LTV is the property-side counterpart to FOIR. Where FOIR tells the bank how much EMI you can afford, LTV tells it how exposed it is to the property. The two ratios co-determine your final loan amount.
The formula
LTV (%) = sanctioned loan amount ÷ bank-assessed property value × 100
The denominator is bank-assessed value, not the circle rate, and not what you paid. The bank sends an empanelled valuer to the property; that valuation can be lower than your purchase price if the locality is overheated or the flooring is basic.
RBI's LTV ceilings (2020 circular, still in force April 2026)
| Ticket size | Max LTV |
|---|---|
| Up to ₹30 lakh | 90% |
| ₹30 lakh – ₹75 lakh | 80% |
| Above ₹75 lakh | 75% |
Banks price under these caps — most private banks hover at 80% for ≤ ₹75L files and 75% above; PSU banks can be 5 percentage points more conservative.
Hidden LTV traps
Trap 1: Circle rate vs market rate
In Ahmedabad, Gandhinagar, and most Tier-2 Gujarati cities, the circle rate (used for stamp duty) is often 15–25% below the market rate you are paying. Banks sometimes use circle rate for valuation when the property is a resale, which can cut your effective LTV by the same percentage.
Trap 2: Stamp duty + registration aren't financed
Banks finance the property value. They do NOT finance stamp duty (4.9% in Gujarat) and registration (1%). For a ₹60L Ahmedabad flat that's ₹3.54L of pure cash you must show in your savings on Day 1.
Trap 3: Under-construction deduction
For under-construction builder projects, banks apply a stage-payment schedule. Even if your LTV is approved at 80%, each disbursement is tied to a certified construction stage — you don't get the whole 80% on Day 1.
Trap 4: Top-up reduces available LTV
If you already have a mortgage and apply for a top-up, banks compute LTV on the combined outstanding. This is why a ₹45L top-up against a ₹60L home loan on a ₹80L property is hard to clear.
Worked example — LTV × stamp duty × your cash
You are buying a ₹75 lakh flat in Science City, Ahmedabad.
- Bank assesses value at ₹72 lakh (3.8% below purchase).
- LTV cap: 80% of ₹72 lakh = ₹57.60 lakh max loan.
- Gujarat stamp duty + registration on ₹75L: ~₹4.43 lakh.
- Gap you fund: ₹75L − ₹57.6L + ₹4.43L = ₹21.83 lakh cash on Day 1.
Many first-time buyers plan for "20% down payment" (₹15L) and get blindsided at the registration counter.
How LTV interacts with your interest rate
Higher LTV is higher bank risk → higher rate. The typical pricing:
- LTV ≤ 75%: starting rate (e.g., 8.25% at SBI).
- LTV 75–80%: +10–20 bps (8.35–8.45%).
- LTV 80–90% (only for ≤ ₹30L files): +20–40 bps.
This is why Money Matrix Hub often nudges clients to a slightly lower LTV on a slightly longer tenure — the rate saving over 20 years far outweighs the extra cash on Day 1.
NRI LTV notes
For NRI home loans, LTV ceilings are the same but banks apply a haircut for currency risk (typically 5–10%) and a stricter repatriation test. If your income is in USD/AED/GBP, expect LTV to be 5 percentage points lower than the published cap.
The Money Matrix Hub take
Run your LTV math before you block a property. Many disappointments in Ahmedabad's 30–60 lakh segment come from buyers who didn't budget for stamp duty, or didn't realise the bank would value the property 5% lower than purchase price. We provide a free LTV + stamp-duty + eligibility combined estimate in 30 minutes — WhatsApp Jay with the project name and the circle-rate entry on Garvi Gujarat.
Rates are indicative and subject to borrower eligibility. LTV ceilings are subject to RBI circulars in force; check the current circular before relying on the 75/80/90 tiers above.
