The two ceilings

Every home loan sanction is the smaller of two numbers, and buyers usually only think about one of them.

The first is loan-to-value — the proportion of the property's value the lender will fund. Regulatory norms cap this and the cap tightens as the loan gets larger, so a modest loan may be funded at a higher percentage than a large one. Around 80% is a reasonable planning assumption in the middle of the range, but the exact percentage depends on your loan size and your lender's own policy, so ask for the number rather than assuming it.

The second is repayment capacity, usually expressed as a fixed-obligations-to-income ratio. The lender adds up your existing EMIs and the proposed one and checks it against your net monthly income. The permitted share commonly sits somewhere between 40% and 55%, and higher earners are usually allowed a higher share because more absolute income remains after the EMI. Again, this is lender policy, not a published universal rule.

Whichever of the two ceilings is lower is your sanction.

The money the loan will not cover

This is where budgets break. Lenders generally lend against the agreement value of the property. Stamp duty, the registration fee and GST are typically excluded from the funded amount, as are many of the extras a developer charges. On a purchase where taxes and charges run to a substantial share of the total, that gap is paid entirely from your own funds — usually in a compressed window around registration.

So the honest way to plan is: take the all-in price, subtract what the bank will fund against the agreement value, and treat the remainder as cash you must have. Pinly shows the all-in price on every project precisely so this calculation is possible before you fall in love with a flat.

• Down payment — The share of the agreement value the lender will not fund.
• Stamp duty and registration — Paid by you, at registration, from your own funds.
• GST — Applies to under-construction purchases; the position differs for a completed property with an occupancy certificate. Confirm the rate applying to your purchase, because GST rules on real estate have changed.
• Charges outside the agreement value — Depending on how the developer structures the cost sheet, some heads may sit outside what the bank funds. Ask your lender which heads they count.

What moves the number in your favour

• Credit score — Drives both approval and the rate band you are offered. Pull your report early — disputes take weeks to resolve.
• Clearing small loans — A personal loan EMI or a car loan reduces eligibility directly, sometimes by more than the loan is worth to you.
• Adding a co-applicant — A working spouse's income is usually added, raising eligibility. Co-applicants take on joint liability, and both credit records are affected.
• Tenure — A longer tenure reduces the EMI and raises eligibility, and increases the total interest paid substantially. It is a trade, not a free win.
• Stable income history — Job changes close to application, or a recent switch to self-employment, tighten what lenders will do.
• The project itself — A project already approved by your lender moves faster. One that no lender has approved is a question worth answering before you commit.

Rate, structure and the fine print

Most home loans in India today are floating rate and linked to an external benchmark, which means the rate resets when the benchmark moves. Fixed-rate options exist, usually fixed for a period rather than the full term and usually at a higher starting rate. Ask exactly which structure you are being offered and how often it resets.

Two clauses are worth reading carefully. Prepayment: floating-rate home loans to individual borrowers generally cannot carry foreclosure or prepayment charges, while fixed-rate structures can — get the position for your specific loan written into the sanction letter. And conditions precedent: a sanction letter usually lists documents that must be produced before disbursement, several of which have to come from the developer and can take weeks.

Sanction is not disbursement

A sanction is the lender agreeing, in principle, to lend you an amount on stated terms. Disbursement is money actually moving. For a ready property, disbursement usually happens once at registration. For an under-construction purchase, the loan is disbursed in tranches against construction stages, and you typically pay interest only on the amount disbursed so far until the loan is fully drawn.

That has a real consequence: for the years before possession you are usually paying rent and partial interest at the same time. Model both together, because a budget that works on the final EMI can still fail in year two. The timeline from sanction to first disbursement commonly runs a few weeks and depends on the lender's legal and technical clearance — ask your bank for their current turnaround rather than assuming.

Frequently asked questions