Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusinessPersonal Finance

Demystifying home loans for NRIs

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.

May 14, 2015 / 07:04 PM IST

Sukanya Kumar RetailLending.com

It was just yesterday that I was having a Skype chat with a friend of mine based in US who showcased her interest in investing in a property in India. While she had finalised on the location and the property, she was extremely confused about the banking procedures involved. Understanding my expertise in the segment she threw a volley of questions at me. This made me realize my friend is not the only one facing this concern.

Among various investment options available for non resident Indians (NRIs), real estate plays a dominant role due to its rate of appreciation and the periodical returns on the investment. Moreover most our citizens settled abroad want a cozy house back home when they decide to return. This trail of thoughts led to writing this article which will simplify the process for NRI’s purchasing a property in India:

Properties one can get loans forHome 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.

EligibilityJust like CIBIL scores are the prerequisite to get loans in India, for NRI-s there is credit scoring requirement too.

As far as the income is concerned your income abroad plus any source of income in India is taken into consideration to determine your ability to pay.

Key Documents Copies of valid passport, salary certificate, and statements of nonresident external (NRE) or nonresident ordinary (NRO) accounts, work experience certificate, bank account statement/ passbook for the last six months and a valid job contract or work permit. For an NRI to apply for a home loan in India, it is necessary for him/her to have a blood relative who is willing to become his general power of attorney(GPA). However, there are banks who take deviations on it.

One needs to provide a sale deed/ agreement for sale, copy of approved building plans, nil encumbrance certificate, updated tax receipts to the bank along with a set of title documents for a ready property.

In case of an under construction apartment, the bank would require the developer to be approved & the entire project title to be cleared before any funding. Generally all A & B category developers will be pre-approved for funding(APF) in India.

Power of AttorneyPower of Attorney is a document where the NRI authorizes a person resident in India to complete all formalities such as registration, possession, execution of agreement of sale etc. A power of attorney can be given to execution to execute all contracts, deeds, mortgagees, lease, sell and all matters related to managing the property. 

Loan TenureThe tenure for which an NRI gets a loan is generally less or restricted as compared to an Indian citizen. This is primarily because of the assumed ability of an NRI to close the loan sooner; also since the person is residing on a foreign soil then the risk factor is higher. Therefore unlike an Indian resident who can avail a loan for 30 years, an NRI can get the same for the 15-25 years, basis bank to bank.

Rate of Interest For NRI-s, the interest rate that is charged is same as the rates charged to their Indian counterparts.

Criteria for Joint Income Loan with an NRIA lot of people (Indian Nationals) have asked me if they can apply and purchase a loan jointly with an NRI. It possible to have an NRI as a co- applicant in the home loan provided the co applicant is an immediate relative. However in such a scenario it would be considered as a NRI loan. Thus even if the asset is jointly owned, it would be considered as a NRI loan. The EMI payments will also have to be made by the NRI which can be done either through their non- resident external account or by opening a non resident account joint with the Indian resident.

Change in status from NRI to resident:When there is a change in status from NRI to resident the loan is reworked according to the revised income and interest applicable is charged and the tenure is also revised.

Repayment of loanThe repayment of an NRI home loan can be paid through NRE or NRO accounts with remittance from abroad. Funds from any earning in India cannot be used to pay these loans. It is important to understand that repayment needs to be done in Indian rupees only.

Myths of Home Loans for an NRI



  • General Power of Attorney is a must

  • General Power of Attorney can be given only to blood relatives

  • Resident Indian and NRI cannot take a joint loan

  • NRI-s gets lesser tenure than resident Indians

  • NRI-s has to pay higher rate of interest to banks than resident Indians

  • There has to be a minimum number of years stay abroad to apply for an NRI home loan

  • Since UAE doesn't have income tax, NRI-s in these countries cannot get a loan in India

  • You have to visit India in person at least once while the loan is under process, to be able to get a home loan in India

The above pointers were able to help my NRI friend to gain valuable insights on the home loan process in India. Apart from these, individuals should realize and be able to put their faith into the right professionals and institutions that would be able to help them further their process of obtaining a home loan in India. There are lenders who are yet to start funding NRI-s as their policy is yet to be defined.

The author is a Founder & Director at RetailLending.com

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347