Published on Feb 24, 2025Updated on Aug 31, 2026
Owning a home is a major financial milestone, but arranging the home loan down payment can often be a challenge. While home loans cover a large portion of the property’s cost, lenders require borrowers to contribute 10-20% of the property value upfront as a down payment. This can be a large amount, especially for first-time homebuyers.
If you’re struggling to arrange the down payment, there are multiple ways to raise funds, including personal loans, government subsidies like Pradhan Mantri Awas Yojana (PMAY), using investments, or borrowing from family and friends.
This article explores easy and effective ways to help you finance your home loan down payment without disrupting your financial plans.
Most financial institutions follow a Loan-to-Value (LTV) ratio, where they finance up to 80% of the property value through a home loan. Borrowers are required to contribute the remaining 20% as a down payment. Some lenders offer 90% LTV, reducing the down payment requirement, but even with a lower amount, arranging funds can be difficult.
The down payment required depends on the lender, loan amount, and property value. Proper planning and exploring multiple funding sources can help make homeownership more accessible.
Here are some practical ways to arrange your home loan down payment.
A personal loan can be an excellent option to cover a home loan down payment, especially if you don’t have sufficient savings. These loans are typically approved quickly and are unsecured, meaning you don’t need to provide collateral.
Before opting for a personal loan, assess your repayment capacity to ensure you can manage both your home loan EMIs and personal loan repayments comfortably.
The Pradhan Mantri Awas Yojana (PMAY) is a government-backed scheme aimed at promoting affordable housing for first-time homebuyers. Under PMAY, eligible applicants can receive an interest subsidy depending on their economic category.
By taking advantage of PMAY, specific borrowers can ease their financial burden and allocate funds toward their home loan down payment.
Instead of liquidating savings, you can leverage assets like fixed deposits (FDs), mutual funds, or insurance policies to secure a loan against securities. This method allows you to retain your investments while utilising them to raise funds for your home loan down payment.
Most financial institutions provide loans against securities, making this a practical option for homebuyers looking to preserve their financial assets.
If formal financing options are not suitable, borrowing from family or friends can be a cost-effective alternative. Unlike traditional loans, informal loans come with zero or low interest rates, making them an attractive option.
However, ensure clear communication and maintain transparency to avoid misunderstandings. Drafting a simple loan agreement can help both parties set expectations.
Saving for a home loan down payment requires proper financial planning. While personal savings are ideal, alternative financing options like personal loans, government subsidies, and loans against investments can help bridge the gap. Choosing the right funding source ensures a smooth home-buying experience without financial stress.
If you need quick financial support, SMFG India Credit offers personal loans up to INR 10 Lakhs* with flexible repayment tenures of up to 60 months*. Our interest rates start at only 12.5%* per annum. Apply online today with minimal documentation.
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