Top 10 Things First-Time Home Buyers Should Know in 2025

1. Finalize Your Budget Clearly

Setting a clear budget is the cornerstone of your home-buying journey. Before you even start browsing properties, determine how much you can afford to spend on a home. Use an EMI (Equated Monthly Installment) calculator to figure out how much loan you can comfortably repay without stretching your finances. Ideally, keep your EMI within 40%-50% of your monthly income.

Additionally, don’t just think about the purchase price. Factor in extra expenses such as:

• Down Payment: Typically, banks will lend you up to 90% of the property’s value, leaving you with 10%-25% to pay upfront.

• Stamp Duty and Registration Fees: These costs can vary, but you should always budget for them, as they are mandatory.

• Home Insurance: While optional, this is strongly recommended for long-term protection.

• Renovation and Maintenance Costs: Don’t forget the costs involved in making the home your own, such as painting, repairs, and furniture.

2. Check and Improve Your CIBIL Score

Your CIBIL score plays a vital role in determining your home loan eligibility. Banks and financial institutions rely on your credit score to assess your risk level. A CIBIL score of 750 or higher is ideal for getting the best interest rates and loan terms.

However, if your score is lower than 750, don’t worry — you can still qualify for a loan. Some banks offer loans to individuals with a score as low as 650, but the interest rate might be higher. If your CIBIL score is below this threshold, take steps to improve it by clearing pending dues, reducing credit card balances, and paying off other outstanding loans before applying for a home loan.

3. Save for Down Payment and Additional Costs

Home loans typically cover 75%-90% of the property’s value. However, you will need to contribute the remaining 10%-25% as a down payment. This upfront payment is non-refundable and needs to be arranged before you can proceed with the loan process.

Aside from the down payment, there are several other costs to keep in mind, including:

• Stamp Duty: A mandatory tax paid to the state government based on the property value.

• Registration Fees: These cover the costs of registering the sale with the local authorities.

• Maintenance Charges: Some properties, especially in gated communities, require an initial deposit for maintenance services.

• Home Insurance: Consider taking home insurance for peace of mind in case of natural disasters or other unforeseen events.

4. Get Your Documents Ready in Advance

To avoid delays and frustration, ensure that you have all the necessary documents ready well before you apply for a home loan. Commonly required documents include:

• Aadhar card and PAN card

• Salary slips (usually for the last 3-6 months)

• Income Tax Returns (ITR) for the last 2-3 years

• Bank statements for the last 6 months

• Property documents (sale agreement, title deed, etc.)

• Proof of employment or business ownership

Having these documents prepared in advance can help speed up the approval process and prevent unnecessary stress.

5. Research and Compare Loan Offers

Not all home loan offers are the same. Each bank or financial institution offers different interest rates, loan terms, and processing fees. Take the time to compare different loan options to find the best deal. Here are key factors to look at:

• Interest Rates: Compare both fixed and floating rates. Fixed rates offer stability, but floating rates are often lower initially.

• Processing Fees: These can add up, so make sure to understand the costs involved.

• Prepayment Penalties: Check if the loan allows prepayment without penalties.

• Repayment Terms: Some loans allow flexibility in repayment schedules, while others may have more rigid terms.

Also, consider getting loan pre-approval from banks. This gives you a better idea of how much you can borrow and strengthens your position when negotiating with property sellers.

6. Choose the Right Location

When buying a home, the location is just as important as the property itself. Choosing the right neighborhood can impact your quality of life and property value in the long run. Consider factors such as:

• Proximity to Work/School: Is the area well-connected to your workplace or your children’s school?

• Public Amenities: Are there hospitals, markets, schools, and recreational areas nearby?

• Future Growth: Investigate whether the area is under development and if infrastructure projects (like metro lines or expressways) are planned.

In Vadodara, areas like Gotri, Manjalpur, Ajwa Road, and New Alkapuri are popular among first-time buyers due to their accessibility, development potential, and affordability.

7. Check Legal Clearances of the Property

Ensure the property you’re interested in has all the legal approvals and certifications before making a purchase. This will protect you from future legal disputes. Verify the following:

• RERA Registration: The property should be registered with the Real Estate Regulatory Authority (RERA).

• Land Ownership Documents: Ensure the land title is clear and the seller has full ownership.

• Approved Building Plans: Check that the construction has been approved by the local municipal authorities.

• Occupancy Certificate: This is important for ready-to-move homes.

Failing to verify these documents can lead to complications down the line, so make sure all the paperwork is in order.

8. Understand Home Loan Terms Properly

Before signing the loan agreement, thoroughly read the terms and conditions. Pay attention to details such as:

• Interest Rate Type: Floating rates can change over time, while fixed rates remain constant.

• EMI Start Date: Understand when your first EMI will be due.

• Prepayment Terms: Know if and when you can repay part of the loan without incurring penalties.

• Late Payment Charges: Find out what happens if you miss an EMI.

Understanding these terms ensures that there are no surprises after you sign the contract.

9. Visit Properties Personally and Inspect

While online listings and brochures can be tempting, nothing beats visiting the property in person. During your visit, check the following:

• Actual Carpet Area: Ensure the actual space matches the property’s description.

• Construction Quality: Inspect the materials used in construction to avoid unexpected repairs later.

• Amenities: Check the quality of amenities such as parking spaces, gyms, and swimming pools.

• Utility Services: Ensure that essential services like water supply and electricity are reliable.

A personal visit ensures that you won’t face disappointments later on.

10. Seek Professional Advice If Needed

Navigating the home-buying process can be complex. If you feel unsure, seek professional help. A real estate agent or home loan consultant can help you:

• Negotiate the best deal: Experts know how to get you better interest rates and terms.

• Speed up the process: A professional can help streamline paperwork and loan approval.

• Ensure a smooth transaction: They can handle the legal aspects and protect your interests.

If you’re unsure about anything, don’t hesitate to consult with professionals.