Top Reasons to Buy a Home
Buying a home in India now makes sense: home loan rates are near multi-year lows, PMAY-Urban 2.0 offers interest subsidies, and RERA protects buyers. Falling borrowing costs and EMI tax breaks lower your real cost of ownership, while RERA keeps builders accountable. Here are the top reasons to buy a home right now, from cheaper loans to tax savings.
- Home Loan Interest Rates Have FallenHome loan rates are no longer driven by the marginal cost of fund based lending rate (MCLR) alone: since October 2019, the Reserve Bank of India has required banks to link new floating-rate home loans to an external benchmark, usually its own repo rate. With the repo rate at 5.25% p.a. as of the RBI Monetary Policy Committee's August 2026 review, home loan rates are near multi-year lows: State Bank of India's home loan rate starts at 7.25% p.a. (effective 1 April 2026), and Bank of Baroda's repo-linked rate ranges from 7.20% p.a. to 8.95% p.a., based on a Baroda Repo Linked Lending Rate of 7.90% p.a. (effective 6 December 2025). Because home loan rates now move in step with the RBI's repo rate, they can rise or fall with each Monetary Policy Committee review rather than follow a one-way trend. Locking in a home loan while the benchmark is near a multi-year low still works in a buyer's favour, since a lower benchmark today means a lower starting EMI, even though rates may move either way in future review cycles.
- The Implementation of Pradhan Mantri Awas YojanaPradhan Mantri Awas Yojana (PMAY) is an affordable housing scheme launched by the Government of India. As per this scheme, affordable housing will be provided to the urban poor of the country, belonging to the Economically Weaker Sections (EWS), Lower Income Groups (LIG) and Middle Income Groups (MIG). As per the various components of the initiative, applicants fulfilling the required criteria are eligible for grants and subsidies from the Central Government. The original Credit Linked Subsidy Scheme (CLSS), which offered a subsidy on home loan interest of up to Rs.2.67 lakh, closed to new sanctions on 31 March 2022. It has been succeeded by the Interest Subsidy Scheme (ISS) under Pradhan Mantri Awas Yojana-Urban 2.0, which gives eligible EWS, LIG and MIG applicants an interest subsidy on a home loan for a limited principal amount and tenure, credited directly into the borrower's loan account.
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- The Real Estate (Regulation and Development) Act, 2016Up until the moment this Act was implemented throughout the country, prospective homebuyers were at the mercy of builders and developers. Many of them were exploited and had to go through various troubles like hidden charges, delay in the housing projects, et cetera, before finally getting their dream house.With no proper mechanism for grievance redressal in place, customers in the sector were growing increasingly frustrated. In addition to this, real estate sector is one of the largest contributors to the Indian economy, but it lacked organisation and proper control. The implementation of the Real Estate Act of 2016 solves that very problem, along with bringing a great deal of transparency in the realty market.As per the Act, a Real Estate Regulatory Authority (RERA) has been established in all the states and Union Territories, whose sole function is to deal with matters pertaining to real estate in that region. It is now mandatory for buyers and developers to register their current and future projects and disclose all the important details like layout, plan, et cetera. Non-compliance with the same will result in strict penalties.Furthermore, RERA also stands to serve as a mediator to settle disputes between builders and buyers. In case the buyers are dissatisfied with the developers, they can approach RERA, lodge a complaint and hold the builders liable for their incompetence. An appellate tribunal will also be established in each state whose job is to consider the appeals against the rulings of the state RERA.Needless to mention, the idea behind RERA is to protect the interest of homebuyers and ensure that they can go about purchasing a home confidently. The Ministry of Housing and Urban Affairs launched a Unified RERA Portal on 4 September 2025, giving homebuyers a single national window to check a project's registration and compliance status across state RERA authorities.
- Tax Benefits that come with Home LoanOne of the best things about taking a home loan (apart from paying for your dream house) is that the part of the EMI you pay can be claimed as tax deductions.As you know, an EMI has two components - principal and interest. The sum paid towards the repayment of principal amount of the home loan is eligible for tax deduction, as per the Section 80C of the Income Tax Act, 1961 and the maximum amount that can be claimed is Rs.1,50,000. Similarly, the Section 24 of the Act speaks about the tax benefit on the interest component of the home loan EMI. The maximum tax deduction for the same is Rs.2 lakh. These deductions under Section 80C and Section 24 apply only if you opt for the old tax regime when filing your return; the default new tax regime does not allow them for a self-occupied property. Apart from this, stamp duty and registration fees are also eligible for tax deductions. Section 80EE, however, only ever applied to home loans sanctioned between 1 April 2016 and 31 March 2017, and that window is now closed. The newer Section 80EEA, which offered up to Rs.1,50,000 on home loans for affordable housing, is also closed, as it covered only loans sanctioned between 1 April 2019 and 31 March 2022; neither deduction is available on a home loan taken today, and both applied only under the old tax regime.
- The Sense of SecurityPaying your home loan EMI every month may seem like a financial burden, but it is a commitment that is definitely worth fulfilling. After all the troubles and sacrifices that you go through, you finally get to have a place you can truly call home. It is a tangible asset whose value will only increase over time. You can also take a loan against your property, in case you need access to cash. In fact, no other investment is likely to give you higher returns that come with owning a property. That's why investing in property is a notion that you should consider in your lifetime. It will require a great deal of financial planning. Presently, the interest rates are low and the consumer interest is protected owing to RERA. If you happen to find yourself in a position to afford a home loan, then now is a good time to act on it.
FAQs on Top Reasons to buy a Home
1.What are the main reasons to buy a home in India right now?
The top reasons to buy a home in India today include historically low home loan interest rates, government-backed subsidies such as PMAY, buyer protections under RERA, and tax deductions on your home loan EMI. Together, these factors can lower both the cost of the loan and the risk of the purchase. Reviewing all four before you decide helps you buy a home with more confidence.
2.Why do home loan interest rates matter when deciding to buy a home?
Home loan interest rates directly decide your monthly EMI and the total interest you pay over the loan tenure, so a lower rate makes buying a home more affordable. Because rates move with the lender's benchmark, comparing current rates across banks before you buy a home can meaningfully reduce your borrowing cost. This is one of the strongest reasons to buy a home when rates are favourable.
3. What benchmark do banks use to set home loan interest rates today?
Since October 2019, Indian banks have had to link new floating-rate home loans to an external benchmark, usually the RBI's repo rate, rather than an internal lending rate. This means your home loan rate can move whenever the RBI reviews the repo rate. Knowing this helps you time your decision to buy a home in India.
4.Do home loan interest rates only go down?
No, home loan interest rates linked to an external benchmark such as the repo rate can rise as well as fall, depending on the RBI's monetary policy stance. Locking in a home loan while the benchmark is low still works in a buyer's favour, since it lowers your starting EMI when you buy a home. Rates in later review cycles may move either way.
5.What is the Pradhan Mantri Awas Yojana (PMAY)?
The Pradhan Mantri Awas Yojana (PMAY) is the Government of India's affordable housing scheme aimed at helping the urban poor buy a home. It covers the Economically Weaker Sections (EWS), Lower Income Groups (LIG) and Middle Income Groups (MIG) through different components. PMAY is one of the strongest reasons to buy a home if you fall within its eligibility criteria.
6.Who is eligible for PMAY benefits when buying a home?
Eligibility for PMAY depends on your annual household income category, whether EWS, LIG or MIG, along with conditions on property size and whether you or your family already own a home. Meeting these criteria can make it easier to buy a home with government support. The exact income and property limits are set by the scheme guidelines and should be checked on the official PMAY portal.
7.Is the PMAY interest subsidy still available for a new home loan?
The current phase, PMAY-Urban 2.0, runs an Interest Subsidy Scheme for eligible EWS, LIG and MIG borrowers who buy a home with a fresh home loan. The subsidy amount, income limits and loan caps are defined by the scheme and are subject to change, so check the current terms before you apply. The earlier Credit Linked Subsidy Scheme component has since closed to new applicants.
8.What is RERA and why does it matter when you buy a home?
RERA, the Real Estate (Regulation and Development) Act, 2016, is the law that regulates how builders and developers sell property to homebuyers in India. It requires developers to register projects with a state Real Estate Regulatory Authority and disclose key project details before you buy a home. This brings transparency and accountability to a purchase that once left buyers with little recourse.
9.How does RERA protect you when you buy a home from a builder?
RERA requires developers to register their projects, disclose accurate details such as layout and timelines, and follow the promised delivery schedule when you buy a home from them. If a builder fails to meet these obligations, RERA gives buyers a formal channel to raise the issue with the state authority. This reduces the risk of delays and hidden charges that affected buyers before the Act.
10.Can you file a complaint against a builder under RERA?
Yes, if you buy a home and the developer does not meet its RERA obligations, you can lodge a complaint with the state Real Estate Regulatory Authority responsible for that project. An appellate tribunal in each state also hears appeals against the authority's rulings. This grievance mechanism is one of the reasons RERA has made buying a home safer.
11.What tax benefits can you claim when you buy a home with a loan?
When you buy a home with a loan, the principal portion of your EMI can qualify for a deduction under Section 80C, and the interest portion can qualify separately under Section 24 of the Income Tax Act. Stamp duty and registration charges paid on the purchase can also be claimed within the same Section 80C limit. The exact limits that apply are listed in the section above.
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