Many Indians working abroad want a home in Bengaluru, for parents, for a future return, or simply as their first owned home. You can take a home loan from an Indian bank as a non-resident Indian (NRI). The steps are similar to a resident's loan, with a few extra papers.
What NRIs can buy
Under India's foreign exchange rules (FEMA), NRIs can buy residential and commercial property in India. Agricultural land, plantations and farmhouses are not allowed.
How the loan works
The loan is given in Indian rupees. The bank pays the builder or seller directly. Most lenders ask for a co-applicant in India, often a close family member, and some also want a person in India to handle paperwork on your behalf.
How you repay
EMIs are paid from your NRE or NRO account in India, or through money sent from abroad through normal banking channels. You cannot pay EMIs in cash or in foreign currency notes.
Papers you will usually need
- Passport and visa or work permit
- Overseas job contract and recent salary slips
- Bank statements from abroad and from your NRE/NRO account
- Overseas credit report, if the lender asks
- A power of attorney, if someone in India will act for you
Down payment and own contribution
The Reserve Bank caps how much of the home's value a bank can lend, so you will need to pay part yourself. That money must come through your NRE or NRO account or normal banking channels.
Buying from abroad: practical tips
- Check the project's RERA registration on the state website before paying anything.
- Ask for a video walkthrough of the site and the sample flat.
- Keep a family member informed so they can visit at key stages.
- Ask the builder how demand letters and receipts will reach you.
Tax
Tax depends on your residential status and the country you live in. Speak to a tax adviser who understands both systems before you buy.
How much can you borrow?
The RBI sets the maximum share of a home's value a bank can lend. For a home costing above ₹30 lakh and up to ₹75 lakh, the cap is 80%. Above ₹75 lakh, it is 75%. Up to ₹30 lakh, it is 90%. The bank will also check that your EMI fits your income, so the loan you are offered can be lower than the cap.
Worked example: a family home for your parents
Illustrative figures only. Not a Reeva price. Say you are looking at a flat with an agreed cost of ₹70 lakh.
- Loan cap at 80%: ₹56 lakh. Your own contribution: at least ₹14 lakh, plus stamp duty, registration and other costs.
- EMI on ₹56 lakh at 8.5% for 20 years: about ₹48,598 a month.
- Total repaid over 240 months: about ₹1.17 crore, of which about ₹61 lakh is interest.
Now take a smaller loan. If you put in ₹22 lakh of your own and borrow ₹48 lakh at the same rate and term, the EMI drops to about ₹41,656. That is nearly ₹7,000 less every month, and about ₹16.6 lakh less paid over the life of the loan. A bigger down payment is not always possible, but it is worth doing the arithmetic before you choose.
Use our EMI calculator to try your own numbers.
Step by step: an NRI home loan
- Check your eligibility. Ask two or three lenders what they need from NRIs in your country and job type.
- Get an in-principle approval. This tells you how much you can borrow before you commit to a home.
- Shortlist RERA-registered homes. Many lenders have already approved certain projects, which can speed things up.
- Have your lawyer read the papers. The bank's legal check protects the bank. Your own lawyer protects you.
- Sign the agreement for sale. In person, or through a power of attorney limited to this property.
- Apply for the final sanction. Share the agreement and project documents with the bank.
- Pay your share, then the bank pays its share. For an under-construction home, the bank releases money stage by stage, against the builder's demand letters.
- Set up the EMI. Link it to your NRE or NRO account and keep a buffer of a few months' EMIs in that account.
Common mistakes NRIs make with home loans
- Choosing a co-applicant without thinking. A co-applicant shares the loan. Pick someone who understands that, and whom you trust.
- Forgetting the exchange rate. Your EMI is fixed in rupees, but your salary may not be. If the rupee strengthens, each EMI costs you more in your home currency.
- Letting the account run dry. A missed EMI can hurt your credit record in India. Keep a buffer.
- Not reading the interest-rate terms. Most home loans are floating rate, so the EMI or tenure can change when rates change. Ask how the rate is set and reset.
- Paying from the wrong channel. Your own contribution must also come through permitted banking channels. Keep every bank advice.
Paying early
Many NRIs pay down part of the loan when they get a bonus. For floating-rate home loans taken by individuals, RBI rules do not allow banks to charge a penalty for paying early. Check your loan terms, and ask whether a part payment reduces the EMI or the tenure. Reducing the tenure usually saves more interest.
A checklist before you sign the loan
- Interest rate, how it is linked, and how often it resets.
- Processing fee and any other charges, in rupees.
- Whether part payments are allowed, and whether they cut the EMI or the tenure.
- How the bank will release money for an under-construction home.
- Who the co-applicant is, and what they are agreeing to.
- Which account the EMI will be debited from.
- Insurance offered with the loan: is it optional, and what does it cost?
Get the answers in writing, read the sanction letter in full, and compare at least two offers before you accept one. A small difference in rate adds up over twenty years: on a ₹60 lakh loan for 20 years, moving from 8.5% to 9% raises the EMI from about ₹52,069 to about ₹53,984, and the total repaid by about ₹4.6 lakh.
If your parents will live in the home
Many NRIs buy a first home so their parents can live in it. A few practical points help:
- Make sure your parents have copies of the agreement, the possession letter and the association's contact details.
- Set up utility bills and maintenance payments so they can be paid on time even if you are travelling.
- Give a family member in India clear written authority to deal with the builder or the association on routine matters.
- Ask your tax adviser how the home will be treated if no rent is charged, since the answer depends on your status and the rules in force.
If you are looking at Sarjapur–Attibele Road, you can ask us anything about The Shalott Marque. Call +91 91838 91839; price is on request.
