News: What a Rs 1 crore home really costs and how to borrow wisely now that the RBI has held rates-06-02-2026

The RBI’s decision to keep the repo rate at 5.25 per cent after its three-day Monetary Policy Committee meeting means EMIs on home loans linked to the policy rate should stay stable. For buyers encouraged by that stability, the article stresses checking affordability before borrowing.
It opens with Neha Kumari, a 34-year-old HR professional in Hyderabad, who booked a Rs 1 crore apartment with a 25 per cent down payment and a home loan for the rest. The EMI fits her budget but leaves little for discretionary spending. She keeps a small emergency fund and plans to restart her systematic investment plan (SIP) once moving and furnishing costs settle. She is comfortable now but knows a future rate rise could tighten her cash flow.

A common rule of thumb is to finance no more than 50 to 60 per cent of the property value through a loan. Buyers should also look past the headline price to the total cost of ownership. For a Rs 1 crore ready-to-move home, brokerage of 1 to 2 per cent, interiors of Rs 10 to 20 lakh and maintenance deposits can raise the overall cost considerably.

Madhupam Krishna, a Sebi-registered investment advisor and chief planner at WealthWisher Financial Planner and Advisors, advised verifying the title deed (a chain of 30+ years), the encumbrance certificate and all approvals such as occupancy and completion, and checking RERA registration and the builder’s track record. He suggested favouring areas with metro links, business hubs and infrastructure growth, which can see 10 to 15 per cent annual appreciation, and noted that luxury properties are often harder to sell. He also warned against overpaying in saturated markets where rental yields lag at 2 to 4 per cent, since prices rise slowly there and the premium can lock money into an asset that barely beats inflation.

Raoul Kapoor, co-CEO of Andromeda Sales and Distribution, said a 50 to 60 per cent loan on a Rs 1 crore home would be Rs 50 to 60 lakh, although lenders typically offer 80 to 90 per cent depending on the borrower. Most first-time buyers can manage only 20 to 25 per cent upfront, so a loan share of 75 to 80 per cent may be considered if the EMI stays within 40 per cent of monthly take-home income.

On an Rs 80 lakh loan at about 7.5 per cent over 20 years, the EMI is roughly Rs 64,500, which needs a minimum in-hand income of about Rs 1.6 lakh, according to Kapoor. At 8 per cent, the EMI rises to around Rs 66,800 to Rs 67,000 and the required take-home income moves closer to Rs 1.7 lakh.

New owners can claim a Section 24(b) interest deduction of up to Rs 2 lakh a year for a self-occupied home and a Section 80C principal deduction of Rs 1.5 lakh, under the old tax regime. Buyers should also plan for family goals such as education and keep an emergency fund of 6 to 12 months. Krishna advised consulting a tax expert if the down payment comes from selling mutual funds or equities.

With inflation risks in play and future rate cuts uncertain, the current pause could mark the end of the easing cycle, said Shubham Gupta, CFA and co-founder of Growthvine Capital. He said affordability should be tested at higher rates as well. If the Rs 80 lakh loan rate rises by 1 percentage point to 8.5 per cent, the EMI goes to about Rs 69,000, an extra Rs 4,500 a month. A 2 percentage point rise to 9.5 per cent takes it to nearly Rs 74,500, close to Rs 10,000 more each month and over Rs 1 lakh more a year.

Prashant Mishra, founder and CEO of Agnam Advisors, said finances should stay comfortable even if rates rise by 1 to 2 per cent, and a home purchase should not force a buyer to stop main investments or hurt long-term goals.