How to Use Provident Fund to Buy a House

Uses of Provident Fund in Buying a House
09:33 AM 03 Sep 2018

Do you want to buy a house?

Are you falling short of money to buy a house? Do you want to take a loan?

What about the equated monthly installment (EMI)?

How much EMI can you pay?

Are you wondering if there are other ways to finance your purchase?

Did you know that you can withdraw up to 90% of your EPF balance or repay a loan using the amount in your employee provident fund (EPF) account to buy a house?

An EPF member can withdraw 90% of his employee provident fund (EPF) balance for buying a house. The new EPF scheme called ‘Employees Provident Fund (Fourth Amendment) scheme, 2017 is effective from 12 April 2017.

To encourage and support the central government’s ‘Housing for All by 2022’, the government amended to the existing EPF withdrawal rules.

So, how does it help you?

  • An employee can withdraw 90% of the accumulated EPF balance. It includes both employee and employer contribution plus interest accrued on the total amount in the account.
  • You can use the money to buy a house, construct a house, or buy a plot of land.
  • You can even use it to pay equated monthly installment (EMI) of your home loan.
  • EPFO will pay the amount directly to the seller such as central government, state government, co-operative society, or even a private builder, promoter or developer.
  • If you are an active member of EPF for the past three years, you can withdraw the money in your PF account for buying a house. Before the amendment became effective, you had to be an active member for more than five years.
  • Avail this facility if you have a fund shortage to buy a house or pay your home loan EMIs.


  • You must be an EPF member contributing to your account for more than three years now.
  • You can withdraw from your EPF account only for buying a plot or construction of a house in a registered society with more than ten members.
  • You can also withdraw if you are buying a land/plot to construct a house from the government, housing agency, developer, or promoter.
  • You can withdraw money for buying a house/ plot jointly with your spouse. In this case, if you spouse must also be an EPF member.
  • You can withdraw from EPF account to repay EMI on your home loan.
  • The minimum EPF balance in your account should not be less than Rs 20,000. In case of joint ownership, the EPF balance in your account and your spouse’s account should be more than Rs 20,000.
  • You can withdraw only once from your EPF account.
  • You cannot withdraw money for buying a house in the secondary market as a resale transaction.

Procedure to Withdraw Money From Your EPF Account

If you are eligible to withdraw the money from your EPF account, follow the procedure given below:

  • Apply to the commissioner of EPFO to get the PF account number, the name of the EPF member, the balance in EPF as on, and the details of provident fund account for the last three years.
  • The commissioner will issue a certificate with all the details to the bank or housing society that is mentioned in your application.
  • In the application, you must also declare the balance in the PF account and confirm that it is more than Rs 20,000.
  • If you want to withdraw jointly from your
  • Submit the certificate to the government, registered cooperative society, housing agency, builder and promoter.
  • Alternatively, you can take a print of passbook from the EPF website to get to know how much money is accumulated in your PF account.

After receiving your application, EPFO will directly pay the amount withdrawn to the bank or cooperative housing society.

How much will EPFO pay?

The amount equal to 90% of the employee’s share, employer’s share plus interest accrued or the cost of the property, whichever is lower. 

In case of home loan

  • Along with the form given above, you must also apply to the commissioner of EPFO authorizing him to pay EMIs to the lending bank or financial institution.
  • The application contains the details of the EPF amount, the EPF and loan account number, name of the bank or lending institution, address, and so on.
  • The lending bank or financial institution confirms that the details given in the application form are correct.
  • Once getting the confirmation, EPFO will disburse the eligible EPF amount towards the home loan repayment.

If the amount in your EPF account is not sufficient to meet the home loan EMI, you must pay the remaining amount to the bank or lending institution. EPFO will pay money to the bank till the time there is enough balance in your account, and your EPF account is active.

Your application should mention that you are solely responsible for repaying all the dues like interest and the balance of the loan amount in case the EPF account becomes inactive, or there is insufficient money.

If your allotment is cancelled, then the amount withdrawn should be paid back into the EPF account within fifteen days of cancellation of the allotment. The EPFO will credit your account once they receive the money back.

The purpose of employee provident fund is to accumulate money regularly that can be used by the member post-retirement. Therefore, if you withdraw money from your EPF account, you will be left with very little money to support you after you retire.

Ensure that you plan for your retirement needs before you decide to withdraw money from your EPF account. Also, taking a home loan works out much cheaper as there are tax deductions when you repay the loan.

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