Down Payment

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Definition

A down payment is the portion of the purchase price paid from personal funds, with the rest financed by loan. Per RBI guidelines, minimum is 10% for loans up to ₹30 lakhs, 20% for ₹30-75 lakhs, and 25% above ₹75 lakhs.

A higher down payment reduces loan principal, EMIs, and total interest. It also strengthens the application and signals financial stability.

Borrowers should budget for additional costs: stamp duty, registration, GST (under-construction), legal fees, and furnishing — which can add 10-15% to property cost.

Frequently Asked Questions

What is the minimum down payment for a home loan? ▾
10% for properties up to ₹30 lakhs, 20% for ₹30-75 lakhs, 25% above ₹75 lakhs per RBI norms. Some lenders may require more.
Is a higher down payment always better? ▾
It reduces EMI and interest but depletes savings. Experts recommend keeping 6-12 months of expenses as emergency reserves.
Can the down payment come from another loan? ▾
Lenders expect down payments from personal savings or family support. Funding through another loan increases debt burden and may lead to rejection.
Why It Matters

The down payment determines how much you borrow and directly impacts EMI, total interest, and financial comfort post-purchase. Planning adequately is the foundation of smart home buying.

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