The surge in home loan borrowing in India has been met with significant challenges related to documentation and procedural inefficiencies. In 2025, nearly 80% of homebuyers relied on loans to finance their purchases, as reported by Knight Frank. However, many borrowers encounter a cumbersome process characterized by excessive paperwork, inconsistent requirements, and a lack of clarity in procedures. This situation reflects a growing concern in the real estate sector as it seeks to accommodate the increasing demand for housing, while also managing risk and compliance effectively.
According to a survey conducted by BASIC Home Loan in February 2026, 44% of respondents identified excessive documentation as a primary obstacle, with 17% reporting that loan approval timelines were excessively prolonged. The issues are prevalent throughout the home loan lifecycle, from the initial application stage to servicing and closure. These delays are attributed to both stringent risk assessments by lenders and the absence of standardized processes across the industry. Atul Monga, CEO of BASIC Home Loan, noted that discrepancies in paperwork can trigger loan reassessments, leading to further delays, particularly at the disbursement stage where lenders often impose additional compliance checks.
The requirements for securing a home loan can vary significantly based on the applicant's profile. Lenders typically evaluate three key factors: identity verification, income verification, and property title legitimacy. Essential documents such as PAN cards and Aadhaar are mandatory for identity verification, while salaried individuals must submit recent salary slips, tax forms, and bank statements. Conversely, self-employed borrowers face more stringent documentation demands, including multiple years of income tax returns and financial statements. Adhil Shetty, CEO of Bankbazaar, emphasized that lenders must ensure that the property being purchased has a clear legal title, but in practice, this can lead to a broader range of documentation requests than necessary.
An illustrative case involves a non-resident Indian (NRI) who, while selling a property in Chennai, was required by the buyer's bank to provide six months of bank statements. The seller complied but expressed confusion over the necessity of this information. Deo Shankar Tripathi, executive vice chairman of Aadhar Housing Finance, clarified that such requests are part of the measures to prevent fraud and confirm the authenticity of the seller’s bank account, while also serving to validate the sale price. The Reserve Bank of India’s Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines mandate that lenders verify the identities of all parties involved in transactions above ₹50 lakh. However, the lack of a standardized checklist for documentation continues to complicate the home loan process, resulting in delays and frustration for borrowers in an increasingly competitive housing market.