What is LTV (loan-to-value)?
Also called: loan to value ratio, LTV ratio, margin money, own contribution
No bank can fund a home's full price. Loan-to-value is the share it may lend: RBI caps it at 90% for home loans up to ₹30 lakh, 80% for loans above ₹30 lakh and up to ₹75 lakh, and 75% for loans above ₹75 lakh; you pay the rest yourself.
Your own contribution, sometimes called margin money, is the balance. On a ₹1 crore flat, a bank can lend at most ₹75 lakh, so you need ₹25 lakh plus stamp duty, registration and other costs from savings. Note that the slabs are set by the loan amount, not the price. A ₹36 lakh flat with a loan of ₹29 lakh sits in the 90% band.
The "value" is the lower of the price in your agreement and the bank's own valuation. If the valuer puts a flat you've agreed at ₹82 lakh at ₹76 lakh, 80% of ₹76 lakh is the ceiling. And stamp duty, registration and similar charges are left out of the value, except for houses costing up to ₹10 lakh, where RBI lets banks include them. Anything the builder lists separately, like club membership, IFMS or maintenance deposit, is generally not financed either.
Lenders are free to go below the RBI cap, and they often do for older resale flats, plots and self-construction loans, or when your income supports a smaller EMI. Plot loans for purely buying land, if a lender offers them at all, usually come with lower LTVs than flats.
Plan the gap early. Builders ask for 10% to 20% at booking, and banks won't disburse until your share of the price has been paid in, so the savings have to be ready in the first few months, not at possession.
For a ₹60 lakh flat in Lucknow, the maximum loan is 80%, or ₹48 lakh, as it falls in the band above ₹30 lakh. The buyer needs ₹12 lakh of her own plus about ₹4.2 lakh for UP stamp duty at 7%, which the bank won't fund.
Buyers work out their down payment on the flat price alone and forget that stamp duty, registration and many builder charges sit outside the loan. That can add 7% to 10% of the price to what you need in cash.
Questions people ask about LTV (loan-to-value)
Can a bank finance 100% of a flat?
No. RBI's LTV limits apply to every regulated bank and housing finance company, so at least 10% of the property value always comes from you.
Does LTV include the builder’s parking and PLC charges?
If they're part of the agreement value in the registered sale agreement, lenders usually count them. Separate charges like club fees and deposits are generally excluded.