Home Loans for NRIs: Eligibility, Benefits, and Key Insights

Introduction

Banks and other financial institutions offer home loans that enable individuals to purchase or construct a home. These loans are designed to help people fulfil their dream of owning a home by offering them the required funds. An increasing number of investors are now also opting for a home loan to purchase a property and this also includes NRI applicants looking forward to buying a house. 

For NRIs, owning a home in India is not just a matter of convenience or investment, but also a connection to their roots. An NRI housing loan in India can help them achieve this dream without having to dip into their savings. Additionally, owning a property in India can provide a sense of security and stability, especially for those who plan to return to India in the future. Thus, NRIs should consider applying for a home loan in India to fulfil their desire. Read on to learn more about the key aspects of home loan tax benefits and other crucial facets of this investment.

Home Loans for NRI: Crucial Eligibility Aspects 

Non-Resident Indians (NRIs) are individuals who hold an Indian passport but live outside of India. Many NRIs aspire to buy a home in India for personal use or as an investment. However, there are certain eligibility criteria that NRIs must meet to be eligible for a home loan in India.

• Citizenship and age: NRIs must hold an Indian passport and be at least 21 years old to be eligible for an NRI housing loan in India. Additionally, NRIs must have a valid visa or work permit in the country they reside in.
• Employment: NRIs must be employed in a foreign country and have a minimum work experience of two years. They must provide proof of income through salary slips, bank statements, or tax returns.
• Credit history: NRIs must have a good credit score and credit history to get a home loan. Lenders may consider an NRI's credit history in the country they reside in along with their credit history in India.
• Property type: NRIs can avail of home loans for residential properties only in India. They cannot take a loan for commercial properties or for purchasing land. Hence, this loan is available only for buying a house in India.
• Loan amount: The maximum amount for home loans for NRI depends on the lender and the property's value. Generally, lenders offer up to 80% of the property's value as a loan.
• Down payment: NRIs must make a down payment of at least 20% of the property's value from their funds for a home loan. Lenders do not allow NRIs to make the down payment from loans or gifts.
• Repayment: NRIs must repay the home loan through NRE or NRO accounts. NRE accounts are non-resident external accounts, and NRO accounts are non-resident ordinary accounts. The repayment amount can be made in Indian currency or foreign currency.
• Power of Attorney: NRIs must appoint a trusted relative or friend in India as their Power of Attorney to carry out loan-related activities on their behalf. This is an extremely crucial requirement for taking an NRI housing loan in India.
• Taxation: NRIs must pay taxes on their income earned in India, including the income from the property purchased through the home loan. NRIs must also comply with the tax laws of the country they reside in.
• Documentation: NRIs must provide the necessary documentation, including identity proof, address proof, income proof, and property documents for buying a house in India. They may also need to provide a power of attorney document and a declaration of their NRI status.

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Types of Home Loans for NRIs in India 

In addition to these eligibility criteria, NRIs must also be aware of the different types of home loans for NRIs available in India. Some of the most common home loan types are:

• Floating rate home loan: The interest rate on this type of loan changes with market conditions.
• Fixed-rate home loan: The interest rate on this type of loan remains constant throughout the loan tenure.
• Home improvement loan: NRIs can avail of this loan to make improvements or repairs to an existing home.
• Home extension loan: NRIs can avail of this loan to construct an extension to an existing home.
• Plot loan: NRIs can avail of this loan to purchase land and construct a home on it.

NRIs must also compare the interest rates, processing fees, and other charges of different lenders before selecting a home loan. Some lenders may offer special schemes or discounts for NRIs.

Home Loan Tax Benefits for NRI 

NRIs can avail of tax benefits on the interest paid towards their home loan in India.

• Under Section 24 of the Income Tax Act, NRIs can claim a deduction of up to INR 2 lakhs on the interest paid towards a home loan taken for a self-occupied property in India.
• Additionally, NRIs can claim a deduction on the principal repayment under Section 80C of the Income Tax Act, up to a maximum limit of INR 1.5 lakhs.

However, NRIs must ensure that they comply with the tax laws of India and their country of residence to avoid legal complications.

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Conclusion 

NRIs can avail of NRI housing loans in India for purchasing residential properties. However, they must meet certain eligibility criteria and provide the necessary documentation. NRIs must also be aware of the different types of home loans available in India for buying a house. It is important to compare the offerings of different lenders before selecting a loan. With careful planning and research, NRIs can achieve their dream of owning a home in India.

To get the best deals on residential properties and home loans for NRI, get in touch with the experts at Adani Realty. They will guide you through the entire process and would help make profitable investments in residential real estate.