Are you wondering how to qualify for home loans in Nepal? Well, you have landed on the right page where we have answered some of the frequently asked questions regarding qualifying for home loans. Pre-approval eligibility, qualifying for home loan calculators, required documents you’ll need, average loan rates etc and much more information regarding home loans are here below.

First, the eligibility criteria for qualifying home loans;
● You must be at least 21years and should not exceed 60 years at the time of maturity. And the retirement age must be more than the tenure of the loan.

● The home loan is provided to any individual who has a regular, adequate, and stable source of income. Some financial centers such as banks also give home loans to salaried and self-employed individuals.

● The home loan in Nepal is only provided to Nepalese Citizens.

● You should always look out for home loans for property within the municipal area. Many financial centers are hesitant to finance house/land which does not lie in a municipal area. However, urban VDC is considered with proper justification.

● The land or house to be constructed/purchased/renovated/extended/modified should have motorable road (8 feet wide in minimum) access. Such roads should be seen in the blueprint or be verified by concerned authorities (e.g. ward office).

● Your Work experience is needed for salaried and self-employed individuals.

● In the case of business income, the financial statement of the company should be audited.

● You must have a Permanent Account Number ( PAN ) for a loan above 50 Lakhs.

● You should be able to provide fixed asset collateral as primary security.

Second, what are the required documents for qualifying home loans?

1. For identification:
● Two passport size photo of applicant/co-applicant
● Photocopy of citizenship certificate and passports of the applicants
● Photocopy of Tax/PAN/VAT certificate along with registration certificate
2. For proof of income:
● Original Salary certificate
● Photocopy of Tax/PAN/VAT certificate
● Original salary certificate which needs to be recent- not more than ten days old.
● Photocopy of contract agreement
● Photocopy of rent contract (optional)
● Original bank statements of the past three months (optional)
● Photocopy of financial statements (Past three years) if you are self-employed.
3. Other documents required for qualifying home loans are;
1. Photocopy of pension book/ID stating the name of the pensioner, amount, and validity period.
2. Photocopy of rent contract if you have any
3. Original bank statement of the past six months
4. An original letter stating coheir of the seller from the local authority- ward
5. An original quotation of housing company
6. Photocopy of blueprint also known as Napi Naksha
7. Photocopy of Certificate of construction from Municipality/VDC in case of purchasing already built house (Nirman Sampanna Pramanpatra)
8. Original Private Sale Agreement in case of Private Sales
9. Photocopy of Memorandum and Articles of Association
10. Photocopy of Detailed break down of cost estimation from the applicant’s consultant
11. Photocopy of Land ownership certificate (Lalpurja)
12. Photocopy of Latest land revenue receipt (Malpot Receipt)
13. Photocopy of Blue Print of building approved from Municipality/VDC (Naksha Pass)
14. Photocopy of Land Transfer Deed (Rajinama)
15. Original Four Boundary Disclosure (Char Killa Pramanit)
16. Approval letter of the municipality for the construction of the house (Ghar Nirman Izazat Patra)
17. Approval letter of the municipality for extension and renovation/modification (if needed) of house

For salaried applicants, the corporate guarantee should be supported by the resolution of the Board of Directors. Original certificates should be presented for verification while submitting this form. The salary certificate must be on the office’s letterhead having a seal and must contain the net salary, designation, years of service, date of retirement or expiry of a contract, and type of employment (permanent or contract). It should be signed along with the name and designation of the signatory. The bank can demand any additional documents at its discretion.

Different financial centers such as banks, cooperatives have different loan schemes and that is why it is advised to study loan schemes of your preferred financial centers before processing home loans. Some banks and cooperatives even have a home loan calculator on their website for you to check your eligibility for a qualifying home loan.And for average loan rates, as per Nepal Rastra Bank data, during the one-year period from mid-April 2019 to mid-April 2020, the average interbank lending rate fluctuated from 5.28 to 2.13 percent. Most financial centers easily finance your home loans for these purposes along with their respective loan rates;
1. For construction & purchase of house/flat
2. Repairs / renovation / Modifications to the house/flat
3. Purchase of land to construct houses/buildings for residential purposes.
But, What will increase your chance of qualifying for home loans?
Well, fret not! You just need to assure your preferred bank of two things:
● That you can legally pay the loan back, which means you should have a valid and adequate income stream.
● If you or the guarantor or can’t pay the loan back in time, the bank will acquire the asset and sell it.

Because home loans can be risky, the financial centers take extra attention while assessing your home loan plans. All in all, you need to assure your financial center that you will be utilizing the money to buy the property or real estate and nothing beyond that.

How much will the bank cover for your purchase and what is the tenure of home loan in Nepal?
The loan percentage depends on the bank you chose, so contact your preferred banks and inquire about their loan percentage. Some will cover 80% and some could only cover just 20%. As for the current. The tenure of home loan again depends on your preferred financial centres. But most of the financial centres provide home loan tenure within the range of 15-20 years and some even up to 50 years. As for the loan limit scenario in Nepal, the minimum loan limit for home loans is Rs. 0.50 Million (5 Lacs) and for purchase of land alone- Maximum Rs. 3.0 Mil. (30 Lacs), but this also depends on different financial centers and their home loan plans/schemes. For example, Standard Chartered Bank of Nepal has a minimum 50% equity contribution with a maximum tenor of 18 years and a maximum loan amount up to NPR 35.00 million. Similarly, Everest Bank has a residential housing Loan up to Rs. 1.50 crore with a margin of a minimum of 10% (in case of construction) however, the total margin including the cost of land/existing building is less than 25%. And minimum 25% of bank value in case of outright purchase of house/flat of the tentative Bank Value and minimum 40% of bank value in case of Land purchase. They have residential housing loans for more than 1.50 crore

There are plenty of options for home loan applicants. With the rise of interest in real estate in Nepal, many financial centers are being more involved in the business. Almost every major bank in Nepal has a ‘home loan,’ or mortgage loan service and they have been proven to be of huge assistance to people.