Home Loan Eligibility for NRIs

Before getting into the eligibility criteria for home loans to NRIs, it may be useful to get an overview of the various facilities extended to NRIs by the RBI (Reserve Bank of India), under the Foreign Exchange Management Act (FEMA), 1999. The points below are a quick reference / overview of the facilities within the RBI framework, for NRIs who plan to avail a home loan in India.

• NRIs can acquire immovable property in India with the exception of agricultural property, plantation or a farmhouse
• the purchase consideration can be paid with funds received in India through normal banking channels by way of inward remittance from outside the country
• compared to Indian residents, NRIs have a different home loan tenure
• depending on the repayment capacity of the borrower, home loan applicants will be eligible for a maximum of 85% of the cost of property or construction
• an NRI can enhance loan eligibility for the home loan by including a co-applicant who has a separate source of income
• home loan interest rates are higher by 0.25% - 0.50% for NRIs than those offered to Indian residents

This link in the RBI's website carries the comprehensive list of facilities extended by the RBI to NRIs and PIOs, through its Foreign Exchange Management (Acquisition & Transfer of Immovable Property in India) Regulation, formulated to comply with the provisions of the Foreign Exchange Management Act (FEMA), 1999.

Some important definitions in the FEMA

• An NRI is an Indian citizen or a foreign citizen of Indian origin, residing abroad (please check for exceptions). Students also come under this category; (An NRI is permitted to operate an NRE/FCNR account in India by the RBI)
• A PIO is an Indian citizen who has opted for citizenship of another country; persons of Indian origin does not include citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, or Bhutan)

Home loan eligibility criteria for NRIs/PIOs differ from those for resident Indians. They are as follows:

• Age limit is 25 to 60 years with the stipulation that the retirement age will be considered the maximum age limit for fixing the loan tenure
• Residential status for salaried applicants is a minimum overseas stay of one year; for self-employed applicants it is three years
• Qualification is linked to home loan tenures and country of residence in the case of salaried applicants; it ranges from graduates /diploma holders to postgraduate / professional degree at the minimum; for self-employed applicants the minimum is SSLC or its equivalent
• Annual Income at the minimum should be USD 42,000, but varies from one lending institution to another; loan eligibility depends on stability and continuity of employment / business
• Number of dependants, as well as assets and liabilities are also considered loan eligibility criteria

When applying for a home loan, applicants would do well to execute a Power of Attorney (POA) in favor of a designated representative who will liaison with their lending institutions, in their absence; at the minimum, home loan applicants should keep ready copies of their passport and visa, employee appointment letter / contract, labor / identity card, salary certificate, and bank statement for six months; the details in the labor / identity card and salary certificate should be translated into English, if required; lending institutions may ask for additional documents to satisfy their respective loan processing norms.