Loan for Home

Buying a House for the First Time

By Tata Capital
23 June 2025
5 mins read
2820

A dream home is bought with love, care, and financial investment. You put immense thought and hopes into a new property, wishing that it would give a fresh start to your life. Since financing plays a crucial role in purchasing a house, it is essential to plan with practical consideration.

The majority of the population considers a home loan for a house in India. According to the Business Standard statistics, 79% of the population prefers a home loan over a cash purchase.

If you are considering buying a house, this blog will guide you. It discusses the steps to buying a house for the first time and how to plan smartly for the future.

5 Steps to Buying a House for the First Time

If you are a first-time buyer, remember that the real estate market keeps changing. You have to implement the right strategies and consider your financial options before making an investment. Follow these steps to buy a house for the first time and build the property of your dreams.

Step 1: Finalise Your Budget

The first step of buying a house is budgeting. Evaluate your financial situation and determine the price range for a house. To ensure a smooth purchase, estimating your down payment and calculating home loan are necessary.

You can use an EMI calculator tool to check whether a property is within your budget. Add your estimated monthly expenses to it and get a fair idea of your monthly cash outflow.

Step 2: Choose the Property Carefully

Home is a long-term investment, and hurried decisions can result in regrets. That’s why, if you want to know how to buy a house, remember that the property and location matter. They should strike a balance between your requirements and budget.

Avoid choosing a home that exceeds your budget in a premium locality or one that is affordable but located in an unsuitable area. Consider areas with good road connectivity, close to basic facilities, and secure for your family.

Step 3: Explore Finance Options

The monthly mortgage payment will depend on your loan amount, type, interest rate, repayment term, and tax levied. So, it is important to find an option that suits your financial situation. The most common choice is a home loan. You can apply for a home loan from your bank or a reputable financial institution. This kind of mortgage generally requires around 20% of a down payment with a competitive housing loan rate of interest.

Other finance options are government-backed loans and adjustable-rate mortgages.

Step 4: Check Your Credit Score

A good credit or CIBIL score is crucial when applying for a home loan. Make sure that your score is over 750 so that the loan is processed smoothly. A credit score below 750 may affect loan approval and result in additional checks by the lender.

In some cases, you might have repaid the credit card due or personal loan EMI, but it still may show as outstanding. In such cases, contact your CIBIL direct officer and submit a closure letter. Apply for a loan after updating your credit score, as it can make a big difference.

Step 5: Read the Loan Agreement

Do not sign an agreement before going through it carefully. A loan agreement involves several clauses like owner equity, prepayment, default, and foreclosure. If possible, appoint an advocate to understand the terms and conditions. Since these terms have long-term implications, it is important to go through them carefully.

Since ownership can also provide tax benefits, consult your advocate to understand whether they apply in your favour.

Apply for a Home Loan for Buying a House

If you want to know how to buy your first home, you should understand the process of loan application as well. Here are the steps to follow:

Step 1: Check Eligibility

Reach out to the bank and determine whether you are eligible for the house loan. Factors like your age, employment status, monthly expenses, and income are important for the approval. Use a home loan eligibility calculator and find out whether you can get the loan.

Step 2: Submit Documents

The next step is to submit the necessary documents. Fill out the loan form and provide your personal and financial details, identity proofs, and sale or title deeds. You also have to submit the allotment letter and NOC for the new property.

Step 3: Evaluate Property

The bank appoints a surveyor to evaluate the property’s market value. The appointed person also confirms the property title before passing the loan. In case of a title deed, the bank may appoint a lawyer for legal clarity.

Step 4: Sign the Loan Document

You will receive a loan agreement format from the bank. You have to draw it up and pay the associated charges like stamp duty, loan processing fees, and loan administration charges. Read the document carefully and sign it.

Step 5: Receive the Amount

You will get the approved loan amount in your account. The bank will decide if the money will be provided in a lump sum or in instalments. Once the amount is credited, you can pay your first EMI and start building the home of your dreams.

Why Buy Your First Home Today?

Projections indicate that India’s real estate market is set to witness significant growth in the coming years, driven by increasing demand and development across segments. The major factors contributing to this increasing demand are rapid urbanisation, affordable housing solutions, and favourable government policies. This indicates that the current housing market offers favourable conditions for potential buyers and investors. Demand is expected to grow steadily due to tax benefits, gated communities, and modern amenities.

FAQs

What is the most important thing when buying a house?

Determining your financial situation is the most important thing when buying a home.

What are the key steps to take when buying a house?

The key steps when buying a home are finalising your budget, choosing the right property and location, and applying for a home loan from a trusted bank.