How Much Should You Save for a Home in India? City‑Wise Budgeting Guide

Introduction

Buying a home in India remains a significant, yet increasingly challenging financial goal especially in metro cities where property prices have surged beyond the pace of incomes. Whether you're eyeing Delhi NCR, Mumbai, Bangalore, or tier‑II cities, mapping your savings plan precisely is key.

• Average ticket size in top 7 cities hit ₹1.23 crore in H1 FY25, up 23% YoY. Delhi NCR leads at ₹1.45 crore, while MMR (Mumbai region) remains steady at ₹1.47 crore.
   
• Per square foot price trends (Q4 2024):
  
  • Delhi NCR: ₹8,105
  • Bengaluru: ₹7,536
  • Chennai: ₹7,173
  • Pune: ₹7,108
  • Kolkata and Ahmedabad remain lower.
     
• Recent price hikes:
  
  
  • Delhi NCR registering 14% annual growth, Bengaluru similar; Mumbai remains costliest at ₹8,532/sq ft.
     
  • Dwarka Expressway corridor saw prices nearly double — from ₹9,434 to ₹18,668 per sq ft between 2020–2024, with 3BHK flats rising from ₹1.8 crore to ₹2.6–4 crore.
• Affordability indicators:
  
  
  • India’s average price-to-income (P/I) ratio stands at 8.8×, surging to 15.1× in Mumbai and 12.3× in Delhi.
  • EMI-to-income ratios: Up from 46% in 2020 to 61% in 2024. In New Delhi, EMI consumes 82% of household income; in MMR and Hyderabad, about 116% and 61%, respectively.
     

 Calculating the Required Down Payment

• RBI guidelines permit banks to finance:
  
  
  • Up to 90% for homes ≤ ₹30 lakh → 10% down payment
     
  • Up to 80% for homes ₹30–75 lakh → ~20% down payment
     
  • Up to 75% for homes > ₹75 lakh → ~25% down payment
     
• Typical recommendation: Banks and financial advisors suggest 10–25% is the practical range.
   

City‑Wise Savings Targets: What You Need to Aim For

Here’s a summary table of property price ranges and corresponding down payments:

• 
  Example: For a ₹2 cr property in Bengaluru, a 20–25% down payment requires ₹40–50 lakh.
  
   
• For a ₹1.5 cr MIG DDA flat in Delhi, you’d need ₹30–37.5 lakh up front.
   

a) Define Your Goal Clearly

Use city-specific prices and your target home size. E.g., "I want ₹50 lakh for a 20% down payment in Delhi NCR."

b) Break It Down Monthly

If your goal is ₹50 lakh over 5 years:
₹50 lakh ÷ 60 months = ~₹83,000 per month.

c) Choose Where to Save

• Dedicated savings or FD accounts keep funds organized and earning interest.
   
• Explore short-term debt or liquid mutual funds for better returns without high risk.
  
   

d) Leverage Rate Cuts

RBI’s recent repo rate cut to 5.5% may reduce home loan interest to ~7.75% sweetening EMI affordability, especially in tier‑II cities.

e) Set a Higher Down Payment When Possible

A higher upfront payment lowers EMIs and total interest. Industry voices recommend 40%, especially in costly markets.

f) Keep a Safety Fund

Ensure you have 4–6 months of living expenses and loan coverage aside before committing to major home purchase savings