The Key Facts Statement: what your lender must show you before you sign a home loan

Rules and rates as of 18 October 2026.

Most people sign a home loan agreement of fifty-odd pages without reading it. The RBI's answer is a short standard document every lender must hand you first: the Key Facts Statement, or KFS. It puts the true yearly cost of the loan, every fee and the repayment schedule in one place, in a format that is the same across lenders. Used properly, it is the easiest way to compare two offers.

Where the rule comes from

The governing circular is "Key Facts Statement (KFS) for Loans & Advances", RBI/2024-25/18, dated 15 April 2024. It applies to all retail and MSME term loans by commercial banks (including small finance, local area and regional rural banks, but not payments banks), urban, state and central co-operative banks, and all NBFCs, including housing finance companies. A home loan to an individual is a retail term loan.

It is mandatory for all new retail and MSME term loans sanctioned on or after 1 October 2024, including fresh loans to existing customers. Credit card dues are exempt. Loans sanctioned before that date were covered by older and narrower KFS rules, which this circular replaced.

What the lender must do

• Before you sign. The KFS must be given to you before the loan contract is executed, in the standard format the RBI prescribed.
• In your language. It must be written in a language you understand, its contents must be explained to you, and the lender takes your acknowledgement that you have understood it.
• A firm offer for a few days. Each KFS carries a unique proposal number and a validity period of at least three working days for loans of seven days or more. If you accept within that window, the lender is bound by the terms.
• One all-in number. It must show the Annual Percentage Rate (APR), which the RBI defines as the annual cost of credit to the borrower, covering interest and all other charges. A computation sheet for the APR and the full repayment schedule must come with it.
• Third-party charges shown separately. Charges the lender collects for others, such as insurance or legal fees, are part of the APR and must be disclosed separately. Where the lender collects them, it must give you receipts.
• No surprise fees. Any fee or charge not mentioned in the KFS cannot be charged at any stage of the loan without your explicit consent.
• Part of the agreement. The KFS also goes into the loan agreement as a summary box.

Other rules that point to the KFS

Three other RBI instructions use the KFS, or the sanction letter, as the place where something must be disclosed:

• Prepayment charges. The Pre-payment Charges on Loans Directions, 2025 (for loans sanctioned or renewed from 1 January 2026) bar such charges on floating-rate loans to individuals for non-business purposes. Whether any charge applies must be disclosed in the sanction letter, the loan agreement and the KFS, and a charge not disclosed this way cannot be levied.
• Penal charges. Under the RBI's August 2023 circular on penal charges, in force from 1 January 2024, late-payment penalties must be a charge, not extra interest, and cannot be capitalised. Their amount and reason must be disclosed in the loan agreement and the most important terms and conditions or KFS.
• Floating-rate resets. The August 2023 circular on resetting floating rates says lenders must explain at sanction how a change in the benchmark could affect your EMI or tenure, and disclose in the sanction letter any charge for switching to a fixed rate. It also requires a quarterly statement showing what you have repaid, EMIs left, and the APR.

For bank loans, the RBI's Interest Rates on Advances Directions, 2025 add that the benchmark used to price the loan and the exact reset periodicity must form part of the loan contract. A repo-linked rate must be reset at least once in three months. Within the spread, the credit risk premium may change only if your credit assessment changes substantially; other components may be altered once in three years. Those directions apply to commercial banks; a housing finance company's loan is governed by its own rules, so read its sanction letter for the benchmark.

Worked example: why the APR matters

Two illustrative offers on a ₹50 lakh loan for 20 years (240 months). Neither is a real quote.

• Lender A: 8.25%, with ₹23,000 in processing, legal and valuation fees.
• Lender B: 8.15%, with ₹60,000 in fees.

The EMI is P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), with r the monthly rate. For A, r = 8.25 ÷ 1,200 = 0.006875, giving an EMI of ₹42,603. For B it is ₹42,290.

The APR asks a different question: what yearly rate makes the EMIs you pay worth exactly what you actually receive? For A you receive ₹50,00,000 − ₹23,000 = ₹49,77,000, so we solve for the monthly rate i in ₹49,77,000 = ₹42,603 × (1 − (1 + i)⁻²⁴⁰) ÷ i and annualise it as 12 × i. We computed this in Python.

	Lender A	Lender B
Interest rate	8.25%	8.15%
Fees paid upfront	₹23,000	₹60,000
EMI	₹42,603	₹42,290
Interest plus fees over 20 years	₹52,47,788	₹52,09,594
APR if held for 20 years	8.31%	8.31%
APR if closed after 5 years	8.37%	8.46%

Over the full 20 years, the two offers cost almost the same once fees are counted: both work out to about 8.31%. B's lower rate is mostly eaten by its higher fees. But home loans are often prepaid or moved to another lender. If you close the loan after five years, A is clearly cheaper, because B's extra ₹37,000 in fees is spread over fewer months. Interest plus fees over those five years: ₹19,70,653 for A against ₹19,82,816 for B.

Two caveats. A lender's APR sheet may use a slightly different method from our 12 × monthly rate, so small differences in the second decimal are normal. And on a floating-rate loan the APR is computed at today's rate; it will change when the benchmark does.

What to check in your KFS

• The proposal number and the validity date. Ask for the KFS before you pay any non-refundable fee.
• The rate type, the benchmark and spread, and the reset frequency.
• Every fee, with third-party charges such as insurance and legal fees listed separately. If an insurance premium is in there, ask whether it is optional.
• Whether prepayment charges apply. On a floating-rate home loan in your own name sanctioned from 2026, they should not.
• Penal charges: the amount and when they apply.
• The APR and the repayment schedule. Compare APRs, not headline rates, across offers.

If a lender levies a charge that was not in your KFS, write to its grievance officer citing the 15 April 2024 circular. For the legal fine print of the agreement itself, a lawyer can review it before you sign.