Also known as LTV
Under the Reserve Bank of India’s 2017 circular on individual housing loans, banks may lend up to 90% of the property value for loans up to ₹30 lakh, up to 80% for loans above ₹30 lakh and up to ₹75 lakh, and up to 75% for loans above ₹75 lakh. Housing finance companies are covered by RBI’s separate directions for HFCs, so check the lender’s current cap.
The “value” is the lender’s assessment of the property, generally based on the agreement value and its own valuation. The buyer funds the gap — the down payment — from savings, along with stamp duty and registration, which lenders generally expect the buyer to pay.
LTV is why a broker’s first qualifying question to a loan-dependent buyer is how much they can put in themselves.
Example
A buyer in Pune is buying a flat for ₹1 crore. Because the loan would exceed ₹75 lakh, the bank can lend at most 75%, or ₹75 lakh. She must bring ₹25 lakh plus stamp duty and registration herself. On a ₹35 lakh flat, a loan up to ₹30 lakh could reach 90% of value under the slabs.
Figures are illustrative, not market rates.
Questions about Loan-to-value ratio
What is the maximum home loan as a percentage of property value?
Under RBI’s slabs: up to 90% for loans up to ₹30 lakh, 80% for loans above ₹30 lakh up to ₹75 lakh, and 75% above ₹75 lakh. Lenders can lend less depending on income, credit history and the property.
Is stamp duty included in the loan?
Generally no. Lenders work out the property value without stamp duty and registration for most loans, so buyers should plan to pay those from their own funds along with the down payment.
Sources
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