New EPF withdrawal rules ease home buying for first time buyers

The Employees’ Provident Fund Organisation (EPFO) has announced significant changes to its withdrawal rules, providing a significant relief for first-time homebuyers. Members can now withdraw funds for home purchases after just three years of opening their EPF account. This marks a reduction from the previous five-year requirement, and allows withdrawal of up to 90% of the EPF corpus. This change is seen as a vital step towards aiding salaried employees in arranging down payments for their homes.

Under the newly instated Para 68-BD in the EPF Scheme, 1952, EPFO members now have more flexibility in using their funds. This amendment is geared towards facilitating housing needs and is permitted once in a member’s lifetime. Experts anticipate this could significantly spur demand in the real estate market, making home ownership more attainable for the middle class. This is expected to be a major boost to the housing sector, encouraging more individuals to invest in properties and fulfill their dreams of owning a home.

Abhishek Raj, founder and CEO of Zenica Ventures, called the move a “game-changer for India’s housing market.” He highlighted the elimination of one of the biggest obstacles in purchasing a home, which is the arrangement of a down payment. “The biggest hurdle in the home buying journey has always been the down payment arrangement, especially for first-time salaried buyers. Now that people can use their PF savings, this financial barrier has been largely removed,” Raj stated.

Raj also noted increased enthusiasm among potential homebuyers in key urban areas like NCR, Pune, Indore, and Lucknow. “This reform not only brings liquidity into the system, but also turns dormant savings into an action-oriented home ownership tool,” he added, while cautioning buyers to consider their retirement security.

In addition to housing-related adjustments, the EPFO has also implemented other significant changes. These include enabling instant withdrawals via UPI and ATMs for emergencies, up to ₹1 lakh, starting June 2025. The auto settlement limit for claims has been increased from ₹1 lakh to ₹5 lakh, expediting the process for employees.

The claim process itself has been simplified, reducing the required parameters from 27 to 18, which streamlines operations and ensures that 95% of claims are settled within three to four days. These measures aim to improve the efficiency of fund access for EPFO members.

For other essential expenses like education, medical needs, and marriage, the withdrawal process from the Provident Fund has been made easier, significantly improving liquidity for employees. These reforms are expected to provide timely financial support for various life events.

The recent changes in the EPF rules reflect a broader strategy to empower salaried employees by enhancing their financial flexibility and security. With these modifications, the government aims to stimulate the housing market and address the evolving needs of EPFO members.

This overhaul of the EPF withdrawal norms stands to benefit many first-time homebuyers, simplifying the financial aspects of owning a home, while also addressing other critical financial needs of employees.