A home loan may once have meant multiple trips to a bank branch, piles of paperwork and plenty of waiting. That is changing. More Indians are now starting their home-loan journey online, while smaller cities are emerging as an important source of housing demand.
A new report by SGA PR suggests that smaller cities and digital lending could drive the next phase of growth in India’s housing finance market.
The report, ‘Housing Finance in India – The Silent Giant of Retail Credit’, highlights the changing home-loan landscape, with technology playing a growing role in how borrowers discover and apply for housing finance.
Digital adoption in housing finance has increased sharply in recent years. According to data cited in the report, nearly 92% of housing-finance applications were processed digitally in 2024, compared with around 60% in 2020.
The shift is also visible in how borrowers find lenders. Around 42% of housing finance firms said most of their enquiries now come through digital channels.
However, home loans have not become completely digital. Unlike some forms of unsecured lending, housing finance still involves property checks, physical verification and field-level work. Manual intervention therefore remains an important part of the process.
The bigger story, however, may be where these loans are coming from.
The report said Tier 2 and Tier 3 cities account for around 64% of home-loan volumes, with volumes growing 81% year-on-year in 2025.
Several factors are supporting this shift. Rising incomes, better infrastructure, new employment opportunities and urbanisation are encouraging more people in smaller cities to buy homes.
The affordability gap in major metros is another factor. With property prices remaining high in many large cities, smaller towns can offer buyers relatively more affordable housing options.
Technology is also opening up a new opportunity in mortgage distribution.
Fintech platforms are connecting borrowers with lenders through digital journeys. These platforms can help customers check eligibility, compare options, complete documentation and find lenders that match their requirements.
Rahul Jain, CEO of SGA PR, said the opportunity is now about making formal housing credit available to a much wider group of borrowers, particularly as demand moves beyond metros.
Meanwhile, the report expects affordable housing, smaller-city demand and digital sourcing to remain key growth areas.
By 2030, digital sourcing could cross 70%, while AI-based underwriting could become more common across the lending process.
For India’s housing finance market, the next growth story may therefore not come only from big cities. It could increasingly be built in smaller towns, with technology helping lenders reach borrowers faster and more efficiently.