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How Your EPF Can Help You Buy Your Dream Property In India

Personal Finance

Buying your own property is the dream of every person. Have you ever considered using your EPFO money to pay for the house of your dreams? The Employees’ Provident Fund (EPF) in India is a government-backed retirement savings scheme for salaried individuals. It offers a convenient and tax-efficient way to save a portion of your income for the future. Along with providing financial security in old age, the EPF can also be used to purchase a dream property. By strategically using your EPF savings, you can turn your housing aspirations into a reality. However, it’s essential to keep in mind the guidelines and rules set by the EPFO regarding the use of EPF funds for property purchases. With careful planning and proper utilization of EPF savings, it’s possible to make your dream of owning a home a reality.

The lock-in period for the Provident Fund (PF) scheme is 15 years. It is a closed-ended investment. As a result, when you are encouraged to invest in PF, the image of money locked away in a closet hangs over your head. Nevertheless, there are some procedures in place for investors so they can take advantage of their provident fund savings before the 16-year period has run its course. Not many people are aware that provident fund savings can be utilised to acquire real estate. Let’s examine how this functions. One way to realise your desire for a home is to use your provident fund to buy a property.

Firstly, let’s understand the various types of provident funds. When you first began working, you must have heard the word EPF. Employees’ Provident Fund Organization (EPFO), based in India, manages the EPF account. A portion of the pay (now 12%) is contributed to this account by the employee, and the company also contributes the same amount. It is very different from PPF (Public Provident Fund).

PPF, or public provident fund, is a savings account that may be opened at any State Bank of India branch. Here are some of the key distinctions between EPF and PPF:

  • EPF is only intended for salaried employees, but a PPF account can be owned by a child. The tenure of your employment and the tenure of the EPF coincide. When you leave your company, you can request that the EPF money be withdrawn and the account closed. On the other hand, money held in a PPF cannot be withdrawn early. Based on the amount deposited in PPF, the depositor may request a loan from the bank (more about it in the next section).
  • PPF interest is tax-free, however, employee provident fund profits in the form of interest constitute taxable income.

Using the Public Provident Fund to Buy a Property

Even though there is a 15-year lock-in term when investing in a public provident fund plan, you can still utilise the money by taking out a loan after five years of contributions. The money can be used to build the property or to purchase an already-built property. If you and your spouse jointly or alone own the plot, you may also borrow money from the provident fund.

The amount of a loan you can obtain through the provident fund plan depends on its use. For instance, if a loan is used to purchase real estate, the maximum amount that can be borrowed is equal to the number of accumulated pension funds up to the maximum amount of two years’ worth of basic pay plus dearness allowance.

The maximum amount of accumulated PF is the only limit on loans for the purchase of a built-in house or construction. The loan amount is equal to the salary for three years plus the cost of living. Home loans are provided up to the lesser of the property’s cost and the amount of accumulated PF.

One can withdraw money from PF for upgrading an existing property in addition to building a new home or purchasing a property that has already been built. It is not required that this property match the one for which the loan for development or acquisition was obtained. The property that will be built may be owned jointly by the husband and wife or by either spouse.

Provident fund scheme’s conditions for money withdrawal

If house construction is to begin right away or within six months of the withdrawal, you may take money out of your provident fund. The completion must be completed within a year as well. Similar requirements apply for using the money for purchases: the property must be bought within a year following the money’s withdrawal. There should be a ten-year gap between any two provident fund withdrawals. As a result, after taking out a home loan from your provident fund to buy a property, you can only withdraw again for improvements ten years after the first time, provided there is still money in your PF account. If funds are to be withdrawn to enhance a built-in property, five years must have passed after the building was finished.

The PF amount may also be applied to the repayment of a mortgage! You can certainly check your provident fund account if you have a home loan and need assistance paying it back. If you wish to use the money from your provident fund plan to pay off a home loan that you or your spouse took out jointly is also an option. The maximum amount that can be taken for the payment is the whole amount accrued in PF (less what is necessary to maintain the account), up to the equivalent of three years’ salary and dearness allowance. The entity does not have to be an individual to use this service. Publicly recognised organisations like municipal corporations, state and federal governments, registered non-cooperative societies, and any other development authority may also make withdrawals, but only for residential use.

Key PPF withdrawal guidelines

What amount can be taken out of a PPF account?

The maximum withdrawal amount is, in fact, subject to several conditions. The PPF account cannot be tapped until five years of contributions have been made, as was previously stated. 50% of the closing sum at the beginning of the fifth year of contributions is available for withdrawal. By way of example, if the PPF balance is 1 lakh at the end of the fourth year, only 50,000 can be withdrawn at the end of the fifth year. The closing balance utilised for computation in years longer than five years will also be the total accumulated after the previous year. Only loans that are within the PPF account’s maximum withdrawal amount are permitted. In a given fiscal year, you are only permitted one withdrawal from your PPF account. Only once the initial loan has been fully repaid is a second loan from a PPF account authorised.

Regulations regarding EPF account withdrawals

If you work for a salary, you can join the EPF plan and put aside a portion of your pay as long as you continue to work for the same company. The employee provident fund organisation (EPFO) has policies in place to support its members who desire to buy real estate. The following regulations apply:

* A home purchase may require a withdrawal of 90% of the EPF account‘s value. If the building cost turns out to be less than the amount taken or if the property is not allocated for any reason, there is a provision for re-depositing the withdrawn cash back into the account within a month. Additionally, the EPF money may be withheld for loan repayment. For this reason, a specific form called Annexure I is supplied, in which the loan applicant is required to fill out all pertinent information.

*Following repayment,  Annexure II is released with information on the balance of the EPF and the subsequent payments to be made into this account. To allow the EPF account manager to pay the home loan EMIs with the money that has accumulated in the account.

*Annexure III must be completed. This Annexure must be completed in conjunction with Annexure I. Once a member leaves the company and closes the account, the EPFO is not responsible for paying any EMI or associated fees.

Forms needed to take money out of your PPF account

SBI offers Form C for submitting requests for partial withdrawals from PPF accounts. To withdraw the allowed amount, one must include their account number and PPF enrolment start date. In addition to SBI, 22 other banks also provide PPF account options. You can open a PPF account at any of their PPF branches and follow the necessary procedures to withdraw funds to purchase property following the conditions set forth.


This programme is definitely for you if you are conscious of your monthly or daily expenses and have the financial means to purchase a home. However, the programme also has several provisions to build your value property if you are unable to pay a lump sum for your dream home. For more consultancy services visit Piramal Finance Website. 

In either case, the EPF housing programme is only offered to ensure that you can still purchase your ideal home even if you do not have sufficient cash flow.