🏡 First-Time Homebuyer? Here’s What You Need to Know

Published on: June 02, 2025

Buying your first home is a momentous occasion, marking a significant personal and financial milestone. In India, it's not just about acquiring property; it's often seen as a step towards stability, security, and a symbol of success. However, the process can seem daunting, with various steps, financial considerations, and legal formalities involved. Here's a comprehensive guide for first-time homebuyers in India to help you navigate the journey with confidence.

1. Assess Your Financial Readiness: The Foundation
Before you even start house hunting, a thorough financial self-assessment is paramount.

Determine Your Budget: This is your absolute starting point. Factor in:
Down Payment: Typically 10-20% of the property value. Ensure you have these savings ready, as it's a significant upfront cost.
Home Loan Eligibility: Banks assess your age (usually 21-60/65), income stability, existing EMIs, and credit score. Use online eligibility calculators to get a rough idea.
EMI Affordability: Your Equated Monthly Installment (EMI) for the home loan should ideally not exceed 30-40% of your net monthly income. Don't forget other existing loan EMIs.
Additional Costs: Beyond the property price, budget for:
Stamp Duty and Registration Charges: Varies by state (usually 5-7% of property value).
GST: Applicable on under-construction properties (typically 5% for affordable housing, 12% for others, with some input tax credit benefits).
Loan Processing Fees: Charged by banks (0.25% - 1% of the loan amount).
Legal and Technical Verification Fees: Paid to the bank for due diligence.
Property Tax: Annual recurring cost.
Maintenance Charges: Monthly/quarterly charges for society upkeep.
Interiors and Furnishing: Significant cost often underestimated.
Brokerage Fees: If you use a real estate agent (typically 1-2% of property value).
Check Your Credit Score (CIBIL Score): A score of 750 or above is considered excellent and significantly improves your chances of getting a home loan at favorable interest rates. Regularly check your credit report for any discrepancies. Pay existing debts on time and manage your credit wisely to boost your score.
Build an Emergency Fund: Homeownership comes with unexpected expenses (repairs, maintenance). Have at least 3-6 months' worth of living expenses saved up.
2. Understand Your Needs and Priorities
What kind of home suits your lifestyle and future plans?

Location: This is crucial. Consider:
Proximity to Workplace: Minimize commute time.
Social Infrastructure: Schools, hospitals, markets, entertainment, parks.
Connectivity: Roads, public transport (metro, bus).
Safety and Security: Research crime rates, community environment.
Future Development: Look for areas with planned infrastructure projects that could boost appreciation.
Type of Property:
Apartment: Common in urban areas, offers amenities, security, lower maintenance responsibility.
Independent House/Villa/Builder Floor: More space, privacy, potential for customization, but higher maintenance responsibility.
Under-Construction vs. Ready-to-Move:
Under-Construction: Generally cheaper, potential for higher appreciation, staggered payments, RERA protection. Risks include possession delays, uncertainty of final product.
Ready-to-Move: Immediate possession, no rent+EMI burden, what-you-see-is-what-you-get. Higher upfront cost, less appreciation potential, possibly older designs. (Refer to the previous article for a detailed comparison).
Size and Configuration (BHK): How many bedrooms, bathrooms, and what carpet area do you need? Consider your family's current and future size.
3. Research the Market & Shortlist Properties
Online Portals: Websites like 99acres, MagicBricks, Housing.com are great starting points.
Local Real Estate Agents: A good agent can provide valuable insights into local market trends, property availability, and legalities. Choose a RERA-registered agent.
Site Visits: Never buy without physically visiting the property. Check the quality of construction, fittings, natural light, ventilation, and the surrounding environment.
Neighborhood Vibe: Spend time in the area at different times of the day to gauge noise levels, traffic, and general atmosphere.
4. Understand Home Loan Options & Application Process
Most first-time homebuyers rely on home loans.

Types of Loans:
Home Purchase Loan: For buying a new or resale residential property.
Construction Loan: For building a house on your own plot.
Home Improvement/Extension Loan: For renovations or adding space.
Plot Loan: For purchasing a residential plot.
Lenders: Compare interest rates (fixed vs. floating), processing fees, tenure, prepayment penalties, and customer service of various banks and Housing Finance Companies (HFCs).
Loan to Value (LTV) Ratio: The maximum percentage of the property's value that a bank can finance (e.g., up to 90% for loans below ₹30L, 80% for ₹30L-₹75L, and 75% for above ₹75L).
Documents Required:
KYC Documents: PAN Card, Aadhaar Card, Passport, Voter ID, Driving License.
Income Proof:
Salaried: Latest 3-6 months' salary slips, 6 months' bank statements, Form 16/ITR for last 2-3 years.
Self-Employed: Latest 2-3 years ITR with computation of income, P&L statements, Balance Sheet, business license, 12 months' bank statements (personal and business).
Property Documents: Sale Agreement/Deed, Allotment Letter (for under-construction), Occupancy Certificate (OC) / Completion Certificate (CC) (for ready-to-move), property tax receipts, approved building plan.
Other: Passport-sized photographs, proof of own contribution/down payment.
Application Process:
Eligibility Check: (As discussed above)
Document Submission: Submit the filled application form with all required documents.
Credit Assessment: Bank evaluates your financial profile and creditworthiness.
Property Evaluation: Legal and technical verification of the property by the bank.
Loan Sanction: If approved, you receive a sanction letter detailing the loan amount, interest rate, tenure, and terms.
Disbursement: After signing the loan agreement and submitting original property documents, the loan amount is disbursed.
5. Understand Legal and Regulatory Checks
This is a critical step to avoid future disputes.

RERA (Real Estate Regulatory Authority): For under-construction properties, always verify the developer and project's RERA registration. RERA ensures transparency and timely delivery.

Title Deed: Ensure the seller has a clear and marketable title to the property. Verify the chain of ownership.
Encumbrance Certificate: Obtain this to ensure the property is free from any legal dues, mortgages, or liabilities.
Approvals: Check if the building plans are approved by the local municipal authorities. For apartments, ensure the Occupation Certificate (OC) and Completion Certificate (CC) are issued.
No Objection Certificates (NOCs): Ensure all necessary NOCs from relevant authorities (e.g., fire, environment) are in place.
Builder-Buyer Agreement/Sale Deed: Read every clause carefully. If unsure, seek legal advice.
6. Government Schemes & Tax Benefits for First-Time Buyers
Leverage government initiatives to make your purchase more affordable.

Pradhan Mantri Awas Yojana (PMAY): This flagship scheme aims for "Housing for All." Under its Credit Linked Subsidy Scheme (CLSS), eligible first-time homebuyers from Economically Weaker Sections (EWS), Low Income Group (LIG), and Middle Income Group (MIG) can avail interest subsidies on home loans.

Tax Benefits:
Section 80C: Deduction for principal repayment of up to ₹1.5 lakh.
Section 24(b): Deduction for interest paid on home loan, up to ₹2 lakh for self-occupied property.
Section 80EE/80EEA (if applicable): Additional interest deductions for specific first-time home loans, if other conditions are met (check current regulations).
Conclusion
Buying your first home in India is a marathon, not a sprint. It requires meticulous planning, financial discipline, and thorough research. By understanding the process, key financial aspects, legal requirements, and available government support, you can transform this complex journey into a rewarding experience, leading you to your dream home. Remember, patience and due diligence are your best allies.