How much savings do you need to put in for the downpayment of a house?

 Let’s start from the basics-

What is a downpayment?

The downpayment amount is the sum of money you need to put towards purchasing a home. This amount is not financed through home loans or any other kind of loan. Downpayment helps you to reduce the money you need to borrow. It is also referred to as Own Contribution or OCR in the mortgage industry. Additionally, more significant down payments are preferred by lenders as that assures them of lesser chances of default. It is a mandatory process to get your home loan financed.

What are the factors that affect downpayment for a property?

The amount of savings you need to put down for a downpayment on a house will vary depending on several factors like-

1. Price of the property – The most crucial factor when buying a home is the price of the property. Typically, the downpayment amount required by the lender is mainly 20-40% of the price of the property. However, in some cases, it can be as low as 10% of the property value, depending on the terms and conditions.
2. Type of loan – The type of loan you choose for a home loan can affect the down payment amount required for approving your home loan. Home loans offered by RBI-registered lenders such as banks and NBFCs are secured loans, and so the downpayment required in such cases varies from 10-40%. Some schemes run from time to time, like Pradhan Mantri Aawas Yojna, aimed towards making housing affordable. In such cases, the downpayment amount required is merely 3-10%.