What is Own Contribution? (OCR, margin money or borrower's margin)

Own contribution is the part of the cost the borrower pays from his own money: cost minus loan.

Written 07 September 2026. For bankers in India.

UR

In one line

Own contribution is what the buyer pays and the bank does not. It is also called margin money, borrower's margin or down payment. Many lenders write OCR (Own Contribution) for it, or for the receipt that proves it.

Why it matters to you

• It comes straight from LTV (Loan to Value). Own contribution is the cost minus the loan the LTV cap allows.
• RBI fixes the home loan minimum. At least 10, 20 or 25 per cent of the cost, by loan size.
• It shows the buyer put in his own money. A borrower who paid nothing walks away more easily.
• Fraud often starts here. Fake receipts, a hidden personal loan or cash with no trail.
• The bank pays after the buyer pays. Most lenders disburse (release loan money) only after the buyer's share is proved.

How it works

1. Find the cost of the asset that your policy allows (see below).
2. Find the LTV cap: the RBI tier for a home loan, or your policy cap for anything else.
3. Maximum loan = cost x LTV cap.
4. Minimum own contribution = cost minus maximum loan.
5. Add the costs that sit outside the loan: stamp duty, registration and anything policy excludes.

In words: own contribution = cost minus loan.

In symbols: OC (Own Contribution) = C minus L. Minimum OC = C x (1 minus LTV cap).

• C is the cost of the asset as your bank counts it.
• L is the loan the bank sanctions.
• OC is own contribution, the borrower's share.

What counts as cost differs by lender. This is how the pieces usually fall.

• Agreement value. Always in the cost. This is the price in the registered sale agreement.
• Stamp duty and registration. RBI RULE: out of the cost, unless the house costs up to Rs 10 lakh.
• GST on an under-construction flat. BANK PRACTICE: some lenders add it to the cost, others do not. Policy decides.
• Parking, club fees, amenities. BANK PRACTICE: some lenders count them if in the agreement; others do not. Policy decides.
• Brokerage, interiors, furniture. BANK PRACTICE: not in the cost. The buyer pays these outside.

The RBI minimums for home loans, by loan amount:

Where the own contribution may come from (BANK PRACTICE, each bank's policy decides):

• Own savings. Bank balance, fixed deposits, recurring deposits. Proof: bank statements showing the money built up.
• Sale of an asset. Shares, mutual funds, gold, a plot. Proof: sale statement and the credit in the bank account.
• Gift from a close relative. Proof: a signed gift letter and the giver's bank statement, or a registered gift deed.
• Provident fund withdrawal. EPF (Employees' Provident Fund) rules allow it after five years of service.
• Loan from the employer. Some lenders accept it if the deduction shows on the salary slip. Policy decides.

Why most lenders refuse own contribution funded by another loan:

• A personal loan for the margin means the buyer has put in nothing. The whole price is debt.
• The new EMI raises the FOIR (Fixed Obligation to Income Ratio). A hidden loan hides that.
• If the buyer defaults, two lenders chase the same borrower. The home loan bank's margin is gone.

Own contribution comes first. Most lenders make their first disbursement only after the buyer proves his share is paid. A resale seller or a builder gives a receipt for it. The bank checks the receipt against the buyer's bank statement.

Staged own contribution. In a construction-linked deal the buyer pays as building stages finish. The builder raises a demand (a payment call) at each stage. Lenders handle the buyer's share in one of two ways. Some take the full own contribution before the first disbursement. Others take the buyer's share of each demand and pay their own share. Policy decides.

Worked examples

Example 1: an under-construction flat in Thane

Agreement value Rs 48,00,000. GST at 5 per cent: Rs 2,40,000. Stamp duty (say 6 per cent): Rs 2,88,000. Registration (say): Rs 30,000. Parking by a separate letter: Rs 3,00,000. The bank's policy counts GST in the cost but not parking.

1. Cost for LTV: 48,00,000 + 2,40,000 = Rs 50,40,000.
2. A 90 per cent loan would be Rs 45,36,000, above Rs 30 lakh. So the 80 per cent tier applies.
3. Maximum loan: 80 per cent of Rs 50,40,000 = Rs 40,32,000. This is inside the Rs 30 to 75 lakh tier.
4. Minimum own contribution on the cost: Rs 50,40,000 minus Rs 40,32,000 = Rs 10,08,000.
5. Outside the loan: stamp duty Rs 2,88,000, registration Rs 30,000, parking Rs 3,00,000.
6. Cash the buyer must find: 10,08,000 + 2,88,000 + 30,000 + 3,00,000 = Rs 16,26,000.

Suppose the builder raises five equal demands of Rs 10,08,000 and the bank splits each demand. The buyer pays Rs 2,01,600 and the bank Rs 8,06,400 at every stage. EMI on Rs 40,32,000 at 8.5 per cent for 240 months: Rs 34,991.

Example 2: a resale flat in Indore

Agreement value Rs 28,00,000. The bank's valuer reports Rs 27,00,000. The buyer has already paid a token (advance) of Rs 2,00,000 and holds a receipt.

1. Value for LTV (bank practice, lower of the two): Rs 27,00,000.
2. Maximum loan: 90 per cent of Rs 27,00,000 = Rs 24,30,000. Under Rs 30 lakh, so 90 per cent holds.
3. Own contribution: the buyer must still pay the full price. Rs 28,00,000 minus Rs 24,30,000 = Rs 3,70,000.
4. That is 13.21 per cent of the agreement value, not 10 per cent. The lower valuation raised the buyer's share.
5. Token already paid: Rs 2,00,000. Balance to pay before disbursement: Rs 1,70,000.
6. Stamp duty (say 5 per cent): Rs 1,40,000. Registration (say): Rs 28,000. Both outside the loan.

Total cash from the buyer: Rs 5,38,000. The bank releases Rs 24,30,000 only after it sees receipts for Rs 3,70,000.

Example 3: a small house and the Rs 10 lakh rule

A house costs Rs 9,50,000. Stamp duty is Rs 47,500 and registration Rs 9,500.

1. The house costs up to Rs 10 lakh. RBI lets the bank add stamp duty and registration to the cost.
2. Cost base: 9,50,000 + 47,500 + 9,500 = Rs 10,07,000.
3. Maximum loan: 90 per cent of Rs 10,07,000 = Rs 9,06,300.
4. Own contribution: Rs 1,00,700.
5. Without the rule the loan would be Rs 8,55,000, and the buyer would need Rs 1,52,000 in cash.

What the rule says

RBI RULE (minimum own contribution for home loans): RBI does not name a margin. It caps LTV, and the margin follows. Paragraph 111 of the Commercial Banks – Credit Facilities Directions, 2025 caps LTV at 90, 80 and 75 per cent. The full name is the Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025. So the minimum own contribution is 10, 20 or 25 per cent of the cost. See Housing loan rules.

RBI RULE (cost base): paragraph 113 of the same Directions keeps stamp duty, registration and documentation charges out. The exception is a house costing up to Rs 10 lakh. The rule came from the circular of 5 March 2015, paragraph 2. For an HFC (Housing Finance Company), paragraph 58 of the Housing Finance Companies Directions, 2025 says the same. See Housing Finance Companies Directions 2025.

RBI RULE (when the bank may pay): paragraph 116 of the same Directions links each release to construction stages. No upfront release in an unfinished project. This began with the circular of 3 September 2013, paragraph 3. RBI does not say the own contribution must be paid before the first release. That sequence is bank practice.

NO RBI NUMBER (sources, GST, parking, employer loans, staged margin): RBI does not fix any of this. Each bank sets it in its own credit policy. The practices above come from lender pages and are marked as bank practice. Your bank's policy decides.

Common mistakes

• Treating 10 per cent as the whole cash need. Stamp duty, registration and excluded items come on top.
• Applying 90 per cent to a loan above Rs 30 lakh. The tier goes by loan amount. Recompute at 80.
• Taking own contribution on the agreement value alone. When the valuer's figure is lower, the buyer's share rises.
• Accepting a receipt without a bank trail. Match every receipt to a debit in the buyer's statement.
• Missing a fresh personal loan. Pull the credit report again before disbursement. A new loan changes FOIR and the margin.
• Releasing money before the buyer's share. Most policies want proof of own contribution first. Check yours.

How to use it at your desk

1. Build the cost sheet (list of every charge): agreement value, then each extra item marked in or out per policy.
2. Pick the LTV cap by the loan amount, not by the property value.
3. Compute maximum loan and minimum own contribution. Write both in the note.
4. List the cash outside the loan: stamp duty, registration, excluded items.
5. Ask the buyer where the own contribution comes from. Collect proof for each source.
6. Match receipts to bank statement debits. Check the credit report for a fresh loan.
7. Record the stage plan for a construction-linked deal: who pays what at each demand.

Related terms

• What is LTV? (Loan to Value ratio) — own contribution is 100 per cent minus LTV.
• What RBI rules say about margin money — which minimum margins RBI fixes, and which are bank policy.
• How to verify own contribution — the proof trail: receipts, bank statements and credit report.
• Parallel funding — a second loan used to pay the own contribution; most lenders refuse it.
• What is FOIR? (Fixed Obligation to Income Ratio) — a loan taken for the margin adds an EMI to FOIR.
• Product rule pages: Housing loan rules, HFC Directions 2025.

Quick check

A flat costs Rs 60 lakh and the buyer wants the largest loan. What is the minimum own contribution?

Answer: Rs 12 lakh. A Rs 48 lakh loan is in the 80 per cent tier; the buyer pays 20.

Can the buyer pay the own contribution from a personal loan?

Answer: Most lenders say no. It means the buyer put in nothing, and the new EMI changes FOIR.

A house costs Rs 9 lakh. Can stamp duty be added to the cost for LTV?

Answer: Yes. RBI allows it where the house costs up to Rs 10 lakh (paragraph 113).

Sources

Report a mistake on this page · All Academy pages