Should I buy under-construction or ready-to-move property?

Both have trade-offs. Under-construction: lower price (usually 10-20% discount), customisation possible, potential construction delays/risks, GST applicable, EMI starts before occupancy. Ready-to-move: higher price, no waiting, no construction risk, no GST, visible property condition. For first-time buyers, ready-to-move is generally safer — eliminates construction risk and immediate occupancy. For buyers comfortable with risk and timing flexibility, under-construction in projects from reputable RERA-registered developers can save 10-20%.

Is it better to take a 20-year or 30-year home loan?

20 years is generally better despite higher EMI. On a ₹50 lakh loan at 8.5%: 20-year EMI ₹43,400 with ₹54 lakh total interest; 30-year EMI ₹38,470 with ₹88 lakh total interest. The 30-year saves ₹5,000/month but costs ₹34 lakh more in total interest. The shorter tenure aligns with retirement timing (assuming you start in your 30s, finishes by 50s). Choose 30-year only if the lower EMI is necessary for affordability.

What is the Section 24 deduction for home loan interest?

Under the OLD tax regime, Section 24(b) allows deduction of up to ₹2 lakh per year of home loan interest paid on a self-occupied home. This is significant — for a ₹50 lakh loan in year 1, interest is approximately ₹4.2 lakh; the ₹2 lakh deduction at 30% slab saves ₹60,000 in tax annually. The NEW tax regime does not allow this deduction. For most first-time home buyers, the old regime + home loan benefit is more tax-efficient. Run both calculations before opting.

Can I use my PPF or EPF for home down payment?

Yes, both allow specific withdrawals for home purchase. EPF allows withdrawal up to 24 months of basic+DA for purchase of plot/house after 5+ years of service. PPF allows partial withdrawal of up to 50% of balance after year 5 for various purposes including home. However, withdrawing from these tax-free compounding accounts has significant opportunity cost — money you withdraw stops compounding at 7-8% tax-free. Consider this only if alternative is sub-optimal (no down payment, would need higher LTV loan at unfavourable rates).

What should I check in the property's RERA registration?

Three critical RERA verifications: (1) The project is registered on the state RERA portal (mahaRERA.in, karRERA, etc.) — search by project name; (2) The status shows 'Registered' and within the listed completion timeline; (3) Promoter's track record — any past complaints or delays. RERA registration is mandatory for under-construction projects since 2017. Buying in a non-registered project loses critical regulatory protections. For ready-to-move properties, RERA verification is less critical but verify Occupancy Certificate.

Knowledge Hub / Real Estate

6 min read

Real Estate

How to Buy Your First Home in India — A Practical Step-by-Step Guide

Buying a first home requires 20% down payment, ₹3-7 lakh in transaction costs, and 5-7 years of EMI commitment before you break even on costs. Here is the systematic process for navigating the decision and execution.

17 May 2026

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Buying a first home in India is the largest single financial decision most middle-class households will make — often a ₹50 lakh to ₹2 crore commitment that locks in 25-50% of net worth and 30-40% of monthly cashflow for 15-20 years. The transaction costs alone — stamp duty (5-7% of value), registration (1%), brokerage (0.5-2%), home inspection, legal fees, GST on under-construction, interior expenses — total ₹3-7 lakh even on a ₹50 lakh purchase. The break-even horizon (when accumulated equity exceeds transaction costs + opportunity cost of down payment) is typically 5-7 years — meaning short-stay purchases are financially destructive. The systematic process: (1) verify financial readiness — at least 30% down payment is recommended (not just the 20% minimum); (2) get pre-approved loan to know your real budget; (3) shortlist 8-12 properties across 3-4 localities; (4) verify legal title with a lawyer; (5) negotiate (most Indian property prices have 5-12% negotiation room); (6) registration and possession. Total timeline: 4-9 months from search start to keys. Freedomwise's Buy vs Rent calculator and Home Loan EMI calculator help you assess affordability before the search begins. Buying a home is not just a financial transaction — it's a 15-year cashflow commitment that should fit your broader financial plan.

Am I financially ready to buy a home?

Five readiness criteria before starting the search:

30%+ down payment saved. Not the minimum 20% — 30% reduces EMI burden and provides cushion against price corrections.
Stable income for 3+ years. Volatile or recent income (less than 2 years in current role) makes EMI commitment risky. Lenders look at 2+ year history.
Emergency fund intact AFTER down payment. 6 months of expenses + EMI in liquid funds, separate from the home purchase.
CIBIL score 750+. Below this triggers higher interest rates (0.5-1.5% premium) and could mean rejection. Improve credit before applying.
Total fixed obligations under 40% of take-home post-purchase. EMI + other loans + insurance + property tax + maintenance should stay under 40% of monthly income.

If you don't meet all five, the rational decision is to delay 1-2 years to strengthen the foundation. The cost of buying too early (overextension during early years, forced selling during downturns, missed equity SIP opportunity) exceeds the cost of waiting.

How do I determine my realistic budget?

Two-step calculation:

Step 1: EMI capacity

Take-home pay: ₹X/month
Other fixed obligations: ₹Y/month
Affordable EMI: 35% × (X − Y), or 35% of take-home minus other EMIs

Step 2: Loan amount and price

For 20-year tenure at ~8.5% interest, ₹1 lakh loan = ₹867/month EMI
Maximum loan = Affordable EMI × 115 (rough multiplier for ₹1 lakh)
Maximum price = Maximum loan ÷ 0.80 (assuming 80% LTV)

Worked example:

Take-home: ₹1,20,000/month
Other EMIs: ₹15,000/month
Affordable home EMI: 35% × (1,20,000 - 15,000) = ₹36,750/month
Maximum loan: ₹36,750 × 115 = ~₹42.3 lakh
Maximum price: ₹42.3 lakh ÷ 0.80 = ~₹52.9 lakh

Stay within this budget. Going beyond produces "house poor" outcomes — the home consumed by EMI with no savings remaining.

What are all the costs of buying a home?

Beyond the headline price, prepare for substantial transaction costs:

Cost	% of price	Notes
Stamp duty	5-7%	Varies by state; Karnataka ~5%, Maharashtra ~6-7%
Registration	1%	National rate
Brokerage	0.5-2%	Negotiable; often 1% from buyer
Loan processing	0.5-1%	One-time loan setup fee
GST (under-construction only)	1% (affordable), 5% (others)	After OC, no GST
Legal verification	₹15,000-30,000	One-time lawyer fee
Home inspection	₹5,000-15,000	One-time
Interior + ready-to-move	5-15%	Often forgotten in budget

For a ₹50 lakh ready-to-move-in property: ~₹4-5 lakh total transaction costs. For a ₹50 lakh under-construction property: ~₹5-7 lakh.

These costs become "sunk" once paid — you don't recover them at sale. They are what make the break-even horizon so long (5-7 years).

How do I shortlist properties?

The systematic approach:

Define non-negotiables. 2BHK or 3BHK? Maximum commute time? Budget cap? School proximity? Walkability?
Choose 3-4 target localities. Diversifying viewings across multiple localities reveals comparative pricing and what your budget actually buys.
Use multiple sources. MagicBricks, 99acres, NoBroker, Housing.com — each has different inventory. Cross-reference. Also drive through target areas and look for "Sale" boards.
Visit 8-12 properties. Fewer than this and you lack comparison; more than this and decision fatigue sets in. Visit during different times (weekday morning, weekday evening, weekend).
Check the rental market in the same locality. If equivalent rent is 2.5%+ of price annually, the locality has healthy rental demand. Below 1.5% suggests overpriced for long-term holding.

What legal verifications are essential before buying?

Five critical legal checks:

Title verification. Engage a property lawyer (₹15,000-30,000) to verify chain of title for 30+ years. Any gap, dispute, or unclear succession can void your ownership rights.
Encumbrance Certificate. Available from sub-registrar office or online; verifies no liens, mortgages, or legal claims on the property.
Approved building plan and OC (Occupancy Certificate). Without OC, the property is unauthorised — affects loan eligibility, resale, and even occupancy legality.
No-objection certificates. For apartments, NOC from society/builder for transfer of ownership.
Building condition and tax clearances. Property tax receipts current; no major society dues; structural condition assessed.

For under-construction properties, additionally verify RERA registration and developer track record. Many retail buyers skip thorough legal verification — and a meaningful percentage face title disputes years later.

What is the loan application and approval process?

The home loan timeline:

Stage	Duration
Pre-approval (in principle)	1-3 days
Document submission	Your turn — gather salary, IT returns, bank statements
Income verification	3-5 days
Property verification (legal + technical)	7-14 days
Sanction letter	After all verifications
Disbursement	At registration

Required documents: PAN, Aadhaar, address proof, last 3 months salary slips, 2 years IT returns + Form 16, 6 months bank statement, property documents.

Tips:

Apply to 2-3 banks simultaneously for rate comparison
A 0.25% rate difference on ₹50 lakh / 20 years = ₹1.5 lakh in total interest
Negotiate processing fee — most banks waive it under competitive pressure

Use this on Freedomwise

Buy vs Rent Calculator — comprehensive analysis for your specific situation
Real Estate vs Equity — opportunity cost comparison
Home Loan EMI Explained — understanding EMI structure
Prepay vs Invest Calculator — once you have a loan, the prepay decision
Real Estate pillar — complete real estate education

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