SYNOPSIS

Down payment can impact EMIs and interest rates on your home loan.

What affects it:
LTV ratio, property type, credit score

Smart planning tips:
- Start saving early
- Invest in SIPs and FDs
- Use bonuses and tax refunds

You can also get expert guidance with HDFC Bank!

Down payment for home loan: All you should know

Purchasing a home is a milestone achievement, and one of the most important things in securing a home loan is organizing the down payment for a home loan. Whether you are a first-time buyer or upgrading, knowing how much you need to pay at the beginning can assist you in planning better.

What is a down payment?

Down payment for a home loan is the amount paid by a buyer while buying a property. The balance that is left is taken as a home loan from a financial institution. The amount of down payment can significantly influence your loan terms, such as interest rates and EMIs.

Why is a down payment important?

Decreased loan amount: With a higher down payment, the loan amount is lowered which leads to lower EMIs and lower interest payments during the loan period.
Lower interest costs: A higher down payment often translates to lower interest costs and greater savings in the long run!"
Better loan eligibility: Large down payments lower the risk of default, improving the chances of being approved for the loan.

How much is the minimum down payment for a home loan?

The minimum down payment for a home usually varies between on average 20 -25% of the property value, based on the loan policies and the financial profile of the applicant.

HDFC Bank provides lucrative home loan schemes where you can avail financing up to 75% to 90% of the property value, keeping your minimum down payment for home loan within reach.

What is a standard down payment on a home?

A standard down payment on a home depends on several factors including:

Loan-to-Value (LTV) Ratio – A higher LTV ratio may decrease your down payment amount.
Type of property – Not always, but often, properties under construction might need a higher down payment than properties that are already being used.
Credit score – A good financial history can ensure a lower down payment requirement.

For instance, if you are buying a ₹50 lakh home, you may have to pay a down payment of ₹7.5 lakh to ₹10 lakh. HDFC Bank allows you to determine the appropriate loan amount and down payment so that you have financial comfort and clarity.

How to plan for a down payment on a home loan?

The following are some of the steps to organize your down payment for home buying:

Begin saving early – Start saving a part of your earnings specifically for your home buying.
Invest in SIPs and FDs – Systematic investment plans (SIPs) and fixed deposits (FDs) may assist in piling up the amount over time.
Use additional earnings – Tax refunds, bonuses, and unexpected earnings can be allocated to your down payment.

Knowing the minimum down payment for a home loan is crucial to organize your home buying process in the right way. Though the typical down payment on a house may vary, careful financial planning can simplify the process. HDFC Bank experts are always here to assist you with professional advice, personalized loan options, and a smooth home loan process.