Buying a Home in India: Costs, EMI and Tax Checklist

Start from your income, not from the property price. Lenders usually keep total EMIs (all loans together) within roughly 40 to 50% of take-home income, and many financial planners suggest staying well under that so you still have room to save. If your take-home is ₹1,00,000 a month, a combined EMI of ₹40,000 to ₹45,000 is the outer limit for most lenders.

Remember the down payment. Under RBI's loan-to-value limits, a bank can lend up to 90% of the property value on loans up to ₹30 lakh, up to 80% between ₹30 lakh and ₹75 lakh, and up to 75% above that. So on a ₹60 lakh flat you should plan for at least ₹12 lakh of your own money, plus the extra costs below.

A ₹50 lakh loan at 8.5% over 20 years has an EMI of about ₹43,400 and costs roughly ₹54 lakh in interest, more than the loan itself. The same loan over 15 years raises the EMI to about ₹49,200 but cuts the interest to about ₹38.6 lakh. A shorter tenure costs more each month and far less overall.

Test different amounts, rates and tenures before you commit, and read about EMI and amortization so the schedule your bank sends makes sense. If you are weighing a home loan against a personal loan for part of the cost, see the home loan vs personal loan comparison.

Stamp duty and registration vary by state and sometimes by buyer, and commonly add several percent of the property value. Add legal and valuation fees, loan processing fees, GST on under-construction property where applicable, society transfer or maintenance deposits, and moving and furnishing costs. A practical rule is to keep a cushion of around 7 to 10% of the price for these, then check your state's actual rates.

Also keep an emergency fund separate from the down payment. Locking every rupee into the purchase leaves you exposed if a job change or repair bill arrives in the first year.

Under the old tax regime, you can claim up to ₹2 lakh a year of interest on a self-occupied property under Section 24(b), and up to ₹1.5 lakh of principal repayment within the overall Section 80C limit. The new regime, which is the default, does not allow these deductions for a self-occupied home.

Because the new regime now charges no tax up to ₹12.75 lakh of salary, many buyers are better off in it even with a home loan. Compare both regimes with your actual numbers in the Income Tax Calculator, and read old vs new tax regime for the rules.