Planning to buy a ₹2 crore home? A large down payment can ease your EMI burden and reduce financial stress
While a ₹2 crore home may seem like a stretch, but it's achievable for dual-income families in high-paying sectors with smart planning and financial discipline
We often come across headlines highlighting the booming demand in the luxury real estate segment, with properties worth crores flying off the shelves. While many of these homes are being snapped up by business owners and startup founders, it raises a broader question: Who else is buying such expensive properties? And if you're drawing a healthy salary, how expensive a home can you realistically afford? Probably not a ₹10 crore apartment, but what about something more modest, like a flat worth ₹2 crore?
Take, for instance, Bengaluru-based IT professionals Raktim Mitra and Rupsa Mitra, both in their 40s. The couple recently purchased a home worth nearly ₹2 crore. With a combined annual income of ₹75 lakh, they fall in the upper-income bracket, yet their purchase was carefully calculated.
How much salary do you need to buy a ₹2 crore apartment?
Let’s break it down. Assuming you want to purchase an apartment worth ₹2 crore through a loan. For a house of ₹2 crore, with a loan and down payment ratio of 80:20 and a loan tenure of 20 years, EMI would be around ₹1.4 lakh a month. and the loan amount will be ₹1.6 crore. This is when the lender charges 8.5% on the loan.
Based on the widely accepted rule that EMIs should not exceed 40–45% of your monthly income, you’d need to earn at least ₹3–3.5 lakh per month (or ₹36–42 lakh annually) to comfortably service such a loan, provided you have minimal other liabilities.
So, while a ₹2 crore home may seem like a stretch, it is within reach for dual-income families in high-paying sectors like tech, especially when prudent planning and financial discipline are in place.
Unlock more with a high salary and savings
“As recommended, the maximum EMI-to-income ratio is 40% of monthly net income. This means ₹3,46,798 or say ₹3.5 lakh monthly or a CTC of around ₹42 lakh. To make room for other and incidental expenses, the annual salary must be around ₹45-50 lakh (approximately),” says Madhupam Krishna, Securities and Exchange Board of India (Sebi)-registered investment advisor (RIA) and chief planner, WealthWisher Financial Planner and Advisors.
Now, coming back to the down payment of ₹40 lakh plus 10% of fees, the actual required upfront is ₹50–55 lakh. So, if you are on similar financial levels and save 25% of your annual salary, you need seven to eight years of savings.
This means that you can buy an expensive home if your salary is high enough. Or you can buy a home, if you pay a sizable down payment to bring your EMI down. In the above case, if you made a down payment of ₹1 crore, your EMI would be within ₹1 lakh, and you would have qualified for it even with a lower salary.
“Most lenders offer up to 80% of the property value as a loan. However, having a sizable upfront corpus helps. A larger down payment not only reduces the EMI burden but also improves your loan eligibility and approval chances,” says Sunil Dewali, co- CEO of Andromeda Sales and Distribution, parent company of Andromeda Realty Advisors.
What will a bank consider before giving you a ₹1.6 crore loan
When assessing a home loan application, lenders typically evaluate three key factors: your credit score, your repayment capacity, and the quality of the property being mortgaged.
1. Credit score
Your credit score, issued by agencies like CIBIL, Experian, or Equifax, reflects how you've managed debt in the past. It takes into account your repayment history, any loan defaults, outstanding credit card dues, and overall credit behaviour.
The score is typically 700+. If you have 750+, you may expect better terms.
2. Repayment capacity
Income stability is key to home loan approval. For salaried individuals, bank checks, salary slips, Form 16, and bank statements for the last six to 12 months. For self-employed individuals, banks verify ITR, business turnover, balance sheets, and bank statements for two to three years. Banks also look at employer reputation, job stability, and industry,” says Krishna.
Banks also assess your current debt-to-income ratio. If you already have EMIs (car loan, personal loan), it may reduce your home loan eligibility.
3. Quality of property being mortgaged
Banks also carry out technical and legal due diligence on the property before approving a home loan. This process includes assessing the market value of the property, ensuring the title is clear, with no legal disputes, checking the track record of the developer and verifying RERA registration for under-construction projects. The process also includes verifying approved building plans and, in the case of ready-to-move-in properties, the occupancy or completion certificate.
Also Read: Can you afford that 3,000 sq ft apartment after retirement? Think before you invest
These checks help ensure that the property is legally sound and worth the investment being financed.
For a larger loan amount, the bank may ask for a guarantor or a co-applicant.
Do not put yourself in the stress zone
If your home loan EMI exceeds 40–45% of your take-home pay, you’re entering the ‘stress zone’, and this may affect your ability to save and spend on other essentials.
One must use the 50-30-20 rule. Allocate 50% of income for needs such as EMIs, premiums, essentials, 30% for lifestyle expenses, travel and rest 20% savings for life goals.
“When you take out a large loan, it can disrupt this ratio,” says Krishna. “The key is to ensure that your EMI doesn't exceed 40% of your monthly income. While you might manage for the first year or two by adjusting expenses, it's not sustainable in the long run. That’s why it's important to pause and assess before committing to a high-value loan.”
Anagh Pal is a personal finance expert who writes on real estate, tax, insurance, mutual funds and other topics
