This will benefit those home seekers who plan to buy properties in the range of Rs 20-30 lakh.
The RBI's decision comes in the wake of all major banks reducing interest rate on home loans.
The Reserve Bank, through a circular, said that in the case of 'individual housing loans' falling under the loan category of up to Rs 30 lakh, the LTV (Loan to Value) ratio is now up to 90%.
For properties above Rs 30 lakh and up to Rs 75 lakh, the LTV is up to 80% and those above Rs 75 lakh, the ratio comes in at 75%.
It has also modified the provisioning or risk-weights norms for home loans.