Home Loans for NRI’s

Owning a home is a dream for most of the NRI’s. With rupee depreciating NRIs can make the most of the increased purchasing power. Things also becomes easier as they can avail home loans from banks in India to purchase property here, subject to fulfillment of certain conditions.


NRI status:
Anyone who comes under the definition of the Foreign Exchange Management Act, 1999 (FEMA) can avail a home loan in India. FEMA defines an NRI as someone who resides outside India for “employment, carrying on business or vocation under circumstances indicating an intention for an uncertain duration of stay abroad”. It also says that an individual will also be considered NRI if his stay in India is less than 182 days during the preceding financial year.


Properties eligible for loan:

Home loans can be availed for any property ready for possession or under construction, construction of property on an owned plot or for alterations to the existing property. Buying of a plot also qualifies for a home loan. However, NRIs are not allowed to purchase agricultural land here. As an NRI you cannot buy more than two residential properties in India. This is regardless of if you own a property in the country that you are working in and residing in. There are no such restrictions on commercial property though.

Maximum amount of loan allowed and other conditions:
Like resident Indians, NRIs too can avail up to 80- 85 per cent (depending on the flat value) of the cost of residential property as a home loan. But the down payment should be done from direct remittances from abroad through normal banking channels or from nonresident external ( NRE) account and /or Nonresident (ordinary) (NRO) account in India. Even the EMI payment should be remitted to the lending bank or HFC from any of these accounts. Income and educational qualifications play an important role in deciding the maximum amount of loan available to an NRI. It is important to note that only graduate NRIs can avail home loans in India.


Tenure of loans:
Though the regular home loan tenures can be up to 25 years (as in case of current times due to increase in interest rates), loan tenure for NRIs is normally 10 to 15 years due to their better affordability. Extension beyond the term of 15 years is solely at the discretion of the bank and in exceptional cases only.

Interest rate

There is a higher rate of interest charged on NRI home loans to cover the higher risk involved. There is generally a margin of 0.25 - 0.50 % charged.


Documents required:
The documentation required for NRI home loans is different from resident home loans. Documents usually required are copies of the passport, work permit and valid visa, contract of employment, salary certificate, work experience certificate and statements of NRE/NRO accounts. The salary certificate should be attested from the embassy if the salary is not credited to a bank. For those residing in the Middle East, a copy of the employment card is also required.


Repayment of loan:
The down payment should be done through normal banking channels or NRE or NRO account in India. The repayment or the equated monthly instalment of these loans can only be paid through NRE or NRO accounts with remittance from abroad. The repayment needs to be made in Indian rupees only.

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