What is the down payment on a home loan?
Buying a house is a major life goal for many people. One important part of taking a home loan is arranging the down payment. Whether you are purchasing your first home or moving to a bigger one, knowing how much money you’ll need to pay upfront can help you plan your finances in a more practical and stress-free way.
Down payment on home loan is the upfront payment you make to a bank or NBFC such as Bajaj Finserv. It represents a percentage of the total purchase price of the home, and the rest of the purchase price is typically financed through a mortgage or home loan.
Planning your home purchase requires careful consideration of both your down payment capacity and loan eligibility. Bajaj Finserv offers competitive rates starting from 7.35%* p.a with loans up to Rs. 15 Crore* to help make your dream home affordable. Check your eligibility today. You may already be eligible, find out by entering your mobile number and OTP.
How much down payment for a home loan should be done
Down payment for home loan is 20% of the property value. According to the RBI rules, lenders in India can only provide 80% of the property value as a home loan for loans above Rs. 30 lakh.
For Example, if you want to buy a house of Rs. 40 lakh, then you need to pay minimum 20% of it, that is Rs. 8 lakh.
Features and benefits of home loan down payment
Following are the features and benefits of down payment on a home loan
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Reasonable rate of interest
Starting from 7.35%* p.a, Bajaj Finserv offers applicants an affordable home loan option to fit their finances.
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Speedy disbursal
No more long waits for loan amounts with Bajaj Finserv. Find your sanction amount in your bank account in just 48* hours from approval.
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Ample sanction amount
Bajaj Finserv provides loan amounts up to Rs. 15 Crore*, to eligible candidate, to boost your home buying journeys.
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5000+ project approved
Find over 5000+ choices in approved projects and enjoy better home loan terms from Bajaj Finserv.
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External benchmark linked loans
By opting for the Bajaj Housing Finance Home Loan linked to an external benchmark, applicants can enjoy reduced EMIs along with favourable market conditions.
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Digital monitoring
Now keep a close eye on all your loan developments and EMI schedules through the Bajaj Finserv online platform.
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Long tenor stretch
The Bajaj Finserv home loan tenor stretches up to 32 years allowing borrowers a buffer period to plan out their EMI payments.
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Zero contact loans
Experience a truly remote home loan application from anywhere in India by applying Bajaj Finserv online home loans and getting an easy approval.
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No prepayment and foreclosure charge
Bajaj Finserv allows you to foreclose the loan or make part-prepayments at no extra costs or prepayment penalty – making way for maximum savings.
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Loan subsidies
Avail of the loan subsidies offered under the PMAY scheme, with Bajaj Finserv. Approach us for updated terms and best home loan deals.
Benefits of a higher down payment when taking a home loan
Benefits of a higher down payment when taking a home loan
Opting for a higher down payment when purchasing a house offers several advantages:
Reduces the risk of negative equity situations, where the property value falls below the mortgage balance
Lowers the likelihood and severity of price declines, enhancing financial security
May eliminate the need for private mortgage insurance (PMI) with a conventional home loan
Reduces the monthly mortgage payments (EMIs) due to the smaller loan amount
Accelerates the loan payoff, helping you become debt-free sooner
Improves your eligibility for better home loan interest rates and terms
Especially beneficial if you have a lower credit score, as it increases the likelihood of loan approval
Demonstrates strong financial discipline, enhancing your creditworthiness, which can be checked through your CIBIL Score
Whether you opt for a higher or standard down payment, securing the right home loan with favourable terms is crucial for your financial well-being. A home loan from Bajaj Finserv provides flexible repayment options up to 32 years and quick approval within 48 hours*. Check your loan offers with Bajaj Finserv now. You may already be eligible, find out by entering your mobile number and OTP.
Key aspects of a home loan down payment
What is a down payment?
A down payment is the initial amount you pay directly to the seller when buying a home. It is paid before the lender provides the rest of the amount as a home loan.
Usual percentage of property value
Generally, lenders ask for a down payment of 20% of the property’s market value. However, in some cases, banks and housing finance companies may allow a lower down payment, depending on the borrower’s profile.
How it affects the loan amount
A bigger down payment means you need a smaller loan, which usually results in lower EMIs. It may also improve your chances of getting a better interest rate or loan terms from your bank, as mentioned by HDFC Bank.
Comparing lenders for best options
Different lenders may offer different down payment conditions and interest rates. It’s a good idea to compare offers from various financial institutions to find one that suits your needs, as suggested by Bajaj Finserv.
Estimating the down payment
You can use a home loan EMI calculator online to work out how much your down payment will be, and how it affects your monthly repayments.
Special cases and exceptions
Zero down payment home loans are quite rare. However, some lenders may offer low down payment schemes with added conditions like insurance cover, according to IIFL Home Loans.
Saving up for the down payment
It’s wise to start saving early. You can use tools like recurring deposits or mutual funds to steadily grow your savings over time for the down payment.
How to plan for a down payment on a home loan?
Planning ahead can make it easier to arrange the down payment for your home. Here are some steps to help you prepare:
Start saving early: Allocate a part of your income each month specifically towards your future home purchase.
Use investment options: Consider fixed deposits (FDs) or start a Systematic Investment Plan (SIP) to steadily build your down payment fund.
Utilise extra income: Bonuses, tax refunds, or side earnings can be set aside to add to your savings.
Set a target: Understand the expected minimum down payment amount so that you can set a realistic savings goal and stay on track.
Although down payments can differ based on the cost of the home and the lender’s rules, having a clear savings plan helps you stay prepared. With careful financial planning, the process becomes more manageable. If needed, you can reach out to lenders like Bajaj Finserv for personalised guidance, customised loan plans, and a smoother home loan experience.
Conclusion
Understanding home loan down payments is the first step towards successful home ownership. With the right preparation and a clear savings strategy, you can confidently approach your property purchase knowing exactly what to expect financially.
The key is to start planning early, compare different lenders, and choose a financing option that aligns with your budget and long-term goals. Whether you are a first-time buyer or looking to upgrade, having a solid grasp of down payment requirements will make your home buying journey smoother and more predictable.
Your home ownership journey deserves a reliable financial partner who understands your needs. Bajaj Finserv combines competitive interest rates with flexible terms to support your property dreams. Check your loan offers today. You may already be eligible, find out by entering your mobile number and OTP.
Important links: What is Home Loan | Home Loan Interest Rates | Home Loan Eligibility Criteria | Documents Required for Home Loan | Home Loan Balance Transfer | Joint Home Loan | Home Loan Tax Benefits | Home Loan Subsidy | Housing Loan Top Up | Rural Home Loans | Home Loan Process | Down Payment for Home Loan | Pre-approved Home Loan | Home Loan Tenure
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Frequently asked questions
Banks and financial institutions in India offered home loans with a maximum loan-to-value (LTV) ratio of up to 90%. This means they could provide a home loan covering up to 90% of the property's value, and you would be required to make a down payment of at least 10% of the property's cost. However, lending policies and regulations can change over time, and different lenders may have varying requirements.
To effectively plan for a down payment on your home loan, start by evaluating your financial situation, setting a clear budget, and calculating the required down payment amount based on your home-buying goals. Establish a savings goal and a timeline for achieving it and consider cutting unnecessary expenses to boost your monthly savings.
The down payment required for a home loan typically varies based on factors like the type of loan, lender policies, and the borrower's profile. Conventional home loans usually necessitate a down payment of 10% to 20% of the property's purchase price, but lower down payment options are available, such as those offered under government schemes like Pradhan Mantri Awas Yojana (PMAY) or affordable housing loans with down payments of 5% to 10%. Down payment requirements may change over time and vary by location, lender, and specific loan products. To determine the exact down payment for your home loan, consult with your chosen lender or a mortgage specialist for up-to-date information and eligibility criteria.
It is generally challenging to obtain a 100% home loan, as most lenders require a down payment. However, certain government schemes like Pradhan Mantri Awas Yojana (PMAY) and affordable housing loans may offer reduced down payment options. Additionally, co-applicants or guarantors with strong financial profiles can help increase the loan amount. Lender-specific programs may also provide higher loan-to-value (LTV) ratios. Eligibility criteria and loan terms can vary, so it's recommended to explore different lenders and government incentives and consult with lenders to understand their current down payment policies.
The amount of home loan you can get in India on a salary of Rs. 70,000 per month will depend on various factors, including the lender's policies, your creditworthiness, and the prevailing interest rates. Lenders typically use a Debt-to-Income (DTI) ratio to assess your loan eligibility, which helps determine the maximum EMI (Equated Monthly Installment) you can comfortably pay based on your income.
Here's a simplified calculation:
Monthly Salary: Rs. 70,000
Assuming a DTI ratio of 50%, your maximum total EMI would be: (50% of Rs. 70,000) = Rs. 35,000
To calculate the maximum home loan amount, you can use this formula:
Maximum Home Loan Amount = (Maximum total EMI / EMI per lakh)
If you're planning to buy a home worth Rs. 50,00,000, you may need to make a down payment of around 20%, which is Rs. 10,00,000. The remaining amount, Rs. 40,00,000, would be covered by the home loan. Keep in mind, lenders may also charge a processing fee, usually 1% of the loan amount—around Rs. 40,000 in this example.
When planning for such a significant investment, it is essential to secure pre-approved financing to streamline your property search. A home loan from Bajaj Finserv offers processing fees up to 4% and competitive rates to help you budget effectively. Check your eligibility for Bajaj Finserv now. You may already be eligible, find out by entering your mobile number and OTP.
It’s unlikely you’ll find a loan specifically meant to cover a down payment. While some personal loans could technically be used for this purpose, they often come with high interest rates and risks. Instead, it’s better to look for lenders offering home loans with lower down payment requirements or flexible terms to reduce the upfront burden.
No, you cannot get a full 100% home loan in India. As per RBI rules, lenders can only finance up to 90% of the property's value. This means you must arrange the remaining 10% or more as a down payment from your own funds before the loan is approved and disbursed.
While 100% financing is not available, choosing the right lender can significantly impact your down payment requirements and overall loan experience. Bajaj Finserv offers home loans up to Rs. 15 Crore* with attractive terms to minimise your financial burden. Check your loan offers today. You may already be eligible, find out by entering your mobile number and OTP.
Usually, down payments for home loans in India range between 10% and 20% of the property's price. This upfront amount is mandatory before the lender releases the loan. The exact percentage may depend on your credit score, the lender’s policies, and the type of property. A higher down payment reduces the loan size and overall interest costs.
