While considering the various home loan options available in the financial market, it is important to know various deals and the basic percentage in which the down payment is to be made. Down payment can be defined as a percentage of the cost of the house you are willing to buy which needs to be paid upfront to complete the purchase transaction. The down payment in India needs to be made by the borrower himself and no banks will provide complete funding for the purchase. The amount payable as a down payment may vary based on the value of the property so purchased.

[lwptoc numerationSuffix=”dot” title=”Table of Contents” width=”full” titleFontSize=”16px” itemsFontSize=”16px” colorScheme=”light”]

Is zero-down payment possible in India?

According to the Central Bank (RBI) regulations, complete financing or zero down payment schemes are not made permitted. It is made important by RBI that the home buyer has a stake in the property that he is willing to purchase. The guidelines of RBI to this effect are as stated:

  • The down payment required for a property that values below Rs. 30 Lakhs is required to make a down payment of 10% of the cost of residential property.
  • The down payment required to be paid for a property valuing between Rs. 30 Lakhs and Rs. 75 Lakhs is 20% of the cost of the property.
  • In cases of the purchase of property values above Rs. 75 Lakhs, then the home buyer is required to make a down payment which is 25% of the cost of the property.

Despite these conditions laid down by the RBI, a home buyer needs not to be discouraged because of his inability to make the down payment. There are several other methods through which you can finance your down payment.

Thus if you are looking forward to investing 90-100% from external sources in your desired home, some of the best ways have been listed below:

  • Avail of a personal loan

Assetscan-appraisalBefore availing of the personal loan, one should know the exact amount that needs to be invested in the property. You can know the exact amount by selecting the property and even approaching the bank to take a home loan. After considering various factors like the credit history, credit score, and even your ability to repay the loan, the bank approves the home loan and lets you know the down payment to make.

One drawback of following this method is that you will have to make the payment of the processing fee for the home loan even if your loan is not approved.  Some banks provide you with a loan sanction letter which states the maximum amount that you can avail as a home loan after which you can search for a property that matches your budget and also avail a personal loan to cover the down payment cost.

After procuring the loan you also have the option to pay your loan EMI along with your Home Loan EMI or the second option is wherein you top up your home loan and settle the credit facility availed as a personal loan. You also get various offers in cases of topping up your home loan. This could also help you save the interest amount as the home top-up amount will be on par with the existing loan. You will also receive the advantage of flexibility in your prepayment according to your financial position as there will be no prepayment fee if you top-up your loan.

  • Take a Loan from your employer

If you are an employee of an organization, then many organizations in India offer general purpose loans to the employees. There may be many factors that affect such loans such as the relationship with the employer, tenure served, your current position in the organization, etc. these types of loans can be easily availed as it has a minimum documentation process and the procedure is quite simple. These types of loans also have a very minimal amount charged against them as the Interest. This is a good option to finance the down payment.

  • Opt for a secured loan

Having a good investment profile can prove beneficial in many circumstances. If you have shared, then you may sell some of them, if the market is offering you higher amounts as well. otherwise having investments in Mutual Funds, Demat Shares, RBI Relief Bonds, or other such bonds, NSC, etc., are not only beneficial for your future as a source of income but can also be pledged for loans in case of financial shortcomings. You can pledge these securities to receive a secured loan.

If you are eligible, then you may also pledge your employee provident fund and avail the loan by pledging the same. Secured loans like these make it easy for the borrower to obtain a high amount of sanctions with nominal interest rates to arrange money to be paid as a down payment. Availing these types of loans can be beneficial as it lowers the burden of acquiring a loan as it is available hassle-free and is also affordable because of its lower interest rates when compared with unsecured loans.

  • Opt for the Pradhan Mantri Awas Yojana

The Indian government introduced the Pradhan Mantri Awas Yojana in the year 2015 which aims at providing affordable housing facilities to the Indian Population. The main aim of this scheme is to ensure that all Indians receive a comfortable shelter by the year 2022. The benefit of this scheme is that you get subsidies in the home loan up to 6.5%. Since the amount payable on the EMI is reduced due to subsidy received in the interest rate, the borrower need not keep so much money for repayment of the loan and he can use the same for the down payment.

However, it is to be noted that the subsidy given in the interest rate depends largely on the income bracket that you fall under. It is thus recommended that the borrower checks through the various eligibility parameters and other terms for considering this as an option to finance your down payment as this method also mitigates the pressure at the time of repayment of the loan.

  • Other methods:

Other methods to finance include financing through friends and family. This is a kind of loan that can be acquired without any interest levied on it and can also eliminate the late payment charges. However, non-payment can taint your relationship. Some banks also offer home loan down payment loans for those that are unable to finance the down payment on their own. Muthoot Finance is an example of those lenders that provide you with home loan down payment loans in exchange for gold.


Summing up, it is to be stated that in India, zero down payment is not permitted by the RBI. You are subjected to make a payment of a certain percentage that is decided based on the value of the property as the down payment. Several options can be used to finance your down payment in circumstances wherein you do not have enough cash to finance your down payment.

This is inclusive of receiving unsecured loans such as personal loans, loans from employers, or those that are opted against the investments you own. There are also some government schemes such as the Pradhan Mantri Awas Yojana which can facilitate raising the fund to meet your down payment requirements. It is also important while you consider different ways to finance that you consider the different interest options to avail of them.