Advance

1. General Limits:

Construction/ Purchase of New House/Flat: Up to 34 months of basic salary, maximum Rs. 25 lakhs.
Extension of Existing House: Up to 34 months of basic salary, maximum Rs. 10 lakhs.

2. Rural Areas:

Advance limited to 80% of the actual cost or 100% if within a town’s periphery.

Repayment Capacity

The loan amount is calculated based on:

20 Years to Retire: Up to 40% of basic pay.
10-20 Years to Retire: Up to 40% of basic pay plus 65% of DCR gratuity.
Within 10 Years to Retire: Up to 75% of basic pay, with adjustments from DCR gratuity.

Interest Rate and Recovery

Interest Rate: 8.50% from FY 2017-18, reviewed every three years.
Recovery Pattern: Principal repaid in 180 monthly installments over 15 years, with interest in 60 installments over the next 5 years.
Rate Changes: New rates apply for subsequent installments if rates change.

Note: The previous clause requiring 2.5% additional interest is withdrawn.

Disbursement Procedures

Ready House Purchase: Lump sum payment upon contract execution, with the house purchased and mortgaged within 3 months.
New Flat Purchase/Construction: Lump sum or installments, with the agreement executed before the first installment.
Construction/Extension: Paid in two installments, with the first after mortgage and the second at the plinth level.

Plinth Level: The foundational base of the building where walls and floors start.

Mortgage Deed: Legal document transferring property rights to the lender until the loan is repaid.

Mortgage and Second Charge

First Charge: Mortgaged to the President of India.
Second Charge: Allowed with a No Objection Certificate (NOC) if additional loans are needed.

Insurance Requirements

Insurance: The house must be insured against fire, flood, and lightning with recognized institutions.
Renewal: Annual renewal is required, with premium receipts submitted regularly.
Penal Interest: Charged at 2% above the prevailing rate for uninsured periods.

Conclusion

The HBA scheme provides vital financial support for Central Government employees seeking to build or buy residential property. Adherence to the rules regarding purpose, eligibility, cost limits, repayment capacity, and insurance ensures a smooth process for securing and utilizing the advance