Home Loan Guide

Who can apply for a housing loan?

Any Indian citizen, including Non Resident Indians, with a steady source of income can borrow funds for financing the cost of a flat from housing finance companies and banks.

How much can a person borrow?

Loans are generally disbursed between 80%-90% of the cost of the flat, depending on the repayment capacity of the borrower. The balance money is to be funded by the flat purchaser from his own contribution. The percentage of loan would vary from bank to bank.

Who is an NRI?

A person residing outside India who is a citizen of India or a person outside India who is of Indian origin is an NRI. The definition of Person resident outside India is defined under section 2(w) of Foreign Exchange Management Act, 1999 as "a person who is not resident in India".

What are the various facilities available to NRI?

NRIs are granted the following facilities:
  • Maintenance of bank accounts in India
  • Investments in securities/shares of, and deposits with, Indian firms/companies
  • Investments in immovable properties in India

How is the rate of interest calculated in India?

Interest rates vary from time to time and from institution to institution. The interest is calculated either on a daily or monthly reducing or yearly reducing balances.

Can a NRI acquire a commercial prperty in India?

Yes, under the general permission granted by the Reserve Bank, property other than agricultural land/farm house/plantation property can be acquired by NRIs provided the purchase consideration is met either out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchaser’s NRE/FCNR accounts maintained with banks in India and a declaration is submitted to the Central Office of Reserve Bank in form IPI 7 within a period of 90 days from the date of purchase of the property/final payment of purchase consideration.

Can NRI obtain loans for purpose of acquiring a residential or commercial property in INDIA?

The Reserve Bank has granted some general permission to certain financial institutions providing housing finance e.g. HDFC, LIC Housing Finance Ltd., etc, and authorized dealers to grant housing loans to NRI nationals for acquisition of a NRI house/flat for self-occupation subject to certain conditions. Criteria regarding the purpose of the loan, margin money and the quantum of loan will be at par with those applicable to resident Indians. Repayment of the loan should be made within a period not exceeding 15 years, out of inward remittance through banking channels or out of funds held in the investors’ NRE/FCNR/NRO accounts.