How to Budget for Buying a New Home: A Smart Guide

Buying a home is more than just excitement—it’s a long-term financial commitment. Tata Housing’s “How to Budget for Buying a New Home” (April 11, 2025) offers clear, step-by-step advice to ensure your dream doesn’t turn into stress

1. Assess Your Finances

Start with a clear picture of your income, savings, debts, and credit score. This solid foundation helps you understand what you can realistically afford .

2. Explore Home Loan Options

Investigate different lenders—banks, NBFCs, housing finance companies—for interest rates, tenure options, and processing fees. Don’t overlook PMAY and other subsidies.

3. Calculate Hidden Costs

Beyond the sticker price, remember:

Stamp duty & registration (5–8%, 1–2%)
GST (5% under construction)
Brokerage (1–2%)
Interiors, maintenance, utilities
These can raise costs by 15–20%

4. Plan EMIs Wisely

Aim to cap EMIs at 30–35% of your monthly income. Opt for shorter tenure, consider co-applicants (women may get lower rates), and make a ≥20% down payment to reduce interest burden.

5. Do Thorough Due Diligence

Verify property title, builder’s RERA registration, legal history, utility clearances. Issues like encumbrances or environmental non-compliance can cause major delays

6. Compare Loan Offers

Don’t settle for the first loan. Compare interest rates, fees, penalties, and prepayment rules. A high credit score (750+) can strengthen your negotiating position .

7. Budget for Ongoing Costs

Post-purchase expenses like maintenance, property tax, and utilities persist. Set aside at least 1–2% of property value annually and invest in energy-efficient fixtures for long-term savings.

8. Explore Tax Benefits

Don’t miss deductions:

Section 24: up to ₹2 lakh on interest
Section 80C: ₹1.5 lakh on principal
If co-owned, splits can double benefits

9. Buy Home Insurance

Insurance protects against calamities like fire, floods, and earthquakes. Typical premiums range from ₹5,000–10,000/year. In risk zones (e.g., Chennai), add flood riders.

10. Stay Rational

Don't let emotions like vastu-compliance or scenic views override rational analysis. Visit multiple times, compare with market prices, and stay anchored to your budget.

Final Thoughts

Purchasing a home is indeed a marathon, not a sprint. By methodically planning your finances, scrutinizing options, and consulting with experts (legal or financial), you can transform this major investment into a confident, stress-free journey

How to Budget for Buying a New Home: A Smart Guide