A software engineer in Whitefield had saved 12 lakh rupees and assumed it was enough to buy an 85 lakh rupee flat with a bank covering the rest. When the loan sanction came, the bank offered to fund only about 63 lakh rupees, leaving him to find far more than he had planned. Nothing had gone wrong with his credit. He had simply run into the loan to value rule, the limit on how much of a home's value a bank is allowed to lend. For a Bengaluru buyer, that single rule often decides whether a deal is affordable or just out of reach, so it is worth understanding before you shortlist a flat.

The short answer. The Reserve Bank of India caps how much a lender can finance against a home, and the cap tightens as the loan grows. A loan up to 30 lakh rupees can cover up to 90 percent of the property value, a loan above 30 lakh and up to 75 lakh can cover up to 80 percent, and a loan above 75 lakh can cover up to 75 percent. The trade off is your down payment. The larger the home, the bigger the share you must fund yourself, and that is before stamp duty and registration, which the loan does not cover.

These limits come from RBI norms that lenders such as IIFL Home Loans apply. Here is how they shape what a Bengaluru buyer actually needs in hand.

What is the loan to value ratio?

The loan to value ratio is the share of a property's value that a lender will finance. If a bank offers an 80 percent loan to value on a 1 crore flat, it lends up to 80 lakh rupees and expects you to bring the other 20 lakh as a down payment. The ratio exists to keep both the borrower and the lender from being over exposed, since a buyer with real money in the home is less likely to default and the lender keeps a cushion if prices fall. It is one of the first numbers a bank fixes when it sizes your loan.

Crucially, the ratio applies to the property value, not simply to the price you negotiated. Lenders usually take the lower of the agreed price and their own valuation, so if the bank values the flat below the sale price, your loan shrinks and your down payment grows to fill the gap.

There is also an upside to putting more down than the minimum. A larger down payment means a smaller loan, which lowers both your total interest over the years and your monthly instalment. Some buyers who can comfortably fund 25 or 30 percent choose to, not because the rule forces them, but because it makes the loan cheaper to carry over its life. The right level depends on whether that cash could earn more elsewhere, so it is a balance to weigh rather than a single fixed answer.

How much can you borrow at each price level?

How much you can borrow depends on which of three bands your loan falls into. RBI sets the maximum loan to value at 90 percent for loans up to 30 lakh rupees, 80 percent for loans above 30 lakh and up to 75 lakh, and 75 percent for loans above 75 lakh. These are ceilings, so an individual lender may offer less based on your income and profile, but it cannot offer more. The table below shows what each band means for the minimum you must fund yourself.

Why does the down payment grow with a costlier home?

The down payment grows because the loan to value ceiling falls as the loan gets bigger. On a modest flat funded by a loan under 30 lakh rupees, you may need only 10 percent down. On a large Bengaluru apartment funded by a loan above 75 lakh, the ceiling drops to 75 percent, so you must fund at least a quarter of the value yourself. This is why the Whitefield engineer was caught. On an 85 lakh purchase his loan fell into the strictest band, and a quarter of the value was far more than his savings covered.

Planning for this early changes how you shortlist. Rather than asking only whether you can afford the monthly instalment, ask whether you can bring the down payment the loan band requires, because the bank will not stretch past its ceiling however strong your income looks.

What costs does the loan not cover?

The loan does not cover stamp duty, registration, or most incidental charges, and these fall entirely on you. Lenders generally calculate the loan to value on the property value alone, so the stamp duty and registration you pay to the state, along with documentation and other fees, sit on top of your down payment rather than inside the loan. On a large Bengaluru flat these transaction costs can themselves run into several lakh rupees, so they belong in your plan from the start. Our guide to how GST and other charges stack up on a purchase shows how quickly these add up beyond the headline price.

Because these costs are unavoidable, the practical down payment you need is your loan band's minimum plus the transaction costs. Treating the two as one pot from the outset keeps the sanction letter from delivering an unpleasant surprise.

How does loan to value interact with your tax and eligibility?

Loan to value sets the size of your loan, and that size then flows into both your monthly maths and your tax planning. A larger loan means larger interest, which under the old tax regime can support a bigger deduction, a point our guide to home loan tax benefits explains. At the same time, the loan to value ceiling is only one limit. Your income and existing obligations set a separate cap on how much a bank will lend, and the final loan is the lower of what the ratio allows and what your repayment capacity supports.

For a concrete example, a project such as Prestige Windgates in Thanisandra sits at a price where the 80 percent or 75 percent band usually applies, so a buyer there should plan for a fifth to a quarter of the value in hand before counting transaction costs.

How can a Bengaluru buyer plan the down payment?

Plan the down payment by working backward from the loan to value band your purchase falls into. Start with the flat's likely value, apply the ceiling for that loan size to see the most a bank can lend, and treat the remainder plus stamp duty and registration as the cash you must arrange. Building that number before you fall for a specific flat keeps your shortlist honest and prevents the shortfall the Whitefield buyer faced. It also gives you room to negotiate, since a buyer who knows the real cash requirement is harder to rush.

It also helps to keep a buffer beyond the bare minimum. Valuations can come in low, transaction costs can run higher than expected, and lenders release the loan in stages for an under construction home, so a cushion of a few lakh rupees prevents a last minute scramble. Aim to have your down payment, your transaction costs, and a small reserve all ready before you sign, rather than assembling them one bill at a time as they arrive.

What should you check before you commit?

Run through these seven steps so the sanction letter never shrinks your plan.

1. Estimate the property value the bank will use, not just the price you negotiated.
2. Identify which loan band applies, up to 30 lakh, 30 to 75 lakh, or above 75 lakh.
3. Apply the ceiling of 90, 80, or 75 percent to find the most the bank can lend.
4. Set aside the remaining share of the value as your down payment.
5. Add stamp duty, registration, and documentation charges on top, since the loan excludes them.
6. Confirm your income and existing loans support the instalment, as that can cap the loan further.
7. Get the sanctioned loan to value in writing before you pay a large advance.

What is the maximum loan I can get against a home?

It depends on the loan size. RBI caps the loan to value at 90 percent for loans up to 30 lakh rupees, 80 percent for loans above 30 lakh and up to 75 lakh, and 75 percent for loans above 75 lakh. These are maximums, so a lender may offer less based on your income, but it cannot lend more than the ceiling for your band.

Does the loan cover stamp duty and registration?

No. Lenders generally compute the loan to value on the property value alone, so stamp duty, registration, and documentation charges are not funded by the loan. You pay them from your own funds, on top of the down payment, which is why your real cash requirement is the down payment plus these transaction costs.

Why was my sanctioned loan lower than I expected?

Two limits can pull it down. The loan to value ceiling caps the loan as a share of the property value, and your income and existing obligations cap it based on repayment capacity. The bank lends the lower of the two. If the property fell into a stricter band or the valuation came in below the price, the loan shrinks and your down payment grows.

How do I calculate my minimum down payment?

Take the property value and subtract the maximum loan for your band, which is 90, 80, or 75 percent of that value. The remainder is your minimum down payment. Then add stamp duty, registration, and documentation charges, since the loan does not cover them, to get the total cash you actually need to arrange.

Last updated 2026-07-20. PropNewz Team.