Disclaimer: This is a user generated content submitted by a member of the WriteUpCafe Community. The views and writings here reflect that of the author and not of WriteUpCafe. If you have any complaints regarding this post kindly report it to us.

According to a common proverb, food, clothing, and home are the three most fundamental necessities of any human being. While the first two are basic necessities that most people can afford, putting a roof over one's head takes a significant financial investment. Home loans have become a lifeline for tens of thousands of people in this situation.

However, it is a common misperception that a lender will provide the total property cost as a home loan. A down payment on a home loan is something that many people overlook. Yes, according to RBI norms, lenders can only finance up to 80% of a property's value above INR 30 lakhs. The borrower must pay the remainder in full upfront.

The down payment required for a home loan is an example of this type of advance payment. You may be thinking that asking borrowers to pay such a large sum is an unreasonable request. However, once you understand how it works, you'll see that making a down payment offers its own set of advantages.

Saving up for Down Payment

When using a home loan eligibility calculator to determine how much house loan you qualify for, remember to include the down payment. This will help you better plan your home purchase.

Remember that down payment on a home is not a little sum of money. For example, if you want to buy a property in India that costs INR 50 lakh on average, the bank will only lend you INR 40 lakh. In fact, the loaned amount may be smaller based on your eligible status as a result of age, income, tenure, credit score, and other factors.

This means you'll still need to put down a minimum of INR 10 lakh on a property loan, which is a significant sum. As a result, if you're thinking about buying a house with a home loan, make sure you think about how you'll save for a down payment. Here are some suggestions:

  • Invest Early

Early planning and investing for a few years to build up a corpus from which you can make the payment is a good notion.

  • Seek proportionate release

Some lenders are willing to let consumers pay the down payment on a house loan in installments rather than in one big sum for particular homes and real estate projects. This is particularly true for properties that are still being built. To make things easier for yourself, try to get a proportionate release.

How not to make a down payment

  • The last thing you want to do is utilize your long-term savings or take out a loan against your insurance policy to pay for a down payment on a home. This could put you in a financial bind or overload you, causing your other EMIs or investments to suffer.
  • Furthermore, taking out a second loan for a down payment would negatively impact your EMI-to-income ratio, preventing you from securing a good home loan offer.
  • Using emergency funds is also not a good idea because it will come in useful in the event of medical emergencies, disasters, or other unanticipated circumstances.

Benefits of making a larger down payment

Making a larger down payment on a house loan can allow you to accumulate more equity in the property. This means you won't need to borrow as much money for a home loan.

  • You can get more favorable conditions for the lowered principal amount if you make a larger down payment on your house loan. Because numerous lenders provide different loan slabs, a lesser loan slab may result in a lower rate of interest and EMI.
  • Of course, the less money you borrow, the faster you can pay off your mortgage. You'll also save money on things like home loan processing fees and insurance rates.
  • Finally, a smaller loan amount gives the lending institution greater confidence, which raises the chances of faster loan approval.


You will get better home loan terms and interest rates if you put down more money, that much is a fact. As a result, if properly arranged, a down payment on a home loan can be an important tool in obtaining a far more inexpensive and practical home loan.



Welcome to WriteUpCafe Community

Join our community to engage with fellow bloggers and increase the visibility of your blog.
Join WriteUpCafe