Home Loan Basics Every Agent Should Be Able to Explain

You are not a loan advisor and should not pretend to be. But a buyer whose financing collapses two weeks before registry costs you a month, and most of those collapses were predictable at the first conversation.

The two ceilings

LTV — loan to value. The bank lends a percentage of the property's assessed value, not the price you agreed. Broadly: up to 90% on small-ticket loans, around 80% in the middle band, and 75% on high-value ones. The assessed value can come in below the deal price, and the buyer funds the gap.

Income multiple, constrained by FOIR. Lenders cap total EMI obligations at roughly 40–55% of net monthly income depending on the profile. An existing car loan or credit card EMI eats directly into eligibility.

The buyer's real budget is the lower of these two, plus their down payment. Establish it early.

What "pre-approved" actually means

An in-principle sanction based on income documents, before any property is identified. It is genuinely useful — it tells you the ceiling is real — but it is conditional on the property passing legal and technical checks.

A buyer without pre-approval is not a bad buyer. They are an unknown one.

The costs nobody budgets for

Beyond the down payment:

• Stamp duty and registration — varies by state and often by the buyer's gender; typically a several-percent hit
• Processing fee — a fraction of a percent, sometimes waived on request
• Legal and technical valuation charges
• GST, on under-construction property only
• Society transfer charges and maintenance deposits
• Interiors — the largest and most consistently underestimated line

A buyer who has budgeted only the down payment will discover a substantial shortfall at exactly the wrong moment. Raise it in week one.

Where deals actually break

• The technical valuation comes in under the agreed price
• Title documents in the chain are incomplete
• The building lacks the occupancy certificate
• The buyer took a new personal loan during the process, wrecking their FOIR
• Employment changed between sanction and disbursement

The last two are entirely avoidable, and telling the buyer plainly — do not take any new credit until registry — prevents most of them.

Prepayment

Floating-rate home loans to individuals generally carry no prepayment penalty. Early prepayment is disproportionately effective because early EMIs are almost all interest.

Reducing the tenure rather than the EMI saves substantially more over a loan's life, though it does nothing for monthly cash flow. Let the buyer choose knowingly.

Your job, precisely

Ask about funding at the first conversation. Ask whether it is pre-approved. Ask what else they are paying EMIs on. Then hand them to a lender or advisor and stay out of the specifics.

Rates, eligibility rules and charges change; anything quoted here is general and should be confirmed with the lender before a buyer relies on it.