Choosing the flat is the fun part. Working out how the money moves is the part that keeps people up at night, usually around 2 a.m. their time, scrolling through bank FAQs.
It doesn't need to be that stressful. The rules are reasonably clear once someone lays them out in plain English. So let's do that: which account to pay from, how NRI home loans work, what currency swings do to your numbers, and how to get money back out of India when the time comes.
Three accounts, three jobs
If you're an NRI, you'll almost certainly deal with at least one of these. They're not interchangeable, and picking the right one at the start makes life much easier later.
| Account | What goes in | Can you take it back out? | Tax on interest in India |
|---|---|---|---|
| NRE (Non-Resident External) | Money earned abroad, deposited in rupees | Yes, freely - principal and interest | Generally tax-free while you're a non-resident |
| NRO (Non-Resident Ordinary) | Income earned in India - rent, dividends, pension, sale proceeds | Yes, but within an annual limit and with paperwork | Taxable, with tax deducted at source |
| FCNR(B) | Foreign currency, held as a fixed deposit | Yes, freely | Generally tax-free while you're a non-resident |
The big idea is simple. Money that comes into India from abroad and stays in NRE or FCNR form keeps its "repatriable" status. Money that's earned in India sits in NRO and has limits on how much can leave.
So when you buy a property, where the money came from matters. It decides how easily you can take the sale proceeds back out later.
How you can pay for a property
You can pay through:
- A direct inward remittance from abroad through normal banking channels.
- Your NRE, NRO or FCNR(B) account in India.
- A home loan from an Indian bank or housing finance company.
You can't pay with traveller's cheques or foreign currency notes. And as we keep saying, never in cash.
Home loans for NRIs
Most banks and housing finance companies in India lend to NRIs. The process is similar to a resident loan, with a few extra documents.
How much can you borrow?
The RBI caps how much of the property's value a bank can lend, known as the loan-to-value (LTV) ratio. It applies to everyone, residents and NRIs alike:
- Up to 90% for loans up to ₹30 lakh.
- Up to 80% for loans above ₹30 lakh and up to ₹75 lakh.
- Up to 75% for loans above ₹75 lakh.
That's the ceiling, not a promise. Banks often lend less to NRIs, depending on your country of residence, job and credit history. The property value used is generally the agreement value, and stamp duty and registration charges usually aren't funded. Plan for a down payment of at least 20–25%, plus those costs.
Co-applicants
Many banks will ask for, or at least welcome, a co-applicant. This is usually a close family member, often one who lives in India. A co-applicant can make the loan easier to approve and gives the bank someone local to contact.
Just be clear about what it means. A co-applicant is liable for the loan. Being a co-applicant doesn't automatically make them a co-owner, and being a co-owner doesn't automatically make them a co-applicant. Talk to the bank and your lawyer about how you want ownership and liability set up before you sign.
What the bank will want
- Passport and visa or residence permit, or OCI card.
- Employment contract, recent salary slips and overseas bank statements.
- Overseas credit report where available.
- Tax returns from your country of residence, if applicable.
- PAN, and property documents.
Self-employed? Expect to show a few years of business accounts as well.
Repaying the loan
EMIs are paid in rupees, usually from your NRE or NRO account. You can also pay from rent earned on the property. Most banks are fine with part-prepayments, though check the terms. For floating-rate home loans to individuals, banks generally can't charge a foreclosure penalty.
Set up a standing instruction from your NRE account and keep a small buffer in it. A bounced EMI because a transfer from abroad took three days is an avoidable dent in your credit history.
The currency question nobody asks early enough
Here's something that doesn't show up in any brochure. You earn in dollars, dirhams or pounds. Your loan, your EMIs and your property's value are all in rupees.
Think of a family in Dubai with a 20-year home loan in India. Over that time the rupee may move quite a bit against the dirham. If the rupee weakens, their EMIs become cheaper in dirham terms. That's nice. But the property's value, measured in dirhams, also looks smaller. If they plan to sell and take the money back to the Gulf, part of their gain might simply disappear in the exchange.
We're not trying to predict currency moves. Nobody can, reliably. The point is to think about it upfront:
- If you'll eventually live in India, currency risk matters less. Your costs will be in rupees too.
- If you plan to take money back out, look at your expected return in your home currency, not just in rupees.
- Don't stretch your EMI to the limit. Leave room for a bad year on the exchange rate.
Getting your money back out: repatriation
This is the bit people ask about most, and also the bit where a clean paper trail pays off.
Sale proceeds of a residential property
If you bought a residential property using foreign exchange - an inward remittance, or funds from your NRE or FCNR account - you can repatriate the sale proceeds. The repatriable amount is generally limited to what you originally paid in foreign exchange. This applies to a maximum of two residential properties.
If part of the purchase was funded by a home loan, the portion of the loan you repaid from NRE or FCNR funds, or remittances from abroad, generally counts as foreign exchange too. Another reason to repay from those accounts where you can.
Money in your NRO account
Anything above that, or money that came from rupee sources, usually ends up in your NRO account. From there you can remit up to USD 1 million per financial year, which covers sale proceeds, inheritance and other balances together.
To do this, your bank will need:
- Form 15CA - a declaration you file online with the tax department.
- Form 15CB - a certificate from a chartered accountant confirming that tax has been paid on the money.
Your CA will typically handle 15CB and help you file 15CA. The bank won't process the remittance without them.
What happens if you've inherited the property?
Sale proceeds of inherited property can also be repatriated, within the same USD 1 million annual NRO limit, and with proof of inheritance - a will, probate or succession certificate. Keep those documents safe.
The paper trail, one more time
If you remember just one thing from this post, let it be this: every rupee you put into a property should be traceable.
When you sell, the bank and your CA will want to see exactly how you paid for it. That means:
- Bank statements showing each payment leaving your NRE, NRO or FCNR account.
- Foreign inward remittance certificates (FIRCs) or bank advice for money sent from abroad.
- Every receipt from the developer or seller.
- Home loan statements showing how the EMIs were paid.
- The registered sale deed and stamp duty receipts.
Scan them. Store them in two places. You'll thank yourself.
Quick checklist
- Pay from NRE or FCNR, or by inward remittance, where you want full repatriation later.
- Budget for a down payment of at least 20–25%, plus stamp duty and registration.
- Understand what being a co-applicant means before adding one.
- Repay EMIs from NRE where possible and keep a buffer in the account.
- Think about your return in your home currency, not just rupees.
- Keep FIRCs, statements and receipts for every payment.
- Line up a CA for Form 15CA/15CB well before you sell.
Money questions are usually easier to answer than they look, once everything is on one page. If you'd like help mapping out the funding and the exit before you commit, an NRIVEST advisor is happy to sit down with you.
FEMA, RBI and tax rules change from time to time. Please confirm the current position with your bank and a qualified CA before you act.
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