Home loan LTV limits and down payment in India: how much will the bank fund?

Under RBI rules, a bank home loan can fund at most 90% of the property cost for loans up to ₹30 lakh, 80% for loans above ₹30 lakh and up to ₹75 lakh, and 75% for loans above ₹75 lakh. The rest is your down payment, often called own contribution or margin money. Stamp duty, registration and other documentation charges are generally excluded from the property cost for this calculation, so you usually pay them from your own funds as well. A lender may lend less than the cap if the valuation comes in lower or your income does not support the EMI.

This guide is part of the overview of home loan interest rates. Figures are illustrative; confirm current limits on the Reserve Bank of India site.

The RBI loan-to-value caps

These are ceilings. Lenders' own credit policies can be stricter, for example for plots, self-construction, older buildings or self-employed borrowers. Housing finance companies follow similar LTV limits under the rules that apply to them; ask your HFC which limit it applies.

What counts as the property cost

The lender usually takes the lower of the agreement value and its own technical valuation. If you agree to pay ₹62 lakh but the valuer puts the flat at ₹60 lakh, the LTV is applied to ₹60 lakh.

Generally excluded:

• Stamp duty and registration charges on the purchase
• Other documentation charges

Sometimes included, depending on lender policy and the agreement:

• Car parking, preferential location charges and similar amounts that form part of the sale agreement
• Cost of fixtures included in the agreement value

For small loans, RBI has allowed lenders to include stamp duty, registration and documentation charges in the property cost where the cost of the house does not exceed ₹10 lakh. Ask your lender whether this applies to you.

Worked examples of down payment

Example 1: ₹60 lakh flat (illustrative)

• Loan bracket: a loan here would exceed ₹30 lakh, so the 80% cap applies
• Maximum loan: 80% × ₹60,00,000 = ₹48,00,000
• Down payment: ₹60,00,000 − ₹48,00,000 = ₹12,00,000
• Stamp duty at an illustrative 6% and registration at 1%: ₹3,60,000 + ₹60,000 = ₹4,20,000
• Cash needed before interiors and moving: ₹12,00,000 + ₹4,20,000 = ₹16,20,000

Stamp duty and registration rates differ by state, and some states offer concessions for women buyers. Check your state's stamps and registration department.

Example 2: ₹1.2 crore flat (illustrative)

• 75% cap: maximum loan ₹90,00,000
• Down payment: ₹30,00,000 plus stamp duty and registration

Example 3: the ₹30 lakh edge case

For a ₹35 lakh flat, 90% would be ₹31.5 lakh. That is above ₹30 lakh, so it falls in the 80% bracket, which gives only ₹28 lakh. But ₹28 lakh is a loan up to ₹30 lakh, where 90% is allowed. The resolution is that the loan can go up to ₹30 lakh, because ₹30 lakh is within the first bracket and is below 90% of ₹35 lakh (₹30 lakh ÷ ₹35 lakh = 85.7%). Lenders handle these edge cases in their own systems, so ask for the exact figure.

Why a bigger down payment can be worth it

A larger down payment lowers the EMI, and some lenders also price lower-LTV loans at a lower spread. On a ₹60 lakh flat over 20 years at an illustrative 8.5%:

Each extra rupee of down payment saves interest at your loan rate, which is usually more than a fixed deposit earns after tax. Against that, do not empty your emergency fund. Keep at least six months of EMI and household costs in reserve. You can run other combinations in the EMI calculator.

Under-construction property: margin is paid in stages

For a flat in an under-construction project, the builder raises demands as construction progresses. You pay your own contribution first or in proportion, and the lender disburses its share against each stage. The pre-EMI versus full EMI guide shows how interest builds up during construction. Check the project's registration and the payment plan on your state's RERA website before booking.

Mistakes to avoid

• Borrowing the down payment on a personal loan. It raises your total EMIs, may reduce your home loan eligibility and is expensive.
• Assuming the agreement value is the valuation. A low valuation means a smaller loan and a larger cash gap.
• Forgetting the costs after the down payment. Stamp duty, registration, society transfer charges, maintenance deposits and interiors add up.
• Paying cash components. Unrecorded payments are illegal, are not covered by the loan and leave you exposed if the deal goes wrong.

Frequently asked questions

Can I get a 100% home loan in India?

Not from a regulated bank within RBI's LTV rules for standard home loans. Offers that promise to fund the full price usually combine a home loan with another loan, such as a personal loan or a builder scheme. Treat them with caution.

Does the LTV cap apply to a balance transfer?

The new lender will assess the current property value and the outstanding loan. Usually the outstanding amount is well within the cap because the property has appreciated and the loan has been partly repaid.

Is the down payment eligible for any tax deduction?

No. Only principal repayments of the loan qualify, under the old regime, within the overall ₹1.5 lakh investment limit. Stamp duty and registration paid in the year of purchase can also be claimed within that limit. See home loan tax benefits.

Will a top-up loan raise my LTV?

Yes. The combined outstanding loan and top-up is compared with the current property value, and the lender's limits apply.

Sources

• Reserve Bank of India — LTV ratios and housing loan instructions
• National Housing Bank — housing finance company rules and housing price data
• Ministry of Housing and Urban Affairs — RERA framework and links to state authorities
• Your state's stamps and registration department — stamp duty and registration on purchase