7 Essential Financial Steps for Buying Your First Home in India

New Delhi. Buying your first home is a milestone filled with both excitement and uncertainty. For many Indians, owning a home represents long-term security, but it also brings major financial responsibility.

about to take this leap, being financially prepared is just as crucial as picking the right property. From budgeting and loans to legal procedures and protection with home insurance, here’s a complete guide to making a smart, well-informed purchase.

7 Things to Keep in Mind When Buying Your First Home

Buying your first home is a major milestone—here are 7 key things to help you make informed and confident decisions.

1. Begin with a Realistic Budget
Your first step as a prospective homebuyer should be setting a realistic budget. This isn’t just about property value—your budget must include stamp duty, registration charges, legal fees, maintenance deposits, moving costs, and furnishings.

As a general guideline, financial experts suggest that your total home expenditure should not exceed 40% of your net monthly income.

Use budgeting rules like the 50/30/20 rule, where 50% goes to needs (including EMIs),
30% to wants, and 20% to savings, to structure your monthly finances.

2. Understand Loan Eligibility and EMI Affordability
Unless you’re purchasing your home outright in cash (a rarity), a home loan is a must. Before approaching a bank or lender, check your loan eligibility using free online tools available on most financial portals.

Most banks offer loans up to 80% of the property’s value. However, your credit score, income stability, existing debts, and repayment history will impact your sanction amount.

Tip: In the early years, aim for a home loan with a fixed or semi-fixed interest rate. Also, evaluate prepayment charges and flexible repayment options before signing the dotted line.

3. Don’t Overlook Registration and Legal Costs
Every property transaction in India requires proper registration with local authorities.

These include:
 Stamp Duty: Varies by state, ranging from 4% to 8%.
 Registration Fees: Typically 1% of the property value.
 Legal Verification Fees: Hiring a legal professional to vet property documents is an additional cost, but vital to prevent fraud.

4. Protect Your Investment with Home Insurance
Your house is likely the biggest investment you’ll ever make, yet many buyers fail to secure it with the right insurance. A comprehensive home insurance protects your property and possessions from unpredictable risks such as:

 Fire and explosions
 Natural disasters (earthquakes, floods)
 Theft and burglary
 Damage due to electrical breakdowns or pipe bursts

Also, consider a policy that offers comprehensive cover, low exclusions, and optional riders such as temporary relocation coverage or landlord’s liability if you plan to rent your property.

5. Plan for Long-Term Maintenance and Utility Expenses
Owning a home is a long-term commitment that comes with recurring costs, regular maintenance, utility bills, property taxes, and unexpected repairs. These expenses often grow over time, especially in urban apartments or gated communities with shared infrastructure.

To stay financially protected, many first-time homeowners consider home insurance as a smart safeguard. Digit Insurance, a trusted and IRDAI-registered insurer, offers affordable, customisable house insurance plans that can cover everything from fire and theft to natural disasters and structural damage.

With an entirely digital purchase and claims process, homeowners can manage their policy easily through Digit’s app, with no paperwork hassles or long waiting periods.

6. Build an Emergency Buffer Before Ownership
Even if your EMI seems affordable now, life is unpredictable. Illness, job loss, or even market downturns can affect your ability to pay. That’s why it’s wise to create a financial buffer before committing to home ownership. Set aside 10–15% of your total home value as a reserve fund. This isn’t just for emergencies, it can also help with delayed possession in under-construction projects or unplanned expenses like furniture or modular kitchen installations.

7. Consider Future Aspects 
Buying a home is as much a financial decision as it is an emotional one. Before making the purchase, ask yourself:

 Will I stay in this city for the next 10+ years?
 Is the neighbourhood conducive to my family’s needs?
 Am I emotionally ready to take on the responsibility of ownership?

Treat your home as a long-term financial asset. Regular upkeep, timely EMI payments, and wise insurance planning will ensure it appreciates and provides security for years to come.

Your first home purchase marks the beginning of financial maturity. With proper planning, due diligence, and timely protection through tools like home insurance, you can avoid common pitfalls and enjoy peace of mind.

Protecting your investment has never been more important as property values rise and climate unpredictability grows.

So, before you hang up that “Home Sweet Home” sign, ensure your financial foundation is as strong as the bricks and mortar you’re investing in.