8 Tips to Consider to Afford a House in 2025

Buying a house is a milestone many of us aim to achieve. However, the financial aspect of purchasing a home can seem daunting. Whether it's saving for the down payment or understanding home loan options, the path to home ownership requires careful planning and smart financial decisions. In this blog post, we'll explore practical steps to afford a house in India by 2025. We'll cover budgeting techniques, saving strategies, and loan options to enhance your home affordability.

1. Determine Your Budget

Start by assessing your financial situation. Calculate how much you can afford to spend on a house without exceeding 30% of your monthly take-home salary on loan repayments. Factor in other financial commitments and savings to establish a realistic budget for your home purchase.

2. Check Your CIBIL Score

Your CIBIL score significantly influences your eligibility for a home loan and the interest rates offered. A higher score can lead to better loan terms. If your score is low, consider improving it by ensuring timely payments on existing debts and managing your credit wisely.

3. Save for a Down Payment

The Reserve Bank of India requires homebuyers to pay at least 20% of the property's value as a down payment. For example, if you aim to buy a property worth ₹1 crore, you need to save ₹20 lakh upfront. Additionally, consider other costs such as registration fees and interior expenses, which can total around ₹40 lakh for a ₹1 crore house.

4. Prepare for EMIs

Before taking out a loan, simulate the impact of monthly EMI payments on your finances. A useful strategy is to save an amount equivalent to your expected EMI for a few months prior to securing the loan. This will help you adjust to the reduced disposable income once the EMI payments begin.

5. Shop for the Best Home Loan Rates

Taking a home loan fast-tracks your homebuying journey. Interest rates on home loans are comparatively lower than personal loans, making them a favourable financing option to consider. Most banks offer home loans that cover 70% to 85% of the total cost of the property. However, before applying for a home loan, ensure that you have the repayment capacity to pay off the loan. 

6. Research the Housing Market

Stay informed about market trends and forecasts for the area where you intend to buy. Understanding local demand and infrastructure developments can help you make a more informed decision about where to invest in property.

7. Start House Hunting

Once your finances are in order, begin searching for homes that meet your criteria. Be flexible and open-minded during this process, and prioritise essential features over nice-to-haves to avoid being overwhelmed by choices. By following these steps, you can strategically position yourself to afford a house in India by 2025, ensuring that your investment aligns with both your financial capabilities and lifestyle needs.

8. Check Government-sponsored Home Loan Subsidy Schemes

With the sole aim to make housing affordable and accessible to all, the Government of India has launched several subsidy schemes under PMAY (Pradhan Mantri Awas Yojana) that offer substantial discounts on interest rates. However, this scheme is only available to the Economically Weaker Section (EWS), Low-Income Group (LIG) and Middle-Income Group (MIG). You can read more about these schemes here.