2 min read
25 May 2021

Buying a home with a low down payment helps you save money initially and gives you a chance to better organise your finances. But, to facilitate this, you must take certain measures.

Find the right lender

Lenders usually require you to pay at least 20% of the property’s purchase price as down payment. Several lenders accept less than 20% as a down payment as long as you pre-qualify for the loan. So negotiate this rate or opt for a lender who doesn’t require you to make a high down payment.

If you opt for a home loan from Bajaj Finserv, you can get a high-value loan at a nominal rate of interest, a three-EMI holiday and a top-up loan, among other benefits.

Ensure that your fixed obligations to income ratio (FOIR) is low

The FOIR is a ratio that measures your debt obligations to your income. The lower your debt obligation, the more confident the lender will be in your ability to repay the loan. So, if you don’t have existing debts or have a low FOIR, the lender will be comfortable with allowing you to pay a low down payment.

Additional Read: RERA benefits for first time home buyers in India

Ensure your property value is high

When you borrow a home loan to purchase a property, you need to ensure that the property’s value matches that of the loan amount you seek. If your property is in a good location and a well-known developer is backing it, it will give your lender confidence about allowing you to pay a low down payment. This is because the property will match the loan’s value and fetch enough to recover the lender’s interests.

Look at the proportionate release option

Several lenders offer a proportionate release option, which helps reduce the burden of making down payments. If you avail this option, you can break the down payment into smaller chunks and pay it over a few months instead of paying it in a lump sum. The lender releases the loan amount in proportion to the payments you make. Pick this option only if you’re purchasing a new property that is still under construction.

Additional Read: How to purchase a home with zero down payment

These strategies can easily help you buy a home with a low down payment. You have more funds at your disposal because you don’t have to save or invest to create a corpus for the down payment.

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