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Yes, down payment is necessary for any bank to sanction the home loan.
Banks or housing finance companies can not sanction 100% amount to purchase a property.
The answer is, any lender whether institutional or local will always insist on “what’s your stake in the whole investment process?” Without any stake by the borrower, the risk rises because a borrower will not care if he/she is investing in right or wrong asset.
As per RBI guidelines, one needs to put 10% as down payment amount in a property up to Rs 30 Lacs, 20% in property worth Rs 30 - 75 Lacs, and 25% in the property above Rs 75 Lacs.
However, before sanctioning the home loan, every bank or housing finance company will carefully evaluate an applicant’s credit history including the monthly ‘take home salary’.
Normally, 45–50% of take-home total income of a household can be utilized to pay an EMI. Therefore, if your take-home income is Rs 1 Lac, then, the bank will calculate Rs 50000 that can go towards paying the EMI and rest for household expenditure. And for Rs 50000 as EMI, the bank will be willing to sanction approximately Rs 50 Lacs as a home loan for a period of 20 years. You can check here HomeCapital Down Payment Assistance Eligibility Calculator.