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.
A slightly lower LTV can sometimes support different pricing or repayment choices, but the trade-off depends on the lender, property, tenure, and borrower profile.
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. Use the LTV and stamp-duty information here as an illustrative planning input, then confirm valuation, eligibility, and current charges with the lender.
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.
