Housing Development Finance Corporation (HDFC ) is planning to raise about $75 million (Rs 407 crore) from International Finance Corporation (IFC).
IFC said the proposed loan would enable HDFC to provide affordable housing finance to low-income households.
The plan is subject to the approvals of regulators and IFC's management and board.
IFC's proposed investment would provide access to mortgage finance to a number of low-income customers.
Significant affordable housing finance in low-income states would spur construction and have a positive impact on employment and growth, IFC said. It added its partnership with HDFC would provide it access to long-term funds, critical to support the nascent affordable housing segment in India.
Incorporated as a specialised mortgage institution in 1977, HDFC primarily focuses on retail housing.
It is present across several financial services, including banking, insurance, asset management, real estate venture capital and education loans.
Its network of 326 offices (including 80 offices of HDFC's wholly-owned distribution company HDFC Sales) caters to about 2,400 towns and cities across the country.