How much banks actually lend, what the sanction process looks like week by week, the valuation gap that catches buyers out, and how to read an offer beyond the headline rate.
Nepali banks compete on advertised interest rates and differ on everything that decides what you actually pay. If you are financing a purchase, the useful comparison is not the rate on the billboard — it is the loan-to-value, the premium over base rate, the service charge, the prepayment terms, and how that particular bank's valuator treats your particular property.
What you can borrow
Most commercial banks lend up to 60 to 70 per cent of their assessed value for a residential purchase. Plan to fund 30 to 40 per cent from your own resources, plus registration costs on top, which are not financed.
Instalment capacity is the second constraint. Banks generally want total monthly obligations — this loan plus any existing ones — to stay within roughly half of documented monthly income. Note "documented": income that does not appear in your tax filings or bank statements will not count, however real it is.
The valuation gap
Here is the mechanism that surprises more buyers than any other. You negotiate a house at 3 crore. The bank sends its own valuator, who assesses it at 2 crore 60 lakh. The bank lends 70 per cent — of 2.6 crore, not of 3 crore. Your loan is 1 crore 82 lakh and you must find 1 crore 18 lakh rather than the 90 lakh you had planned.
Bank valuators are conservative by mandate. Assume a gap, ask your agent what recent bank valuations in that tole have come in at, and keep a buffer.
The process, week by week
| Stage | Typical duration | What happens |
|---|---|---|
| Pre-assessment | 2–4 days | Bank gives an indicative borrowing capacity from your income documents |
| Application and file submission | 3–7 days | Full document set lodged with the branch |
| Property valuation | 1–2 weeks | Bank's empanelled valuator inspects and reports |
| Legal and title check | 1–2 weeks | Bank's lawyer verifies the Lalpurja and searches for charges |
| Credit approval | 1–3 weeks | Branch, then regional or head office depending on size |
| Sanction letter and offer | 2–5 days | Terms issued in writing for your acceptance |
| Registration and disbursement | 1 week | Mortgage registered at Malpot alongside transfer; funds released |
Four to ten weeks end to end is normal. Anyone promising two weeks is describing an exception, not a plan.
What the file needs
- Citizenship certificate and passport-size photographs
- PAN card
- Salary certificate and the last six to twelve months of pay slips, or audited accounts and tax clearance for the self-employed
- Bank statements, generally six to twelve months
- Lalpurja, Napi Naksa and current land revenue receipt for the property
- Approved building drawing and completion certificate for built property
- Sale agreement or token receipt
- Existing loan statements, if you have any
Reading an offer past the headline rate
Most home loans in Nepal are floating: base rate plus a fixed premium. The base rate moves with the bank's cost of funds; the premium is what you negotiate and what stays with you for the life of the loan. A quarter-point difference in premium on a two-crore loan over twenty years is a substantial sum.
Then look at:
- Service or processing charge — usually a percentage of the sanctioned amount, sometimes negotiable
- Prepayment penalty — critical if you expect to clear the loan early; terms vary widely between banks
- Rate revision frequency — quarterly, half-yearly or annual, and how you are notified
- Insurance requirements — property and often life cover, sometimes only through the bank's partner
- Moratorium — whether a grace period is available if you are building rather than buying
Where applications stall
- The valuation comes in below the purchase price.
- Declared income does not reconcile with tax filings.
- A title defect surfaces during the bank's legal check — often a co-owner or an incomplete kitta katta.
- The property is registered agricultural without conversion; many banks will not lend against it for residential construction.
- The seller will not wait for the sanction, and the token deadline expires.
The last one is avoidable and it is the one that costs buyers real money. If you are financing, write the sanction timeline into the token agreement and make the deadline realistic.
