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First-time home buyer guide in India

By Tata Capital
01 December 2025
8 mins read
2989

Buying your first home is an exciting yet overwhelming journey. The process involves many easy and challenging steps, which require extra care, especially if you’re a first-time home buyer. You need to put in hard work, diligence, and financial commitment, while carefully weighing your options based on your current life stage and budget.

A first-time home buyer must understand the loan application process and seek guidance on legal requirements to avoid making common mistakes and incurring unnecessary expenses. There are plenty of tax benefits for first-time home buyers, and lenders also offer favorable loan terms.

This article discusses the steps to follow when buying a home for the first time and some key first-time home buyer benefits you should be aware of. But first, let’s understand who qualifies as a first-time home buyer.

Who is considered a first-time home buyer?

A first-time home buyer, as the name suggests, refers to an individual or family buying a residential property for the very first time. It includes all those individuals who have never owned an apartment or home in their name.

An individual qualifies as a first-time buyer even if their spouse owns a home or if they have jointly owned a home with their spouse. A first-time home buyer has access to various benefits. These include subsidies under government schemes, tax deductions on interest payments, and attractive loan terms from banks and financial institutions.

You are eligible to avail of a home loan with the first-time home buyer benefits if you do not currently own any residential property. There are additional conditions, such as specific income levels, property size restrictions, and location criteria, if you apply under schemes like Pradhan Mantri Awas Yojana (PMAY). Your borrower profile is strong if you have a high credit score, a stable income, and the required documents, including salary slips, income tax returns, employment certificate, etc.

Key benefits for first-time home buyers in India

In India, first-time home buyers get several benefits that make property ownership more accessible. Some of the first-time home buyer benefits include the following:

Tax benefits under Section 80C: Section 80C allows buyers to claim deductions of up to Rs. 1.5 lakh annually on the principal repayment of a home loan.
Tax incentives under Section 24(b): This section allows a deduction of up to Rs. 2 lakh on interest payments, reducing the overall tax liability.
GST relief: First-time home buyers benefit from reduced GST on under-construction homes – 1% for affordable housing and 5% for non-affordable – making property purchase more economical.
Government subsidy through PMAY: The Pradhan Mantri Awas Yojana (PMAY) offers interest subsidies of 3% to 6.5% depending on the income group, significantly reducing monthly EMIs.
Subsidized home loan interest rates: Many banks and financial institutions offer lower interest rates to first-time home buyers to improve affordability.
Reduced processing charges and fees: Lenders often extend discounts on processing fees and other charges, easing upfront costs for new buyers.

Essential advice for first-time home buyers

The following advice for first-time house buyers can make the process more efficient and enable you to make financially sound decisions.

Assess your financial condition

Before buying a home, evaluate your financial stability. A good credit score improves your chances of securing a home loan with lower interest rates. You must also have an emergency fund with savings to help you meet the expenses for 6 months. As far as the down payment is concerned, try to pay 10% to 25% of the property cost.

Choose the right financier

Don’t take the first loan offer you see. Compare lenders on interest rates, repayment flexibility, processing fees, and customer service. For instance, Tata Capital offers home loan solutions at attractive interest rates of 7.75% per annum.

Fulfill loan eligibility requirements

Your age, income, and employment stability determine your eligibility for a loan. Prepare a proper documentation checklist, including salary slips, bank statements, ID/address proof, and property papers, to avoid delays.

Calculate EMIs in advance

Calculating EMIs in advance enables you to plan your budget realistically, preventing financial stress. Tata Capital’s home loan EMI calculator allows you to estimate your monthly EMI instantly for different loan amounts, tenures, and interest rates.

Smart home buying tips for first-timers

Buying your first home is a big decision that requires careful research and planning. Do keep the following tips in mind:

Research property locations and future value

The property’s location is of the utmost importance. Your first home should be located in a neighborhood with good connectivity, solid infrastructure, and promising growth potential. Buying a property in an area where the demand for rent is high and resale is favorable can help you get better value appreciation and financial returns in the future.

Inquire about hidden costs

Some property transactions come with hidden costs, such as registration fees, stamp duty, home insurance, and maintenance charges. Cumulatively, these can add up to a significant portion of your total expense and disturb your budget. Make sure you plan for them to avoid last-minute surprises.

Decide between renting vs. buying

Before deciding on a property, evaluate the pros and cons of renting vs. buying. Renting is the right choice for first-time homeowners with a job that requires frequent shifting of places. However, buying has its own benefits of building long-term stability and equity.

Focus on legal due diligence

Legal due diligence is crucial and shouldn’t be overlooked. Verify the property title, builder approvals, encumbrance certificate, and RERA registration. A property lawyer can also provide more details to clarify the ownership status.

Government schemes & support for first-time buyers

The Indian government supports first-time homebuyers through several initiatives. The Pradhan Mantri Awas Yojana (PMAY) is one of the most popular schemes, aimed at providing “Housing for All.” Under its Credit Linked Subsidy Scheme (CLSS), eligible buyers can avail interest subsidies ranging from 3% to 6.5% on home loans, depending on the income category they belong to, including Economically Weaker Section (EWS), Lower Income Group (LIG), or Middle Income Group (MIG). This significantly lowers monthly EMIs and overall loan burden.

Another major benefit is the GST reduction on affordable housing. Currently, GST is charged at just 1% for affordable projects and 5% for others without input tax credit, reducing the upfront cost of buying a new home.

The government’s continued focus on housing infrastructure and affordability ensures that new buyers have better financial access, protection, and opportunities in India’s growing real estate market.

Common mistakes first-time buyers should avoid

A few common mistakes can turn your experience of buying your first home into a stressful one. Here’s what first-time home buyers should remember to avoid.

Overstretching your budget

Many buyers commit to expensive properties or large EMIs without considering future expenses or emergencies. Don’t have an EMI that’s more than 40% to 50% of your monthly income to maintain financial stability.

Ignoring the property’s resale value

Even if you plan to live there long-term, market potential, location, and infrastructure development should influence your decision. You can expect better appreciation and resale opportunities in a well-connected area with upcoming projects.

Skip reading the fine print

Many first-timers overlook the fine print in loan documents or sale agreements. Missing details about hidden charges, pre-payment penalties, or delayed possession clauses can lead to unexpected financial strain.

Some first-time home buyers neglect legal verification of property titles, failing to compare multiple lenders, and underestimating additional costs like registration, stamp duty, and maintenance.

How does Tata Capital help first-time home buyers?

Tata Capital is a reliable and trusted name in the lending industry. It offers various housing loans, enabling you to fulfill your desire to own a home. You can secure a loan of up to Rs. 7.5 crore* through a digital application process. The interest rate is competitive, starting from 7.75% per year. There is a provision for instant approval and quick disbursal. The process is seamless and requires minimal documentation, ensuring that your journey to homeownership is smooth without any interruptions.

With Tata Capital, you can rest assured about the loan amount and get a flexible loan tenure of up to 30 years. The processing fee and registration charges are minimal, and there are no foreclosure charges, which means you can repay your entire loan amount before the end of the scheduled tenure without paying any additional charges.

Final thoughts

The real estate sector has undergone significant changes over the years, and so have the buying trends of individuals. However, the experience of buying a home, particularly the first one, still remains special to every Indian.

Lack of financial know-how and research can make the journey of buying a home taxing and daunting. Thus, it is crucial for first-time home buyers to understand the home loan process. You must study the different loan solutions before determining which one suits your needs the best. Prepare for the application process by collecting your financial documents, including pay slips, bank statements, and tax returns. Keep every document ready that can improve your eligibility and your chances of loan approval. You can also apply with a co-applicant in case you don’t have a steady income to strengthen your borrower’s profile.

Tata Capital can make your home-buying experience smooth and easy, with its tailor-made housing finance options. Explore the offerings on Tata Capital’s instant loan app or website to secure funding for your home. Check if you qualify for a home loan using the home loan eligibility calculator and apply today!

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FAQs

Who qualifies as a first-time home buyer?

Generally, the term ‘first-time home buyer’ refers to an individual who is purchasing a residential property for the very first time and has never owned a home before. Several programs and benefits are offered to these individuals to help them enter the real estate market. These include assistance to make the down payment, government housing schemes, tax deductions, and favorable loan terms for first-time home buyers.

How to calculate eligibility?

Your income, repayment capacity, credit score, existing financial commitments, and employment stability determine the eligibility for a home loan. Lenders use your monthly net income to calculate the maximum loan amount you can borrow. Most banks and financial institutions allow you to set aside a particular percentage (roughly 40% to 50%) of your monthly salary for loan repayment. You can use home loan eligibility calculators for a better understanding of your chances of loan approval. These tools evaluate your age, salary, loan tenure, and interest rates. If you have a higher credit score and the debt is low, your eligibility improves to get you more favorable loan terms.

What are the rules for first-time home buyers?

The following rules define who is a first-time home buyer:

An individual who has never owned a home, even if their spouse has.
Someone who hasn’t had ownership in their main home in the last three years.
Someone who only owned a home jointly with a spouse.
A single parent who jointly owns a home with a joint mortgage.

The other rules regarding loan sanctions and first-time home buyer benefits depend on the lender and government housing schemes. Government-backed programs may have conditions related to the property’s maximum value, size, or the individual’s income levels. First-time buyers might also be eligible for tax benefits under Section 80EE or 80EEA of the Income Tax Act.

What should first-time home buyers know about home loans?

First-time home buyers must know that comparing interest rates, processing fees, and repayment options across lenders is crucial before finalizing a home loan solution. They must also be aware that the application requires the submission of accurate documentation. Understanding the differences between fixed and floating interest rates also helps in making informed choices. Applicants must consider hidden costs that are beyond the loan. These include stamp duty, registration, etc.

Budgeting for EMIs is also crucial for first-time home buyers as it ensures that they do not exceed 40-50% of their monthly income. They must also consider foreclosure rules, pre-payment options, and tax benefits.

Who is eligible for first-time buyers?

Individuals who have never owned a residential property are eligible to qualify as first-time buyers. In India, eligibility also depends on household income, property location, and size under schemes like Pradhan Mantri Awas Yojana (PMAY). Salaried, professional, and self-employed individuals who meet the lender’s income and credit score criteria can apply for the first-time homeowner loan and its subsequent benefits. Some programs allow you to apply jointly with a family member or spouse.

While the eligibility rules vary for different financial institutions and government initiatives, you are not eligible for any first-time buyer benefits if you already own a property in your name. Tax deductions and subsidies do not apply to you.

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