Saving for a Home Deposit in India

Summary

Buying a home in India typically requires a down payment of 10-20% of the property value, plus 7-10% in additional costs (stamp duty, registration, GST on under-construction property, and brokerage). For an average property price of Rs 1.25 crore in a metro city, the total upfront cash needed is Rs 25-37.5 lakh. The calculator models how long it takes to save this amount given your current monthly savings rate.

How it works

LTV and minimum down payment

RBI guidelines set maximum LTV ratios for home loans:

Additional upfront costs

Beyond the down payment, buyers must budget for:

• Stamp duty: 5-7% (varies by state; lower for women in some states)
• Registration: 1% of property value
• GST: 5% on under-construction property (1% for affordable housing), nil for ready-to-move
• Brokerage: 1-2% in some markets

Savings vehicles for the deposit

For a 2-5 year savings horizon, capital preservation matters more than high returns:

• FDs / RDs: 6.5-7.5% with quarterly compounding, no market risk
• Debt mutual funds: 7-8% but subject to slab-rate taxation
• PPF: 7.1% tax-free, but 15-year lock-in makes it unsuitable unless already mature
• Equity SIPs: Higher returns (12-14%) but volatile for short horizons

Worked example

Target property: Rs 80 lakh, Down payment: 20% = Rs 16 lakh, Additional costs: 8% = Rs 6.4 lakh, Total needed: Rs 22.4 lakh, Current savings: Rs 5 lakh

1. Amount to save: Rs 22,40,000 - Rs 5,00,000 = Rs 17,40,000
2. Vehicle: RD at 7% compounded quarterly
3. Monthly deposit: Rs 17,40,000 x (0.07/12) / ((1 + 0.07/12)^36 - 1) = Rs 44,100/month for 3 years
4. Total deposited: Rs 15,87,600
5. Interest earned: Rs 1,52,400

With a 12% equity SIP instead, the monthly contribution drops to Rs 40,800 — but with downside risk.

Key differences from other markets

• Higher upfront costs: Indian buyers face stamp duty (5-7%) plus GST on under-construction flats, making the total upfront cash requirement 25-30% of property value — well above the UK (5-10%) or US (3-20%).
• Family funding is common: Unlike Western markets where mortgage affordability is assessed on individual/couple income, Indian home purchases often involve pooled family savings and joint loans with parents, which the calculator does not model.