Buying your first home is a big deal, and figuring out how to get a home loan can feel a bit overwhelming at first. But don't worry, you're not alone in this. Many first-time buyers have the same questions about where to start, what documents they need, and how to actually qualify for a loan. In this guide, we’ll walk you through the whole process step by step. You’ll understand what lenders are looking for, how to prepare yourself financially, and what kind of support is available to help you make that first big move. Let’s make this journey a little easier for you.
What is the First-Time Homebuyers Loan?
A first-time homebuyer’s loan is a special type of home loan created for people who are buying a house for the very first time. If you've never owned a property before, this loan can make things easier and more affordable. It often comes with benefits like a lower interest rate, reduced processing fees, smaller down payments, or longer repayment terms.
Some lenders may also offer support schemes that help you with costs like registration, stamp duty, or insurance. These loans are designed to give new buyers a smoother start by making the overall cost of buying a home more manageable. Whether you're planning to buy a flat, a bungalow, or a ready-to-move-in apartment, this type of loan can reduce the financial burden and help you take your first step into home ownership with confidence.
What Is the Eligibility Criteria for a Home Loan?
Before you apply for a home loan, it’s important to know whether you meet the basic eligibility requirements. Every bank or lender has slightly different rules, but most of them follow a similar structure. Here’s what they usually look at:
- Age: You should be at least 21 years old at the time of application. Most lenders prefer that the loan is fully repaid before you turn 65.
- Income: Whether you're salaried or self-employed, your income level needs to be stable and high enough to manage the loan repayments. Lenders usually ask for salary slips, income tax returns, or business proof.
- Employment status: Lenders want to see a steady job history. If you're salaried, they might ask for at least 2 years of work experience. If you're self-employed, they usually expect a stable business income for the past few years.
- Credit score: A good credit score (usually above 700) shows that you’re reliable with repayments. This improves your chances of approval and might also get you a better interest rate.
- Existing loans: If you already have too many loans or credit card debts, it could affect your eligibility. Lenders want to make sure you won’t be overburdened.
- Property value: The home you're planning to buy should meet the lender’s guidelines. The loan amount is usually based on the property's market value.
Meeting all these points doesn’t guarantee a loan, but it definitely improves your chances. Make sure to check your documents, track your credit score, and compare offers before finalising your decision.
Schemes and Government Subsidies for First-Time Home Buyers in India
If you're buying your first home, the Indian government has several helpful schemes to make the process easier on your wallet. These programs are meant to support individuals and families who may not have a high income but still dream of owning a house. Let’s go over the main ones you should know about.
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Pradhan Mantri Awas Yojana (PMAY)
PMAY is one of the most helpful schemes for first time home buyers. It is designed for different income groups, including Economically Weaker Sections, Low Income Groups, and Middle Income Groups. Based on your annual income, you can receive an interest subsidy on your home loan. The amount of subsidy varies. EWS gets the highest relief, followed by LIG and then MIG. You can apply online through the official PMAY website or visit designated government centres that guide you through the process.
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Credit-Linked Subsidy Scheme (CLSS)
CLSS works along with PMAY to give you further financial support. If you fall under the LIG or MIG category, you can get a home loan interest subsidy that lowers your EMI. Many banks and lending institutions participate in this scheme. All you need to do is apply through your chosen bank and they handle the process for you. When used with PMAY, the savings can be quite impressive.
Financial and Tax Benefits for First-Time Buyers
Buying a home doesn’t just give you a place to live. It also brings long-term financial benefits. Let’s look at a few ways it can help you save money over time.
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Income Tax Benefits
Under Section 80C, the principal amount you repay on your home loan qualifies for a tax deduction. This lowers your taxable income for the year. Under Section 24, the interest you pay on your home loan can also be deducted, giving you more savings. If you are a first-time homebuyer, Sections 80EE and 80EEA offer additional deductions on loan interest. These extra benefits make owning a home easier on your finances.
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GST Benefit on Affordable Housing
If you're buying a house under the affordable housing category, you pay a lower GST rate. This lowers the total cost of your property. To qualify, your home should fall within the government’s defined price and carpet area limits. This benefit is automatically applied by the builder or developer, so you don’t need to apply separately.
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Home Loan Subsidies
As mentioned earlier, both PMAY and CLSS offer interest subsidies that reduce your monthly loan payments. Over time, this can help you save a lot. These benefits are especially useful for younger families or individuals buying their first home with limited income.
Tips for First-Time Home Buyers in India
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Figure Out How Much You Can Afford
Before anything else, take a clear look at your finances. Think about your monthly income, regular expenses, and existing EMIs. Use an online loan EMI calculator to understand how much EMI you can comfortably manage. Don’t forget to factor in registration charges, stamp duty, GST, and society fees. Knowing your budget early helps you avoid unnecessary stress later.
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Start Saving as Early as Possible
A bigger down payment usually means a smaller loan, lower EMIs, and less interest in the long run. Most lenders in India ask for at least 10 to 20 percent of the property value as down payment. So the earlier you start saving, the easier it gets. You’ll also need funds for stamp duty, registration, interiors, and moving costs, so factor those in while planning.
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Polish Your Credit Score
Lenders look closely at your credit history before approving your loan. If your CIBIL score is below 750, work on improving it. Pay your credit card bills on time, clear off small debts, and avoid taking on new loans for a while. A good credit score not only improves your loan eligibility but also helps you get better interest rates.
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Research First-Time Home Buyer Assistance Programs
As mentioned earlier, there are schemes like Pradhan Mantri Awas Yojana (PMAY) that can help reduce your interest burden. Under PMAY, eligible first-time home buyers can get subsidies on the interest rate, which brings down your overall repayment. Some state governments also have their own housing schemes. Take the time to check if you qualify and how to apply.
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Know Your Home Loan Options
Different banks and NBFCs offer different types of home loans. Some offer fixed interest rates, while others offer floating rates that change over time. Some even have special loans for women borrowers or salaried professionals. Compare terms like tenure, processing fees, prepayment rules, and interest rates. Don’t just go for the one with the lowest EMI. Look at the full picture.
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Compare Mortgage Lenders
Don’t just go with the first bank that says yes. Check interest rates, processing fees, prepayment charges, and customer reviews. Look at both private and government banks, and also explore NBFCs (non-banking finance companies). Even a small difference in interest rate can make a big impact on your overall cost over the years.
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Hire a Reputable Real Estate Agent
A trustworthy agent can save you from a lot of stress, especially if you’re buying for the first time. They’ll help you understand local property rates, shortlist homes, negotiate deals, and connect you with legal experts. Always verify the agent’s background and experience. Avoid anyone who pressures you into decisions or skips over important details.
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Review Legal Aspects and Documentation
Before signing anything, get the property documents verified by a legal expert. This includes the title deed, encumbrance certificate, RERA registration, and land-use permissions. Make sure the property is not involved in any legal disputes. Legal clarity upfront saves you from massive headaches later.
Need Extra Funds After Buying Your Home?
Secured your dream home but still falling short when it comes to furniture, appliances, or everyday expenses? That’s a common situation many first-time buyers face. Once the down payment, registration, and moving costs are taken care of, there might not be much left for setting up the house the way you want.
This is where a personal loan from Freo can help. It’s a simple and fully digital way to get funds when you need them. You can borrow up to ₹5,00,000 without any collateral, and the best part is you only pay interest on the amount you actually use. Whether it’s for furnishing your home, setting up a workspace, or covering your initial utility bills, Freo gives you the flexibility to manage your money without any stress.
Closing Thoughts
Buying your first home is a big milestone, and the loan process might seem confusing at the start, but it becomes much simpler once you understand the steps. Take your time to check your eligibility, compare lenders, and make full use of the schemes and benefits available to first time buyers. With the right planning, you can move through the process with confidence and avoid common mistakes that new buyers often make. Remember that every bit of preparation you do today brings you closer to owning a home that feels truly yours. And if you need extra support during the setup phase, options like Freo are always there to make things easier.
