A first time buyer in Bengaluru walked into a bank expecting it to fund the whole price of a 60,00,000 rupee flat, and walked out realising he needed to arrange far more of his own money than he thought. The bank would lend a capped share of the property value, and the stamp duty and registration on top were entirely his to fund. The gap between the price of a home and the loan a bank will actually give against it has a name, and understanding it early is what separates a smooth purchase from a stalled one.

The short answer. The loan to value ratio, or LTV, is the share of a property's value that a lender will finance, and it is capped by the Reserve Bank of India on a sliding scale: broadly around 90 percent for smaller loans, stepping down to 80 percent and then 75 percent as the loan gets larger. Crucially, stamp duty, registration, and documentation charges are excluded from the property value used to calculate LTV, so they come out of your own pocket on top of the down payment. The trade off is that a buyer must arrange both the LTV gap and these transaction costs in cash, and since the exact slabs have been revised over time, the current thresholds should be confirmed with your lender.

What is the loan to value ratio?

The loan to value ratio is the proportion of a property's value that a lender is willing to finance through a home loan. If a bank offers an 80 percent LTV on a property, it will lend up to 80 percent of the assessed value and expects you to fund the remaining 20 percent as a down payment. The ratio exists because lenders want the borrower to have real equity in the home, which reduces the lender's risk if the loan goes bad, and the Reserve Bank of India caps how high the ratio can go. For a buyer, the LTV is the single number that translates a property's price into the loan you can actually expect, so it belongs at the front of your planning rather than as a detail you discover at the sanction stage, as the Bengaluru buyer above did.

How much can you borrow, and how does LTV step down?

You can borrow up to the LTV cap for your loan size, and that cap steps down as the loan grows larger. Under the RBI's loan to value framework, the ceiling is highest for smaller loans and lower for bigger ones, on the principle that larger exposures should carry a larger owner contribution. The notified structure has placed the highest ratio, around 90 percent, on the smallest loans, a middle ratio of 80 percent on a large middle band, and the lowest, 75 percent, on the biggest loans above 75,00,000 rupees. Because these slab boundaries have been revised by the RBI over time, the reliable figures are the current ones your lender applies, so treat the tiers as the shape of the rule rather than fixed numbers, and confirm the exact thresholds and ratio for your loan size before you budget. The direction is what matters: the more you borrow, the larger the share you must fund yourself.

Why are stamp duty and registration excluded from LTV?

Stamp duty, registration, and documentation charges are excluded from the property value when computing LTV, which means the loan is calculated on the price of the home alone and you fund those charges separately. The RBI has directed that lenders should not include these charges in the cost of the housing property they finance, precisely so that the LTV ratio genuinely reflects equity in the property rather than being diluted by transaction costs. For a buyer, this is one of the most important and least understood points in the whole purchase, because stamp duty and registration can add several lakh rupees, and they sit entirely on your side of the table on top of the down payment. Budgeting only for the down payment and forgetting these charges is a classic way to fall short of funds at registration, so count them from the beginning as a separate, unavoidable cash requirement.

How does LTV shape your down payment?

Your down payment is the part of the property value the LTV does not cover, plus the transaction charges the loan excludes. If the LTV for your loan is 80 percent, your down payment on the property value is at least 20 percent, and if it is 75 percent, it is at least 25 percent. On top of that base, you add stamp duty, registration, and other costs, which are not financed. So a buyer of a larger home faces a double effect: a lower LTV means a bigger percentage down payment, and the excluded charges add more cash still. This is why two buyers with similar incomes can face very different upfront requirements depending on the size and price of the home. Planning the down payment realistically, as the LTV gap plus the excluded charges, is the difference between a purchase you can actually close and one that unravels when the money is called.

Why does a bigger down payment help you?

A bigger down payment, meaning a lower LTV, reduces your loan, your EMI, and your total interest, and can make approval easier. Borrowing less against the same property means a smaller principal, which directly lowers the monthly EMI and the total interest paid over the tenor, in the same way a shorter tenor does. A lower LTV also leaves the lender better protected, which can help your application and sometimes your pricing. None of this means a buyer should drain every rupee of savings into the down payment, because keeping an emergency buffer matters too, but it does mean that where you have the means, putting in more than the bare minimum is usually a sound way to reduce the cost of the loan. The right balance is enough down payment to lower the loan meaningfully while keeping a cushion for the move and for emergencies. It is also worth remembering that the lender assesses the property's value independently, and if that assessed value comes in below the price you agreed, the loan is calculated on the lower figure, which quietly increases the down payment you must find. Checking the lender's own valuation early, rather than assuming it matches the price, avoids that particular surprise.

LTV and down payment at a glance

The relationship between loan size, LTV, and your cash requirement follows a clear pattern.

The theme across the table is that your own contribution rises with the size of the loan and always includes the excluded transaction charges, so the down payment is never just the headline percentage.

What should a buyer check about LTV and down payment?

A buyer should confirm the applicable LTV, compute the full cash requirement, and keep a buffer. Work through these checks before you commit.

1. Ask your lender for the current LTV cap that applies to your loan size.
2. Calculate the down payment as the property value minus the loan the LTV allows.
3. Add stamp duty, registration, and documentation charges, which the loan will not cover.
4. Include other costs such as any GST, brokerage, and moving expenses in your cash plan.
5. Consider putting in more than the minimum down payment to lower your EMI and interest.
6. Keep an emergency buffer rather than exhausting your savings on the down payment.
7. Confirm the current LTV thresholds, since the RBI has revised them over time.

Doing this turns the down payment from a shock at sanction into a number you planned for, and it keeps you from being the buyer who agrees a price they cannot actually fund.

Frequently asked questions

What is the loan to value ratio on a home loan?

The loan to value ratio is the share of a property's value that a lender will finance. If the LTV is 80 percent, the bank lends up to 80 percent of the assessed value and you fund the rest as a down payment. The Reserve Bank of India caps how high the ratio can go, on a sliding scale by loan size.

How much down payment do you need for a home?

Your down payment is the property value not covered by the LTV, plus charges the loan excludes. For an 80 percent LTV that is at least 20 percent of the value, and for 75 percent it is at least 25 percent, and you add stamp duty and registration on top. Larger loans require a larger percentage down payment.

Are stamp duty and registration included in a home loan?

No. The RBI has directed lenders not to include stamp duty, registration, and documentation charges in the property value used to compute LTV, so the loan is calculated on the home's price alone. These charges are funded separately by the buyer, and they can add several lakh rupees, so budget for them as a distinct cash requirement.

Does a bigger down payment reduce your EMI?

Yes. A bigger down payment means a lower LTV and a smaller loan, which directly reduces the EMI and the total interest paid over the tenor. It can also help your loan approval by lowering the lender's risk. The sensible balance is to put in more than the minimum where you can, while keeping an emergency buffer.

See how the loan itself behaves in our guide to home loan EMIs and the repo rate, and check the project side in our note on an APF approved project and home loan. If you are comparing homes, our overview of Embassy Codename Yelahanka shows what to weigh. The rule referenced here is the RBI's loan to value ratio notification.

Last updated 2026-07-13. PropNewz Team.