Home Loans & Finance
What is LTV Ratio?
The cap that means you always need cash. And the valuation trap that turns a shortfall into your problem, days before registration.
The short answer
LTV is how much the lender will advance, as a percentage of the property's value.
RBI caps it: 90% for loans up to ₹30 lakh, 80% for ₹30–75 lakh, 75% above ₹75 lakh.
There is no 100% home loan. And the LTV is calculated on the lender's valuation, not your price — which is where people get hurt.
The caps
| Loan amount | Maximum LTV | You must fund at least |
|---|---|---|
| Up to ₹30 lakh | 90% | 10% |
| ₹30 lakh – ₹75 lakh | 80% | 20% |
| Above ₹75 lakh | 75% | 25% |
And note what the LTV is calculated on: the property value as the LENDER assesses it, which may be lower than what you agreed to pay. If the bank values your Rs 1 crore flat at Rs 90 lakh, your 75% LTV is 75% of Rs 90 lakh — and the shortfall is yours to find.
The valuation trap — and it lands late
You agree to buy a flat for ₹1 crore. You plan on a 75% loan — ₹75 lakh — and ₹25 lakh of your own.
The bank sends a valuer. The valuer says the flat is worth ₹90 lakh.
Your loan is now 75% of ₹90 lakh = ₹67.5 lakh.
You must now find ₹32.5 lakh, not ₹25 lakh. An extra ₹7.5 lakh — and you find out weeks into the process, having already paid a token and possibly a booking amount.
This is not rare. It happens where:
- The builder's price is above the market — a new project in an unproven micro-market
- You have paid a large preferential location charge or floor rise, which a valuer may not fully recognise
- The market has softened since the project launched
- You negotiated poorly, and paid over the odds
Ask your lender to do the technical valuation before you pay a large booking amount — not after.
Because if the valuation comes in low, you want to know while you can still walk away, renegotiate, or find the extra money in an orderly way.
A low valuation is also useful information about the price you agreed. An independent professional, with no stake in the sale, has just told you the flat is worth less than you are paying. That is worth listening to.
The cash you actually need
The real number, on an ₹80 lakh flat
- Flat price
- ₹80,00,000
- Loan at 80% LTV
- ₹64,00,000
- Down payment
- ₹16,00,000
- Plus — stamp duty & registration
- ≈ ₹5,00,000
- Plus — corpus fund
- ≈ ₹1,20,000
- Plus — advance maintenance (18 months)
- ≈ ₹80,000
- Plus — car parking
- ≈ ₹3,00,000
- Plus — loan processing fee
- ≈ ₹50,000
- Cash you actually need
- ≈ ₹26,50,000
₹26.5 lakh, not ₹16 lakh. That is a third of the flat's price, and it is why "I have 20% saved" is so often not enough.
Why a LOWER LTV helps you
You do not have to borrow the maximum. And there are reasons not to.
- A lower LTV can buy a better rate. Less risk for the lender, a thinner spread for you — and the spread is fixed for the life of the loan.
- Faster approval, and a smoother one.
- A smaller loan means less interest — obviously, but the effect over 20 years is larger than people expect.
- More room to prepay later, since your EMI is lower.
Do not put your last rupee into the down payment.
Keep an emergency fund — six months of expenses including the new EMI.
A borrower who bought a slightly bigger flat with no savings, and then lost their job, is in a far worse position than one who bought a slightly smaller flat and kept a cushion. The EMI does not pause because your circumstances changed.
Home loan rates and the RBI's repo rate move. A page that says 'the rate is X%' is wrong within months, and quietly misleads everyone who reads it afterwards.
So we explain how the mechanism works — which does not change — and leave the number to you.
For the current repo rate, check the RBI's own website. For current home loan rates, check three or four lenders directly. Both take five minutes, and both are more reliable than anything a content site tells you.
Frequently asked questions
What is LTV ratio in a home loan?
The ratio of the loan to the lender's assessed value of the property. RBI caps it at 90% for loans up to Rs 30 lakh, 80% for Rs 30-75 lakh, and 75% above Rs 75 lakh. There is no 100% home loan in India.
Is LTV calculated on the price I paid?
No — on the LENDER's valuation, which may be lower. If you agree to buy at Rs 1 crore and the bank's valuer says Rs 90 lakh, your 75% loan is 75% of Rs 90 lakh, not of Rs 1 crore. The shortfall is yours to find, and you usually discover it weeks in, having already paid a token.
How much cash do I need to buy a flat?
Far more than the down payment. On an Rs 80 lakh flat at 80% LTV, the down payment is Rs 16 lakh — but add stamp duty and registration (about Rs 5 lakh), the corpus fund, advance maintenance, car parking and the loan processing fee, and you need closer to Rs 26 lakh. A third of the price, not a fifth.
Does a lower LTV get me a better interest rate?
Often, yes. A larger down payment means less risk for the lender and can buy you a thinner spread — which is fixed for the life of the loan, so it compounds. But do not drain your savings to achieve it: keep an emergency fund of six months' expenses including the new EMI.
What happens if the bank's valuation is lower than my price?
Your loan shrinks, and you must find the difference. Get the technical valuation done BEFORE you pay a large booking amount, not after — so that if it comes in low you can still walk away, renegotiate, or arrange the money in an orderly way. A low valuation is also useful information about the price you agreed.