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How Much Money Do you Need To Buy A Home?

April 21, 2023

‍Once you’ve become an adult, with a stable job the next step is mostly buying your own home if not for marriage. Buying a house or getting married are huge commitments and can be overwhelming, especially if you’ve just worked for a couple of years. This article will shed some light on how to get started with the home buying process.

Irrespective of what market you are in, buying a home is a life-changing decision. Maybe you're earning a pretty handsome salary now - but is it enough to fulfill your dream of getting a house? How much money do you need to buy a home?

Maybe you're earning a pretty handsome salary now - but is it enough to fulfill your dream of getting a house? 

Since 2015, Indians' loan burden has increased by 13%. According to a recent RBI report, the average house price in India in March 2019 was 61.5 times the average Indian's monthly income.

As the ratio rises, housing becomes less affordable in cities across India. Despite the global pandemic affecting the real estate ecosystem, property prices continue to rise.

Making such a significant decision at the wrong time can make or break the rest of your financial planning and derail major life milestones. However, taking the right approach, backed up by careful planning, can save the day!

House prices are expected to rise in 2022 due to the record-breaking housing boom, prompting many of us to reconsider our home-buying decisions. 

But if you're still determined to realize your dream, we'll help you figure out how much money you'll need to buy your first home.

How to get started?

The first step in buying a house is determining how much you can afford to pay. It is not advisable to borrow more than 30% of your take-home pay.

So, if you have other loans or financial commitments, you should sit down and figure out how much of your take-home pay you can spend on your home.

Start like this - consider how much money you have in savings and whether there is a possibility of more money/additional sources of income that you can add to your monthly income. 

Buying a house that exceeds your budget can result in many months of financial struggle until you can sell the house. 

This financial burden could result in a cash crunch in your day-to-day functioning and perhaps even an acute shortage of having an emergency fund by your side to face any uneventful crisis that comes your way. 

Another thing to remember is not to buy a house out of your budget; some people mistake purchasing a home to selling it to pay off the loan and earn a profit. 

This is a very risky decision because there is a possibility that the real estate market topples for the worse, and you do not get your due share of the profit you were keeping your eyes on.

Determine why and where you want to buy a home

It is critical to determine why you are purchasing a home, whether for personal or investment purposes. 

If you intend to live there, you should select a house based on its location and amenities. Choose a home that is both comfortable for you and those with whom you live.

If you choose it from an investment perspective, do good research on the property location, check the appreciation history of the property and then make a final decision. 

After all, since this is taken as an investment, it should be able to fetch you a good ROI in case you wish to sell the property after a couple of years. 

Before you make a purchase!

Before purchasing a home in 2022, you should research housing market predictions for 2020 and 2019. You can also look for real estate forecasts for the city and neighborhood you're interested in.

A good real estate forecast can help you place a safe bet on areas that are always in demand, areas that are experiencing increased demand due to infrastructure and other factors, and areas that are experiencing a sharp drop in demand.

Next is to factor in the interest rate and a down payment on the property. The good news is that interest rates on home loans have been low for some banks but gradually picking up. 

The bad news is that you still need to put down 20% of the purchase price, or you won't be able to get a home loan, as the RBI has mandated that all banks and lending institutions can only lend up to 80% of the property's value.

This means that the required down payment for a home loan in India is 20%. To buy a house worth one crore, you must have a minimum down payment of Rs. 20 lakhs.

When you factor in additional costs such as registration fees, loan application fees, furniture, and interior design costs, you'll need nearly Rs. 35-40 lakhs saved up before buying a house for Rs. 1 crore.


Buying a house can be an overwhelming process for first-time buyers, but it brings in the excitement and satisfaction of owning your place for life. 

If you're a beginner in the real-estate journey, we suggest you take slow steps and start saving for this decision; the more you save for your down payment, the less you will have to borrow from the bank, and the less you will have to pay in EMI each month. 

However, saving a substantial sum of money may appear intimidating if you are new to saving and budgeting your finances. 

This is where the Jar app can help you out! It's a daily saving app that helps debit your account by rounding up your daily transactions and investing them in digital gold. Invest as low as Rs. 10/day or Rs.5000+ in a month on the app and see your savings increase bountifully. 

With the price of digital gold rising over the years, you can expect a handsome return on your investment in a few years. 

So, save on the Jar app and fulfill your dream of getting yourself a beautiful house in the years to come.