It is not rare to see non-resident Indians (NRIs) and persons of Indian origin (PIOs) interested in purchasing property in India. But, they face a common hindrance like a lack of clarity while applying for an NRI home loan. There are some things that all potential NRI homebuyers must know about getting a home loan in India. One of these is that the Reserve Bank of India (RBI) permits all banks and housing finance companies registered with National Housing Bank (NHB) to grant loans to NRIs for residential properties. If an NRI has an Indian employer, the employer can also grant a home loan.

The loan is sanctioned in Indian currency and requires to be repaid in the same. According to the regulations set by RBI, the loan amount cannot be deposited to the NRI applicant's account. Instead, it is disbursed to either the seller's or the developer's account.

Application

One can apply for a home loan either through the internet or through offline means. It is necessary to attach certain documents along with the application. These documents may differ, depending on whether the applicant is salaried or self-employed.

Some common documents required are:

• Passport and VISA forms
• Details of the permanent address in India
• Deputation/appointment letter, work permit, contract of employment and work experience certificate in case of a salaried applicant
• Salary certificates in case of salaried applicants
• Statements of NRE and NRO accounts
• Verified foreign land address proof
• Tax returns from the foreign land
• Qualification certificate
• Notarised General Power of Authority (GPA) in the bank's format

One must enquire well in advance from the bank if the documents need to be certified from the Indian embassy in the country of residence.

Repayment of the loan

The applicant can repay the loan using funds deposited in their non-resident ordinary (NRO), non-resident external (NRE) or foreign currency non-resident account (FCNR) account. Alternatively, they can pay the EMIs through remittances from outside India, provided a proper banking channel is involved.

In case one has rented out the said property, they can use the rental income for loan repayment.

In case one has purchased the property for self-occupancy, they can avail a loan of up to Rs 1 crore against their FCNR or NRE account deposits.

Other requirements

• An NRI applicant needs to hold at least a graduate degree to qualify for a home loan
• Minimum income requirements may differ from bank to bank
• Having a co-applicant is mandatory
• GPA holder can either be a co-applicant or a guarantor to the loan
• Guarantor to the loan is mandatory when a local resident is not available as a co-applicant
• The GPA holder must be present in person during the disbursement of the loan and must sign the disbursement documents

While the interest rate stays the same as on regular loans, the tenure of an NRI home loan may be shorter than that of a regular loan. The reasoning behind this is that the repaying capacity of an NRI is, supposedly, stronger than that of an Indian resident.