Current Home Loan Rates for NRIs: What to Expect in 2024

Even for people who have moved outside India and have already spent years living in another country, India remains their first home. Consequently, many NRIs try to buy at least one property in India that they can call home. NRI investments have also increased considerably over the last few years due to the promising growth demonstrated by the Indian real estate market. Additionally, until a few years ago, home loan rates for NRIs tended to be on the higher side.

However, this is not the case anymore. Today, many banks and NBFCs offer low home loan interest rates for NRIs. Before diving into the home loan rates for NRIs, let us understand a few things about home loans for NRIs. 

Home Loans for NRIs: Here’s How These Loans Are Different 

As mentioned earlier, home loan rates for NRI used to be a lot higher before. These days, though most banks and NBFCs have reduced home loan rates for NRIs, making housing finance affordable in general, the home loan rates for NRIs tend to be slightly higher than the home loan interest rates offered to Indian citizens. Lenders charge a slightly higher rate of interest on NRI home loans primarily keeping in consideration the higher risk of doing business with individuals staying outside of India.

In case of a loan default, recovery is not easy for NRI home loans. Thus, to mitigate this high risk, lenders charge a high rate of interest on NRI home loans.

Further, NRIs must know that while they can secure housing finance to buy an under-construction or ready-for-possession residential property, they cannot buy agricultural lands or a farmhouse. Further, NRIs can pay their home loan EMIs only through the Non-Resident External (NRE) or the Non-Resident Ordinary (NRO) accounts.

It is also important to understand all laws related to housing finance mentioned under the Foreign Exchange Management Act (FEMA) if you are an NRI and plan to secure a home loan to fulfil your dream of owning a home in India.

Current Home Loan Rates for NRI

The home loan interest rate on NRI home loans tends to be slightly higher than the home loan interest rate offered to Indian citizens. Lenders categorize NRIs as high-risk individuals, so to compensate for the risk, they charge a slightly higher interest rate.

Non-resident Indians who can establish stable income sources and an impressive profile can easily secure loans at home loan interest rates as low as 7.50% per annum. However, do keep in mind that this is the lowest NRI home loan interest rate and that most individuals may find it challenging to secure such a low interest rate.

Whether you are an NRI or an Indian citizen trying to secure housing finance, you must use the home loan calculator to plan your repayment journey beforehand. This will help you repay your loan without facing any major bumps on the way.

In fact, a home loan calculator can even make home loan prepayment easy, if becoming debt-free quickly is high on your priority list. The amortization schedule provided by the calculator will easily help you decide the most ideal time for prepayments and foreclosure, ensuring maximum benefits.

Let us conclude this article by sharing some tips on how NRIs can score a low-interest rate home loan. 

1. To secure a low home loan interest rate, you must add a co-borrower with excellent creditworthiness. Banks and NBFCs do not grant home loans to NRIs in the absence of a co-borrower. The co-borrower is needed to minimize the risk. Adding a co-borrower with high creditworthiness and repayment capacity and a CIBIL score above 750 will help you secure a profitable deal. 
2. NRIs who already have other loans and a high debt-to-income ratio may find it difficult to secure a low interest rate on their home loan. Ideally, loan borrowers must never let their debt-to-income ratio exceed 40%. 
3. It is also equally important to maintain a low credit utilization ratio. A high credit utilization ratio indicates an excessive dependency on credit, which banks and NBFCs do not see as a good thing. Maintaining a credit utilization ratio below 30% helps secure debt at profitable loan terms and conditions. 
4. Lastly, maintain income and job stability to convince your lender of your ability to clear debt on time and encourage them to sanction the loan at the best possible loan terms and conditions.