NHB Tightens Rules on High-Value Home Loans: What Borrowers Need to Know

The National Housing Bank (NHB) has flagged concerns over housing finance companies (HFCs) that breached the loan-to-value (LTV) rules on high-value home loans. Regulators noticed that some lenders sanctioned loans above ₹75 lakh with LTVs as high as 90%, even though the regulatory limit for this category is 75%.

To address this, NHB has directed lenders to reclassify such loans as non-home loans, bringing stricter compliance into the housing finance space. This move impacts borrowers, lenders, and the real estate sector alike.

What Are LTV Norms and Why They Matter

The loan-to-value ratio (LTV) sets the percentage of a property’s value that can be borrowed as a loan. It acts as a safeguard for both borrowers and lenders, ensuring debt remains manageable.

Here’s how the framework currently works:

Loans up to ₹30 lakh → 90% LTV allowed
Loans between ₹30–₹75 lakh → 80% LTV allowed
Loans above ₹75 lakh → 75% LTV allowed

By enforcing these limits, NHB ensures high-value borrowing does not expose households or financial institutions to excessive risk.

What This Means for Borrowers

For those planning to take a home loan above ₹75 lakh, the impact is quite direct:

Higher Down Payments – You’ll need to contribute more personal funds since the loan can now cover only up to 75% of the property value.
Stricter Eligibility Checks – Expect closer scrutiny of your income, credit score, and repayment capacity.
Reduced Over-Leverage Risk – While this might feel restrictive, it prevents borrowers from taking on unsustainable debt.

💡 Before applying, you can use our Home Loan EMI Calculator to estimate your monthly installments and plan your finances.

How It Impacts Housing Finance Companies

For lenders, NHB’s directive brings in:

Reclassification of Loans – Loans breaching LTV norms will no longer qualify as home loans.
Tighter Compliance – Lenders must align their policies with NHB norms to avoid penalties.
Lower Risk Exposure – Stricter rules reduce the chances of rising defaults in the high-value loan segment.

While this may slow down disbursements in luxury housing loans, it ensures long-term stability in the financial system.

Effect on Developers and the Real Estate Market

Luxury home developers may feel indirect pressure as fewer borrowers qualify for high-value loans. This could result in:

Slower sales in premium housing projects
Developers exploring alternate funding options to maintain cash flow

The Bigger Picture

As of September 2024, HFCs held a housing loan portfolio of ₹6.25 lakh crore, while the overall industry size was close to ₹34 lakh crore. With such large exposure, even small lapses in lending norms can carry systemic risks.

The Reserve Bank of India (RBI) also been tightening disclosure and compliance requirements to ensure long-term housing finance stability.

Our Perspective on NHB’s Move

The NHB’s stricter stance may make access to high-value home loans more challenging, but it promotes responsible borrowing and safeguards the market from over-leveraging.

If you’re considering a large-ticket loan, it’s important to:

Plan for a higher down payment
Use tools like the Home Loan EMI Calculator to understand repayment obligations
Check your affordability with the Home Loan Affordability Calculator

Conclusion

The NHB’s crackdown on high-value lending is reshaping the borrowing landscape. Borrowers must prepare for larger contributions, lenders need to comply with tighter norms, and developers may turn to alternative financing.

For individuals, the key takeaway is simple: plan wisely, calculate your EMIs in advance, and borrow well within your means to ensure long-term financial security.

1 Comment

How NBFCs and Banks Are Adapting to New Lending Restrictions – Daily Dose by Hemangi

September 3, 2025

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