How much money should I save before buying a house in India?

Buying a home is a dream that people strive for. To make this dream a reality requires a lot of time, hard work, thinking, and proper planning. 

If you want to buy a house you should start planning and saving as early as possible. For example, if you are at the age of 25, you will have enough money to invest in a property after 7-10 years. To know how much money should I save before buying a house in India, you must carefully plan your strategy to avoid hindrances that may come your way.

1. Avoid purchasing a house if you are in debt.

2. Avoid purchasing a house that can make you pay a heavy debt.

3. Avoid not saving enough to purchase a house.

4. You should also include other costs related to moving home and save your money accordingly.

Plan when to buy a house, where to buy a house, set a time frame, and start saving your money.

Create an estimation of the current cost of the house you want to buy considering the inflation rate. For example, if a property in Kolkata costs around 50 lakhs today, considering the inflation of 10% the estimated cost of the house would be around 80.5 lakhs after 5 years.

Based on your monthly income start saving your money. Usually, it is suggested to invest 20% of your income. For example, if your salary is 25k you must start investing 5k initially every month to buy property.

Calculate how much principal money you will be able to invest while buying a home. You can always take a loan to invest in a house.

Create a good relationship with your bank manager, who can help you invest in your dream house.

NoBroker is a platform that helps you buy the perfect house with 0% brokerage at the lowest price. 

When I started thinking about buying a house, I wanted to get a clear idea of how much money should I have before buying a house. I decided to call a friend for advice who is into finance. Sitting with him, I realised there’s more to it than just saving for a down payment and explained to me the 20-30-20 rule, He broke it down for me in a way that felt easy to follow. Here’s what I learned from him and the steps they suggested to get financially prepared:

How Much Should I Have Saved Before Buying a House?

1. Down Payment (20%): The first thing he pointed out was that I’d need to save about 20% of the house’s value as a down payment. For a Rs. 50 lakh property, this means setting aside Rs. 10 lakhs. This amount forms the foundation of what I should aim to save.

2. Monthly EMI (30% of Income): He recommended keeping my monthly EMI (loan instalment) within 30% of my income. This way, I’d still have enough for my daily expenses without feeling stretched financially. He explained that this balance is essential to keep other finances steady.

3. Loan Period (20 Years): Finally, he advised me to aim for a loan tenure of not more than 20 years. Shorter loans mean I’d pay less in interest over time and could fully own the house sooner. He stressed that keeping the loan period within 20 years would make a significant difference in my overall savings.

4. Additional Costs – Besides the 20-30-20 breakdown, he went over other necessary expenses, like registration, stamp duty, and legal fees, which are around 7-8% of the house’s cost. I also needed an emergency fund for unexpected repairs or other home expenses.

After going through this advice, I felt prepared and confident. The 20-30-20 rule made it easy to understand how much money should you have before buying a house and gave me a clear savings goal. So based on this rule you should plan out your budget and buy a new house.

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I researched how much should I save before buying a house before purchasing a home in Bangalore. We did put a 20% down payment with funds for stamp duty and one significant emergency. Prior to knowing how much you should save, scroll down to check the expenses associated with purchasing a home.

How much to Save Before Buying a House in 2024?

Before purchasing a house, we kept the following expenses in mind:

• We saved a minimum of 20% of the house's total cost as a down payment. As our property value was Rs 1 Crore, so, me and my wife together saved Rs 20 lakh for a downpayment.

• To register the property with the government, it is mandatory to pay stamp duty and registration costs as a one-time fee. So, we kept 3% of the total property cost as a registration charge.

• Apart from these 2 charges, we kept an extra amount for legal fees and property taxes.

• We used the NoBroker platform to search for the property and got a lot of options along with the owner's direct contact information, so we didn't have to set aside any money for brokerage. 

• We also put up a buffer of emergency money before purchasing a Bangalore home. Unexpected costs like maintenance, repairs, and other unplanned charges might occur at any time. Maintaining an emergency fund can protect you from financial issues and keep you from falling behind on your mortgage payments.

Rest Rs 80 lakhs we took a home loan from the bank. Before purchasing a home, you should save a certain amount depending on several variables, including your location, income, monthly expenses, loan eligibility, and personal financial objectives. 

You must do the calculation yourself and decide how much should you save before buying a house.

• The most important factor is the cost of the property you wish to buy. You are required to save a substantial amount for the down payment, 20% to 25% of the property price
• If you areopting for home loans to finance the purchase of a house. In addition to the down payment, you are needed to secure monthly EMIs (Equated Monthly Installments).
• You should save for other costs associated with buying a house, including:

• Stamp Duty and Registration Fees
• Legal and Documentation Charges
• Property Tax
• Home Insurance

Owning a house has been a big deal to me. I have wanted to buy a 2 BHK apartment in an urban-posh area for the past five years. In my quest to find the perfect property, I have made many mistakes financially. I will give you a brief on how much to save to buy a house. I hope you learn from my mistakes. 

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How much should you save to buy a house?

According to many real estate websites and investment experts, you should have savings of Rs 25-30 lakh to buy a property in an upcoming urban area. Though, this number is not definitive as the price of an area can vary depending on many factors like neighbourhood infrastructure and type of property. 

I assumed it would be easy to buy a property as I could just take out a home loan. I completely agree with those people who say, you need to save at least 25% of its sale price in cash to cover a down payment. Just to give you an example of how much to save to buy a house?

If the property price is Rs. 250,000, you might pay more than Rs.60,000 to cover all of the different buying expenses.

In metro cities like Delhi and Bangalore, properties on average are priced in the range of Rs 70 lakh to Rs 2.5 crore, the down payment amount is in the range of Rs 30 to Rs 45 lakh. So, you should have Rs. 45 lakh.

You should be saving for the down payment as well as the home loan EMI payment. I was wrong to begin saving home loan EMI earlier. Even if you earn Rs. 15,000 a month, you can put it in SIP and get a return of 12%. That way, you will have at least savings of Rs. 12.40 lakhs, in a matter of just 5 years. 

I will share a table below where interest rates will be displayed. It will give you a better idea about how much money to save for a house.