Home Buying Checklist India 2026: Budget to EMI Guide

The ₹15 Lakh Surprise: What They Don't Tell You

Scenario: Priya found perfect ₹80L apartment in Bangalore

Budget Breakdown:

ItemAmountReality Check

Property Price₹80LBase cost Home Loan₹60L (75%)Approved Down Payment₹20LSaved ✅ Stamp Duty (3%)₹2.4LForgot! Registration (1%)₹80kForgot! GST on Under-Construction (5%)₹4LForgot! Parking (2 slots)₹3LForgot! Interior/Modular Kitchen₹5LForgot! Brokerage (2%)₹1.6LForgot! Legal/Home Inspection₹50kForgot! Club Membership₹1LSociety mandatory Loan Processing Fee₹50kBank charges TOTAL NEEDED₹38.9Lvs ₹20L saved!

Shortfall: ₹18.9L (needed personal loan @ 14% to cover!)

Lesson: Home price is JUST THE START. Budget 25-30% extra.

Calculate true cost: Mortgage Calculator | Stamp Duty Calculator

Step 1: Calculate True Affordability

The 40% Rule

Formula: Home Price ≤ (Annual Income × 5) OR EMI ≤ 40% of Monthly Income

Example: ₹12L annual income (₹1L/month)

Method 1: Income Multiple ₹12L × 5 = ₹60L affordable home price

Method 2: EMI Affordable ₹1L × 40% = ₹40k max EMI Add ₹11L down payment (25%) = ₹55L affordable price

Take Lower: ₹55L is safe budget

Verify your budget: Home Loan Calculator | Mortgage Calculator

Critical: Don't stretch to ₹80L+ (EMI ₹72k = 72% of income = bankruptcy risk)

Hidden Income Considerations

Don't Count:

Bonuses (unreliable)

Rental income (if investment property)

Freelance income < 2 years history

Spouse income (if planning children soon)

Count 100%:

Fixed salary

Spouse income (double-income, no kids)

Rental income from other owned property

Count 50%:

Variable pay (commissions, incentives)

Freelance if > 2 years consistent

Step 2: Build Down Payment (20-25%)

Minimum Down Payment

Loan-to-Value (LTV) Limits:

Property ValueMax LTVMin Down Payment

₹30L or less90%10% ₹30L-₹75L80%20% Above ₹75L75%25%

Example: ₹1Cr property

Max loan: ₹75L (75%) Min down payment: ₹25L

Why 25% is Better Than 20%

Scenario: ₹80L property

20% Down (₹16L): Loan: ₹64L @ 9% for 20 years EMI: ₹57,597 Total Interest: ₹74.2L Total Paid: ₹1.54Cr

25% Down (₹20L): Loan: ₹60L @ 9% for 20 years EMI: ₹53,997 Total Interest: ₹69.6L Total Paid: ₹1.50Cr

Savings: ₹4.6L over 20 years + ₹3,600/month lower EMI

Sweet Spot: 25-30% down payment (best interest rate + lower EMI)

Down Payment Sources

✅ Savings: Self-accumulated (best) ✅ Gift from Parents: Tax-free (no proof needed) ✅ Sale of Assets: Stocks, gold, existing property ✅ EPF Withdrawal: Allowed for home purchase

❌ Personal Loan: 14-18% interest destroys savings ❌ Gold Loan: 11-14% + risk of losing gold ❌ Credit Card: 18-42% (financial suicide)

Step 3: Hidden Costs Breakdown

Registration & Stamp Duty (State-Wise)

StateStamp DutyRegistrationTotal %

Maharashtra5% (men), 4% (women)1%5-6% Karnataka3% (women), 5% (men)1%4-6% Delhi4% (women), 6% (men)1%5-7% Tamil Nadu7%1%8% Gujarat4.9%1%5.9% Telangana4%0.5%4.5%

Example: ₹80L Bangalore property (woman buyer)

Stamp Duty: ₹80L × 3% = ₹2.4L Registration: ₹80L × 1% = ₹80k Total: ₹3.2L

Calculate by state: Stamp Duty Calculator

Tip: Register in wife's name (saves ₹1.6L in Karnataka!)

GST on Under-Construction (If Applicable)

Ready-to-Move: No GST Under-Construction: 5% GST (without ITC) OR 12% (with ITC, but developer choice)

Most Common: 5% on property value

₹80L under-construction: ₹80L × 5% = ₹4L GST (massive hidden cost!)

Strategy: Prefer ready-to-move-in (saves 5% + no construction delays)

Other Mandatory Costs

Cost% of Property₹80L Example

Home Loan Processing0.5-1%₹40-80k Legal Verification₹20-50k flat₹35k Property Valuation₹3-5k₹5k Home Insurance0.1-0.3%/year₹10-25k/year Brokerage1-2%₹80k-₹1.6L Interior Basics5-10%₹4-8L Club Membership₹50k-₹3L₹1L avg Parking (extra slot)₹1.5-5L₹2L

Total Hidden: 15-25% of property value

₹80L Property Total Cost: ₹92-100L (not ₹80L!)

Calculate total costs: Home Affordability Calculator | Stamp Duty Calculator

Step 4: Home Loan Comparison

Fixed vs Floating vs Hybrid

Current Rates (Feb 2026):

TypeRateBest For

Floating8.75-9.25%Most borrowers (85%) Fixed (5 years)9.5-10%Expect rate increase Hybrid (3+years floating)9.25% fixed → 9% floatingCautious borrowers

Example: ₹60L loan, 20 years

Floating @ 9%: EMI ₹53,997 Fixed @ 9.5%: EMI ₹56,093 (+₹2,096/month)

Over 20 years: Fixed pays ₹5L MORE (if rates stay same) BUT if rates rise to 11%, fixed saves ₹8L

Verdict: Floating for most (historically rates drop long-term)

Bank Comparison (Top 5 Lenders 2026)

BankInterest RateProcessing FeePrepayment

SBI8.75-9.25%₹10k + GSTFree after 6 months HDFC8.85-9.40%0.5% (min ₹3k)4% penalty < 12 months ICICI8.90-9.45%0.5% (max ₹10k)Free Axis9.00-9.50%₹10k + GSTFree after 6 months Kotak8.95-9.35%₹5k-10kFree

Hidden Differences:

SBI: Lowest rate BUT processing time 45-60 days HDFC: Fast approval (15-20 days) BUT prepayment penalty ICICI: Best prepayment terms (no penalty) Axis: Flexible tenure (up to 30 years)

Tip: Apply to 2-3 banks, compare final offers (rate can drop 0.25-0.5% in negotiation!)

Prepayment Strategy

Example: ₹60L loan @ 9%, 20-year EMI ₹53,997

Year 5 Bonus: ₹5L available

Option A: Reduce Tenure (keep EMI same) New tenure: 12 years (from 15 remaining) Save: ₹18.2L interest

Option B: Reduce EMI (keep tenure same) New EMI: ₹47,500 (-₹6,497/month) Save: ₹11.7L interest

Winner: Option A saves ₹6.5L more (always reduce tenure!)

Step 5: EMI Optimization Techniques

The 30-20-10 Thumb Rule

30% Equity: Pay 30% down payment (better rates) 20-Year Max: Choose 15-20 year tenure (not 25-30) 10% Buffer: Keep 10% cash reserve post-purchase

Example: ₹1L monthly income

30% = ₹30k max EMI ₹30k EMI @ 9%, 20 years = ₹33.3L loan Add 30% down (₹14.3L) = ₹47.6L affordable property

(Not ₹70-80L many agents push!)

Part-Prepayment Schedule

Strategy: Prepay ₹50k-₹1L annually (bonus, increment portion)

Impact: ₹60L loan @ 9%, 20 years

Regular: ₹53,997 EMI, ₹69.6L total interest

With ₹1L Annual Prepayment: Tenure: 12 years (vs 20) Interest: ₹38.4L (vs ₹69.6L) Savings: ₹31.2L! (45% less interest)

Execution: Year 1: Pay ₹1L extra Year 2: Increment 10% = ₹1.1L extra Year 3: ₹1.21L extra ...compound the prepayments

Balance Transfer (If Rates Drop)

Current: ₹50L outstanding loan @ 9.5% with Bank A (5 years paid, 15 years left)

Offer: Bank B offers 8.75% for balance transfer

Savings Calculation:

Remaining @ 9.5%: EMI ₹51,854 Transfer @ 8.75% + ₹25k processing: EMI ₹49,673 (-₹2,181/month)

Annual Saving: ₹26k 15-Year Saving: ₹3.9L (after ₹25k fee)

When Worth It: Rate difference > 0.5% + outstanding > ₹30L + tenure > 10 years

Optimize EMI: EMI Calculator | Loan Calculator

Step 6: Timeline-Based Budget Planning

12-Month Pre-Purchase Plan

Month 1-3: Financial Cleanup

Check CIBIL score (target 750+)

Close expensive loans (credit card, personal)

Build emergency fund (6 months expenses)

Budget: ₹0 (cleanup phase)

Month 4-6: Savings Sprint

Open high-interest savings (7-8% FDs)

Redirect bonuses, variable pay

Sell unnecessary assets

Target: Accumulate 40% of total cost

Month 7-9: Pre-Approval

Apply for loan pre-approval (3 banks)

Get eligibility letters

Freeze credit inquiries

Budget: ₹5-10k (application fees)

Month 10-12: Property Hunt

Shortlist 10-15 properties

Legal verification (3 finalists)

Negotiate price (10-15% below asking)

Budget: ₹50k (legal, site visits)

At Booking (Day 1)

PaymentAmount (₹80L Property)Timeline

Token₹1-2LImmediate Booking10% = ₹8LWithin 7 days Balance Down15% = ₹12L30 days Stamp Duty₹2.4LAt registry Registration₹80kAt registry Loan Disbursal₹60L45-60 days

Cash Needed Day 1-30: ₹22-24L (not just ₹20L down!)

Under-Construction Payment Plan

Example: ₹80L property, 3-year construction

Stage%AmountWhen

Booking10%₹8LMonth 0 Foundation10%₹8LMonth 6 Plin th15%₹12LMonth 12 Slab20%₹16LMonth 18 Finishing20%₹16LMonth 24 Completion25%₹20LMonth 36

Payment from: Your funds: ₹20L (phased) Home loan: ₹60L (disbursed in stages)

PRE-EMI: ₹60L loan disbursed over 3 years

Month 6: ₹8L disbursed → Interest ₹600/month Month 12: ₹20L total → Interest ₹1,500/month Month 36: ₹60L total → Interest ₹4,500/month

After Possession: Full EMI ₹53,997 starts

Budget: Save ₹5k/month for 3 years pre-EMI (₹1.8L total)

Step 7: Emergency Scenarios

Job Loss Protection

Scenario: Lost job Month 6 after buying ₹80L home (₹60L loan, ₹54k EMI)

Option 1: Loan Moratorium (Bank Specific) 3-6 month EMI holiday (but interest compounds) ₹54k × 6 months = ₹3.24L deferred Interest on ₹3.24L @ 9% = ₹29k extra cost

Option 2: Sell Immediately List at ₹75L (5% below market for quick sale) Loss: ₹5L + ₹3.2L stamp duty = ₹8.2L loss Clear loan, recover ₹15L

Option 3: Rent Out ₹25k/month rent (vs ₹54k EMI = ₹29k shortfall) Use emergency fund to cover ₹29k × 6-12 months = ₹1.74-3.48L Find new job meanwhile

Best: Option 3 if emergency fund exists (this is WHY you need 12-month expenses saved BEFORE buying)

Interest Rate Spike

Scenario: Bought @ 9% floating, rate rises to 11% (₹60L loan, 15 years left)

EMI Impact: 9%: ₹53,997 11%: ₹62,478 (+₹8,481/month = ₹1.02L/year)

Fix Strategies:

1. Prepay Aggressively: ₹5L lumpsum → Reduces EMI to ₹57,065 even @ 11%

2. Extend Tenure: 11% but 20 years (vs 15) → EMI ₹56,936 (manageable)

3. Balance Transfer: Find bank @ 9.5%, pay ₹30k processing → ₹5.4L savings over 15 years

4. Partial Liquidation: Sell ₹10L stocks, prepay → Loan drops₹50L → EMI ₹52k even @ 11%

Frequently Asked Questions

Q1: Should I buy now or wait for prices to drop?

If Prices Drop 10%: ₹80L → ₹72L (save ₹8L) BUT: If interest rates rise 9% → 10% ₹60L loan EMI: ₹53,997 → ₹58,181 (+₹4,184/month) 20 years: ₹10L more interest paid

Net Effect: "Saved" ₹8L on price, "lost" ₹10L on interest = ₹2L worse off

Verdict: Buy when YOU are ready (income stable, savings done), not when market is "right"

Q2: Under-construction or ready-to-move?

Under-Construction Pros:

10-15% cheaper upfront

Modern amenities

Fresh property

Cons:

5% GST (₹4L on ₹80L)

3-5 year wait

Pre-EMI burden (₹1-5k/month)

Possession delay risk

Ready-to-Move Pros:

No GST

Immediate possession

Actual property visible

Rent savings start now

Cons:

10-15% premium price

Break-Even: ₹80L under-construction + ₹4L GST + ₹1.8L pre-EMI = ₹85.8L ₹88L ready (₹80L × 1.1)

Difference: ₹2.2L → If renting for ₹25k/month, 3-year rent = ₹9L Winner: Ready-to-move saves ₹6.8L net!

Q3: How much to spend on interiors?

Basic (₹80L property): 5% = ₹4L Mid-Range: 8% = ₹6.4L Luxury: 12-15% = ₹9.6-12L

₹6L Budget:

Kitchen: ₹2L (modular, appliances)

Wardrobes: ₹1.5L (3 bedrooms)

Painting: ₹80k

Lighting/Electrical: ₹70k

Bathroom fittings: ₹60k

Flooring (if needed): ₹1L

Tip: Phase it (₹4L Year 1, ₹2L Year 2 from savings)

Q4: Should I prepay or invest surplus?

₹2L surplus annually: Prepay loan OR invest in equity?

Prepay: Saves 9% guaranteed (loan rate) Reduces tenure by 8 years ₹28L interest saved

Invest in Equity: Potential 12% returns (not guaranteed) ₹2L annually for 20 years @ 12% = ₹1.61Cr vs ₹40L invested

But: Loan continues, pays ₹69.6L interest Net: ₹1.61Cr - ₹69.6L = ₹91.4L

Prepay Net: Saves ₹28L interest + loan-free in 12 years Then invest ₹54k EMI for 8 years @ 12% = ₹60L Total: ₹28L saved + ₹60L invested = ₹88L

Winner: Invest (₹91.4L > ₹88L) BUT only if disciplined! Reality: 80% people spend, not invest → Prepay is safer

Q5: Joint loan with spouse: pros/cons?

Pros:

Higher eligibility (combined income)

Both claim Section 24 (₹2L × 2 = ₹4L deduction)

Both claim 80C (principal ₹1.5L × 2 = ₹3L)

Tax saving: ₹2.1L/year @ 30% bracket

Cons:

Both CIBIL scores matter (if spouse score < 700, loan rejected)

Co-ownership mandatory (can't sell alone)

Maintenance responsibility shared

Verdict: ALWAYS co-apply if spouse working (₹2.1L tax saving = ₹42L over 20 years!)

Q6: What if property value drops after purchase?

Scenario: Bought @ ₹80L, now worth ₹70L (10% drop)

Impact IF Selling: Loss: ₹10L + ₹3.2L stamp duty = ₹13.2L total

Impact IF Holding: ZERO (unrealized loss) 20-year horizon: Property will appreciate (8-10% long-term) ₹70L today → ₹3.3Cr in 20 years @ 9%

Lesson: Buy only if 10+ year holding plan (short-term volatility doesn't matter)

Q7: How to negotiate price?

Research: Check 5-10 similar properties (same society/area) Find avg price/sq ft

Negotiation Script:

Builder/Seller: ₹80L asking You: ₹68L offer (15% below) Builder: ₹78L counter You: ₹70L (explain: Other flat in Society X sold @ ₹7,000/sq ft, yours is ₹7,500/sq ft = overpriced) Builder: ₹75L final You: ₹72L + request freebies (2 parking slots, modular kitchen, waived club membership = ₹3L value) Builder: ₹74L + freebies

Result: ₹6L + ₹3L freebies saved = ₹9L (11% discount)

Works if: Ready stock property, end of quarter (sales target pressure), seen property 3+ times (serious buyer signal)

Key Takeaways

✅ True Cost: Property price + 25-30% (stamp duty, GST, interiors, etc.) ✅ Affordability: EMI ≤ 40% monthly income (30% safer) ✅ Down Payment: 25-30% optimal (lower interest rate + manageable EMI) ✅ Hidden Costs: ₹15-20L on ₹80L property (plan ahead!) ✅ Loan Type: Floating rate for 85% of buyers (cheaper long-term) ✅ Prepayment: Reduce tenure, not EMI (savemore interest) ✅ Timeline: 12-month planning minimum (savings + credit cleanup)

Home buying is a 20-30 year financial commitment. Spend 100 hours researching to save ₹10-20 lakhs.

Plan your purchase: Mortgage Calculator Home Affordability CalculatorEMI Calculator Stamp Duty Calculator