Whether you are a Non-Resident Indian (NRI) or an Indian citizen, purchasing your dream home is a significant financial commitment.
For Indian citizens, negotiating the house loan market involves being aware of local laws, loan conditions, and repayment options that work for their budget. Non-resident Indians, on the other hand, face extra difficulties, such as handling documentation from overseas, comprehending foreign exchange, and complying with particular regulatory requirements.
Continue reading to learn in detail the eligibility and conditions required for a home loan for Indians and NRIs.
Eligibility Criteria
If you are an Indian citizen, you must fulfil certain conditions, such as age and remaining years to retirement, to be eligible for a home loan. The applicant’s age plays a major role in determining home loan eligibility. The maximum loan term is generally capped at 30 years.
Eligibility Factors For Indian Citizens
- Age Limit for Salaried Individuals: The home loan age limit varies depending on your work profile. For instance, if you are a salaried person, you should be between 23 to 60 or 65 years old to be eligible for a home loan.
- Age Limit for Self-Employed Individuals: If you operate your own business or are self-employed, your age limit should be between 21 and 65.
- Minimum Salary: The home loan amount also depends upon your monthly salary. In India, you must earn a minimum of ₹10,000 per month to be eligible for a home loan.
- Minimum Business Income: Business incomes are very volatile, so it becomes difficult for the financial institution to sanction the home loan amount. If you are a business owner, you should have a minimum income of ₹2 lakh p.a. to be eligible for a home loan.
- Financial Position: The applicant’s present and future income significantly impacts the loan amount. Your past and present credit history and credit score also play a significant role in this determination. A clean repayment record is considered positive.
Specific Eligibility Requirements for NRIs
It is essential to confirm your eligibility before applying for an NRI home loan. Although the requirements for qualifying for an NRI loan vary from lender to lender, the following fundamentals should be understood:
- Age: You cannot be older than 60 or 70 and must be at least 18.
- Employment: You have to be self-employed or have a fixed salary.
- Nationality: Being a Non-Resident Indian is the fundamental requirement.
In addition to these fundamental requirements, you will need to fulfil additional requirements specified by your lender. When processing your application, lenders also consider your credit history, retirement age, age upon application, and monthly income, among other things.
Loan Amount and Tenure
Indian and NRI Indians have various loan terms and amounts. You need to carefully consider each option to determine the loan size and term that is best for you.
Maximum Loan Amount for Indian Residents
Below are some of the factors that influence the maximum loan amount for Indian residents.
- Property Value: Up to 80–90% of the property’s market value is normally offered by lenders. The percentage may be lower for luxury or high-value residences.
- Income and Salary: In general, having a higher salary makes you eligible for a larger loan amount. Lenders use your salary to calculate how much you can afford to repay them.
- Credit Score: You have a better chance of getting a bigger loan amount if your credit score is higher (often above 750). A high credit score is indicative of responsible debt management.
- Employment Stability: A steady job or steady revenue from your business gives lenders confidence that you will be able to make your payments on time, which might increase the amount of credit you are qualified for.
Loan Amount Limits for NRIs
NRIs need to fulfill certain requirements in order to be eligible for a home loan:
- Property Value: NRIs can often obtain loans for 80-85% of the property’s market value. This percentage could be lower for high-value or luxury houses.
- Income and Credit Score: Loan amounts are determined by the NRIs income and credit score. Higher income and a good credit score typically result in qualifying for larger loan amounts.
- Employment Status and Lender Policies: Stable employment or continuous business income is important. Different lenders have different regulations and lending limits for NRIs; therefore, terms may vary according to the institution.
NRI Home Loan Tenure
Although there are minor differences, home loan terms for non-resident Indians (NRIs) are largely comparable to those offered to Indian residents. NRI home loans often have terms between 5 and 20 years. Depending on the applicant’s age and financial situation, certain lenders may potentially grant even longer terms.
Lenders may offer alternatives with flexible tenures that let you select a payback schedule that works for your budget. Longer loan terms result in lower monthly instalments but higher overall interest payments throughout the loan.
Read Also: Looking To Get A Home Loan? Here’s What You Need To Keep In Mind
Interest Rates and Charges
Interest rates can vary between NRIs and Indian nationals. You can choose a fixed-rate mortgage, which has a fixed interest rate for a set amount of time (often two or three years) before transitioning to an adjustable rate for the remainder of the term. Alternatively, you might select an adjustable-rate mortgage from the start.
| Category | Interest Rate Range | Description |
| Fixed Interest Rate | 8.00% – 9.50% | Fixed rates remain constant throughout the tenure. Initial rates may vary. |
| Floating Interest Rate | 7.50% – 9.00% | Rates fluctuate based on the MCLR or Repo Rate. Initial rates are often lower. |
| Hybrid Interest Rate | 8.00% – 9.50% (initial fixed) | Combines a fixed rate for an initial period with a floating rate thereafter. |
| Fixed Interest Rate | 8.50% – 9.75% | Fixed rates are usually slightly higher compared to those for Indian residents. |
| Floating Interest Rate | 7.75% – 9.25% | Rates fluctuate based on the MCLR or Repo Rate. Generally slightly higher than for residents. |
| Hybrid Interest Rate | 8.50% – 9.75% (initial fixed) | Combines fixed rate for an initial period with a floating rate thereafter. Usually higher compared to Indian residents. |
Tax Benefits
Continue reading to learn more about the tax benefits for NRIs and Indians who take out a home loan.
| Tax Benefit | Indian Residents | Non-Resident Indians (NRIs) |
| Section 24(b) – Interest Deduction | – Up to ₹2 lakhs per annum: Interest paid on home loans is eligible for deduction under Section 24(b) of the Income Tax Act. This benefit is available for self-occupied properties. | – Up to ₹2 lakhs per annum: NRIs are also eligible for interest deduction under Section 24(b) for self-occupied properties or rented properties. |
| Section 80C – Principal Repayment | – Up to ₹1.5 lakhs per annum: Principal repayment on home loans is eligible for deduction under Section 80C. This limit includes other eligible investments under Section 80C. | – Up to ₹1.5 lakhs per annum: NRIs can claim this deduction for principal repayment on loans for properties in India. |
| Section 80EE – Additional Interest Deduction | – Up to ₹50,000 per annum: Available for first-time homebuyers under certain conditions (loan up to ₹35 lakhs and property value up to ₹50 lakhs). | – Not applicable: This benefit is not available to NRIs. |
| Section 80 EEA – Additional Interest Deduction (Affordable Housing) | – Up to ₹1.5 lakhs per annum: For home loans taken for affordable housing under certain conditions (loan up to ₹45 lakhs and property value up to ₹50 lakhs). | – Not applicable: This benefit is not available to NRIs. |
| Section 37(1) – Interest on Loans for Rental Properties | – Fully deductible: If the property is rented out, the entire interest amount can be claimed as a deduction under Section 37(1). | – Fully deductible: NRIs can claim the entire interest amount on loans for properties that are rented out in India. |
Read Also: What are the Tax Benefits on Under Construction Properties?
Conclusion
Getting a home loan for your dream house is almost everyone’s dream, but it may involve complications like extra paperwork and some more interest if you are an NRI who is seeking to build a dream house in your native land. There are many platforms that can help you choose the best banks for the best services if you are thinking of taking a home loan for your dream property.
If you are looking to buy your dream home in Mumbai, visit Rustomjee Residential Properties today! With our Finserv services, you can avail your dream home without the hassles – we will help you every step of the way.
FAQs
1. What is the maximum loan amount for NRI Home Loan?
The value of the property, the borrower’s ability to repay the loan, and the lender’s policies all affect how much an NRI can get on an Indian home loan. In India, NRI home loans are typically offered by the majority of banks and financial institutions, with maximum loan-to-value (LTV) ratios ranging from 75 % to 90 % of the property’s value.
2. Is a PAN card mandatory for NRI/OCI?
Yes, it is mandatory for NRI/OCI citizens. A permanent Account number consists of a 10-digit number allotted by the Income Tax Department of India under the supervision of the Central Board of Direct Taxes.
3. Is Aadhaar mandatory for NRI/OCI (Overseas Citizen of India) to apply for a mortgage loan in India?
No. Aadhaar is not mandatory for NRI/OCI customers. However, if Aadhaar is available, it can be submitted as your Indian address proof.
4. Is NRE/NRO account mandatory to apply for a mortgage loan for NRI/OCI customers?
NRE/NRO savings account is not mandatory when applying for a mortgage loan. However, at the time of disbursement, NRI/OCI customers must have an active NRE/NRO Account to repay mortgage loans.
5. I am an NRI/OCI customer. How do I calculate my eligibility for a Home Loan?
If you are an NRI/OCI customer looking for a platform to calculate home loan eligibility, choose the Rustomjee EMI and eligibility calculator for better results.
