How much cash a home purchase really needs
The down payment is not simply the part of the price a lender will not fund. It is that amount plus every cost the loan cannot cover — and those extras are what leave buyers short at the last moment.
Loan-to-value limits set the floor
Regulatory limits cap how much of a property’s value a lender may finance: up to 90% for smaller loans, 80% in the middle band, and 75% for high-value loans. That makes your minimum down payment 10%, 20%, or 25% depending on the loan size.
Lenders also apply the limit to their own valuation rather than your agreement price. If their valuer assesses the property lower than you are paying, the shortfall comes out of your pocket on top of the down payment.
The costs a home loan will not fund
Stamp duty and registration are normally excluded from the financed amount, and together often add 5-8% of the property value. Add brokerage, legal charges, the loan processing fee, mortgage-related stamp duty in some states, and interiors.
On an ₹80 lakh property with a 75% loan, the ₹20 lakh down payment can easily become ₹26-30 lakh of actual cash required. Planning only for the down payment is how buyers end up borrowing expensively at the eleventh hour.
Why a bigger down payment usually pays
Every extra rupee of down payment removes a rupee of principal that would otherwise attract interest for the whole tenure. It also improves your loan-to-value ratio, which some lenders reward with a slightly lower rate.
The counter-argument is liquidity. Emptying your emergency fund to reduce the loan leaves you exposed to job loss or medical costs, and a personal loan at 14% is a poor substitute for savings you spent at 8.5%.
Where the money should come from
Savings, debt fund redemptions, and maturing deposits are the usual sources. Some buyers use a partial EPF withdrawal, which is permitted for house purchase subject to service and limit conditions.
Borrowing the down payment through a personal loan is the option to avoid. Lenders check for it, it inflates your obligations and reduces home loan eligibility, and it converts a cheap secured loan into an expensive unsecured one.
Cash needed on an ₹80 lakh property
- Property value
- ₹80,00,000
- Maximum loan at 75% LTV
- ₹60,00,000
- Down payment
- ₹20,00,000
- Stamp duty and registration
- ≈ ₹4-6 lakh
- Brokerage, legal, processing fee
- ≈ ₹1-2 lakh
- Realistic cash required
- ≈ ₹26-30 lakh
Budget roughly a third of the property value in cash for a high-value purchase, and keep your emergency fund intact on top of that.