What is the down payment on a home loan?
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.
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
Following are the features and benefits of down payment on a home loan
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Reasonable rate of interest
Starting from 7.99%* 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 Finserv 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
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
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)
