The NRI Guides Team regularly reviews this article to ensure the content is up-to-date and accurate. The last editorial review and update were on 22 October 2023.
Are you an NRI looking to purchase a property in India? If so, you may be wondering if you’re eligible for a home loan. The good news is that NRIs are eligible for a home loan in India under similar conditions that apply to an Indian resident.
In this article, we’ll take a look at the eligibility criteria for NRI home loans and some of the best lenders offering these loans. We’ll also provide tips on how to get the best interest rate on your loan.
Table of Contents
Properties Eligible for NRI Home Loan
NRIs can purchase a residential house either under construction or on resale, and can even take loans for self-construction of a residential property on a residential plot.
Not only this, they can also get finance for the purchase of a plot of land allotted by a society or development authority or even renovate or improve an existing residential property in India.
NRI Home Loan Eligibility
Eligibility criteria are different for various banks. Here are some of the common requirements. Please check with your bank for the exact requirements.
- Age Requirement: Most banks require that the NRI must be a minimum of 21 years old. This may be higher with some banks. The maximum age limit is 60 years or retirement age (whichever is earlier) at the time of loan maturity.
- Status Requirement: You must be a Non-Resident Indian (NRI), a Person of Indian Origin (PIO), or an Overseas Citizen of India (OCI), except Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan.
- Work Experience: If you are a salaried applicant, you should have been abroad for a minimum period of 1 year. If you are self-employed, you should have been abroad for a minimum period of 3 years. For some banks, the applicant should have a minimum overseas work experience of six months with a total work experience of 2 years.
- Minimum Income: Income requirement varies from bank to bank. Most banks accept a monthly income of AED 5,000 for residents of GCC countries and USD 3,000 for residents of other countries.
The income taken into account for calculating the home loan eligibility for an NRI is the repatriable income, plus any income in India. For NRIs working in countries that restrict repatriation, only the repatriable portion of the income is considered for calculating loan eligibility.
The bank will also consider your past and existing loans, credit score, and type of property.
Loan eligibility can be enhanced by taking a joint loan with relatives. However, for credit reasons, banks allow only a select list of relatives to be joint owners of the property
NRI Home Loan Maximum Amount
Like Resident Indians, NRIs, too, can avail of up to 80- 85 per cent of the total amount (depending on the flat value) of the cost of residential property as a home loan.
However, in the case of an NRI, there is a stress on certain prerequisites like qualifications, current job profile, past experience, probability of continuing abroad for the loan tenure and probability of servicing the loan with an extended tenure in case of return to India.
The loan-to-value (LTV) ratio for NRI customers varies from one bank to another, though the manner of calculation is the same in the case of a regular home loan.
There is no cap on the number of home loans you will be able to take, to buy properties in India. However, during a loan application, you are required to be transparent about any other existing loan.
NRI Home Loan Payment Mode
The down payment for the NRI home loan should be done from direct remittances from abroad through normal banking channels or from Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account in India.
The EMI payment also should be from any valid deposit account maintained in India including Non-Resident Ordinary (NRO) accounts. This can also be from the rental income derived from the property.
NRI Home Loan Duration
Though the regular home loan tenures can be up to 25 years, loan tenure for NRIs is normally 15 to 20 years. Often this would be subject to the age of the borrower.
NRI Home Loan Interest Rates
| Banks | Interest Rates |
|---|---|
| State Bank of India | 7.55% to 8.05% |
| PNB Housing Finance Limited | 8.24% to 11.15% |
| Axis Bank | 9.90% onwards |
| Canara Bank | 7.35% onwards |
| Federal Bank | 9.55% onwards |
| Indian Overseas Bank | 7.05% onwards |
| Indiabulls | 7.60% onwards |
Note that most banks have a processing fee between 0.25% to 1.5% of the loan amount.
Also, if you want to pre-close the home loan a pre-payment penalty will be charged by the bank. Nowadays many banks have stopped charging pre-payment on floating-rate loans.
Documents Required for NRI Home Loan
Along with the documents required for a regular home loan, some additional documents are required for an NRI home loan. The documents required for an NRI home loan include:
| Identity Proof | A copy of your passport and visa A copy of the labour card/identity card (translated in English duly countersigned by the consulate) if employed in the Middle East |
| Income Proof | Salary certificate (in English) specifying name, date of joining, designation and salary details The last 3 months’ salary statement The last 6 months’ bank statement A copy of the appointment letter and contract Copy of local income tax returns filed in the country of residence (if applicable) Bank statements for the last six months domestic (NRE/NRO/FCNR) and international Contract slips with income details in case employed in the merchant navy For self-employed: Income Tax Returns along with details of your businesses and your income for the last 3 years, Balance sheet and profit and loss statement for 3 years. |
| Property Documents | Title Deeds, Encumbrance Certificate, Construction estimate from the architect (for home construction) Receipt of payments made to builder, Agreement letter |
| Other Documents | Employment details Proof of own contributions Applicant’s passport-size photos Processing fee cheques Self-declared residential status Business profile and list of directors (for self-employed) |
Power of Attorney for NRI Home Loan
Most banks require a Power of Attorney (PoA) to ease the process of dealing with the NRI customer. The PoA holder only gets the powers that you give and does not have the power to deal with the property.
It is important that an NRI provides General Power of Attorney (PoA) in favour of a local relative as per the draft of the bank which should be duly attested by the Indian consulate in the country of his residence. In case the loan borrower is in India, the POA can be locally notarized.
NRI Home Loan Against Funds in Bank
An NRI or PIO can also avail of a loan from an authorised dealer for acquiring a flat/house in India for his own residential use against the security of funds held in his NRE Fixed Deposit account or FCNR (B) account.
Such loans are subject to the terms and conditions as laid down in Schedules 1 and 2 to Notification No. FEMA 5/2000-RB dated May 3, 2000, as amended from time to time.
However, banks cannot grant fresh loans or renew existing loans in excess of Rupees 20 lakh against NRE and FCNR(B) deposits either to the depositors or to third parties.
Such loans can be repaid:
- a) by way of inward remittance through a normal banking channel or
- b) by debit to his NRE / FCNR (B) / NRO account or
- c) out of rental income from such property
- d) by the borrower’s close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower’s loan account.
Repayment of NRI Home Loan
NRI home loans can be repaid:
- a) by way of inward remittance through a normal banking channel or
- b) by debit to his NRE / FCNR (B) / NRO account or
- c) out of rental income from such property.
- d) by the borrower’s close relatives, as defined in section 6 of the Companies Act, 1956, through their account in India by crediting the borrower’s loan account*.
*In 2011, the Reserve Bank of India allowed resident individuals to repay housing loans in rupee on behalf of their close relatives, who are non-resident Indians (NRIs) or People of Indian origin (PIO).
NRI Home Loan Tax Benefits
Like resident Indians, NRIs also enjoy certain tax benefits on interest payments, if they have any income chargeable to tax in India.
Under Section 80C of the Income Tax Act, of 1961, NRIs are eligible for tax benefits on home loans if they file income tax returns in India. This tax deduction is for the interest component of the home loan and the principal component.
RBI Conditions for NRI Housing Loans
The following is the directive by the Reserve Bank of India regarding NRI Home Loans:
An authorised or housing finance institution in India approved by the National Housing Bank (NHB) may provide a housing loan to an NRI or a PIO for the acquisition of residential accommodation in India subject to the following terms and conditions:
- The quantum of loans, margin money and the period of repayment shall be at par with those applicable to housing finance provided to a person resident in India;
- The loan amount shall not be credited to the NRE/FCNR(B)/NRNR account of the borrower;
- The loan shall be fully secured by an equitable mortgage of the property proposed to be acquired, and if necessary, also by a lien on the borrower’s other assets in India;
- The instalment of the loan, interest and other charges, if any, shall be paid by remittances from outside India or out of funds in NRE/ FCNR(B)/ NRNR/ NRO/ NRSR account of the borrower or out of rental income derived from renting out the property acquired or by any relative of the borrower in India by crediting the borrower’s loan account through account to account transfer;
- The rate of interest on the loan shall conform to the directives issued, if any, by the RBI and/ or NHB.
FAQ on NRI Home Loans
Can NRI get a home loan in India?
Yes, NRIs can also get home loans in India if they meet the eligibility requirements.
How much home loan can an NRI get from India?
The maximum amount of the home loan will depend on factors like NRI’s age, income and property value.
Can self-employed NRIs get home loans in India?
Yes, self-employed NRIs can also get home loans if they can produce income statements for three years.
Can NRI make a joint application for a home loan?
Yes, NRI can also get a home loan with another co-applicant.
You May Also Like
- Guide To NRI Buying Property in India
- NRI Selling Property in India: Guide
- Foreigners Buying Property in India
- Documents Checklist for NRI Buying Property
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Reference: Reserve Bank of India
Aneesh, the Founder & Editor of DG Pixels, holds a Master’s Degree in Communication & Journalism, and has two decades of experience living in the Middle East. Since 2014, he and his team have been sharing helpful content on travel, visa rules, and expatriate affairs.