For many Non-Resident Indians, buying a home in India has become an attractive dream for their post-retirement period. But with various foreign regulations and Indian policies to consider, it can be difficult to understand if NRIs are allowed to get loan options in the country. Here in this article, we address this pressing question – Can NRI’s take out loans when looking into purchasing a house back home?
For those living abroad, attaining a Home Loan in India can be an overwhelming process. That’s why we need to make sure that NRIs understand all the conditions they need to fulfill when applying for such loan conditions like having an educational degree or diploma, maintaining a stable income, and providing accurate documents. Despite varying criteria set by each bank individually; these are essential components of every NRI checklist.
Let’s have a look at all these in detail!
- 1 Eligibility Criteria for a Home Loan for NRIs
- 2 FAQs About NRI Home Loans
- 2.1 What is the home loan repayment norms/procedure for NRIs?
- 2.2 What is the Power of Attorney (POA) requirements for an NRI home loan?
- 2.3 Will the income from an NRI’s property be taxed in India?
- 2.4 Who is an NRI?
- 2.5 Are there any restrictions on the property owned?
- 2.6 NRI Home loan – What is the maximum limit?
- 3 Do The Math And Take the Necessary Action
Eligibility Criteria for a Home Loan for NRIs
The NRI checklist for home loans typically includes the following requirements:
- You must be between the ages of 21 and 60 years
- You must possess an educational degree or diploma as specified by the lender
- A stable income is necessary
- All the necessary documents should be present without any complications
Note that the eligibility criteria for each bank may vary slightly.
Documents Required for NRIs to Avail a Home Loan in India
Applying for an NRI Home Loan requires several documents to be in order. Make sure all documentation is provided accurately for a seamless experience! The documents are listed below.
- Id-card given by the employer
- Copy of passport and visa
- Address proof (current overseas address)
- Loan Application form with 3 Passport size photographs
- PAN card/ Passport/ Driver’s License/ Voter ID card
- Residence proof
- Property construction permission documents
- Registered sale agreement/ allotment Letter/ stamped Agreement for Sale
- Approved Plan copy/ blueprint, conveyance deed
- Payment receipts for payments made to Builder/Seller
- Bank account statement of previous 6 months, overseas account showing salary and savings, details of Indian account (if any)
- Copy of valid work permit
- Employment contract – an English translation duly attested by the employer/ consulate / our foreign office / Embassy in case it is in any other language
- Salary slip of the last 3 months
- ITR copy
For those looking to invest in India, a variety of loan options are available from several trusted banks. If you’re interested in exploring your financing opportunities, you can look at banks like private and nationalized banks. You can carefully analyze your requirements and choose the provider based on your interests.
Tax Benefits For NRI Home Loans
Below are some of the tax benefits NRIs can get, when availing a home loan in India.
1. As per Section 80C, the deduction is available with regard to the repayment of the principal component of home loans. The maximum deductions available as per Section 80C could be 150000 p.a.
2. As per Section 24, the deduction is available for the repayment of interest on home loans up to 200,000 p.a. This deduction is available under the head ‘Income from house property’.
3. For NRIs availing home loans in order to buy their first home, an additional deduction of up to 50,000 p.a. is available (subject to the fulfillment of certain conditions) with regard to the repayment of interest on home loans as per Section 80EE.
4. As per Section 80C, NRIs can also avail deductions for registration charges and stamp duty paid for acquiring their property.
5. Section 24 also allows deduction pertaining to repayment of interest on NRI home loans, even though the property is in the pre-construction phase.
FAQs About NRI Home Loans
What is the home loan repayment norms/procedure for NRIs?
Non-Resident Indians can easily and securely repay home loans from abroad through a variety of options available, such as transferring money via regular banking channels or issuing post-dated cheques/ECS transfers. They may also opt for alternate solutions like having domestic relatives issue suitable bank cheques on their behalf.
What is the Power of Attorney (POA) requirements for an NRI home loan?
Home loans for NRIs require special attention due to their physical absence in India. To ensure that the process is well managed, lenders seek a Power of Attorney (PoA) – an individual based within Indian borders who can handle on-ground operations as required by lender policies.
Will the income from an NRI’s property be taxed in India?
Non-Resident Indians may not be residing in India, but their income generated from sources within the country – such as rental payments for a property – remain subject to taxation by Indian authorities.
Who is an NRI?
Budget 2020-21 took a step forward in defining the non-resident status by extending it from 183 to 245 days. Now, citizens can stay out of their country for nearly eight months and still maintain their designation as non-residents.
Are there any restrictions on the property owned?
India has imposed a cap on the number of residential properties an NRI can own. Though unrestricted acquisition is allowed for commercial real estate, when it comes to houses intended for living in, only two are permitted per Non-Resident Indian. Furthermore, renting out these homes does not expand their property allotment – still, just the two dwellings may be owned. Also, agricultural lands are still not permitted for buying for NRIs.
NRI Home loan – What is the maximum limit?
A person can get a maximum of 90% funding if the loan amount is Rs.30 lakhs, 80% up to Rs.75 lakhs, and 75% for loan amounts above Rs.75 lakhs. (Source: Creditmantri)
Do The Math And Take the Necessary Action
Applying for a home loan can be a difficult and tiring process, but it is worth it in the end. You will have your very own home that you can call yours. The steps to apply for a home loan are not too complicated, and as long as you have all of the required documents, it should be a smooth process.
Even if you are an NRI, you can easily avail a home loan in India with the few simple steps mentioned above. Just make sure that you understand all the terms and conditions before taking the loan. And once you have availed the loan, timely repayment is very important to maintain a good CIBIL score. For more information on home loans, please visit our website.
Just remember to do your research so that you understand what kind of loan would work best for you and your family. Have a look at our website for more information on the projects and opportunities you can look out for when planning to invest in India.