What you need to know before applying for your home loan as a first-time home buyer
1. Can you actually afford this? Start with your EMI capacity
Before you apply for a home loan, work backwards from your monthly income, not forwards from a property you like. A practical rule of thumb: your total EMI obligations should not exceed 40–50% of your monthly take-home pay. You can use financial tools like the home loan eligibility calculator and the home loan EMI calculator, both available on the Bajaj Finance website, to estimate your eligible loan amount, monthly EMI, and total interest by modelling different scenarios.
Example: Priya is a 32-year-old salaried marketing manager in Pune with a take-home income of Rs. 80,000 per month. Using the 40% rule, her maximum monthly EMI capacity is Rs. 32,000.
At an interest rate of 7.25% p.a. over 20 years, Rs. 32,000 per month supports a loan of roughly Rs. 40 lakh. If the property costs Rs. 55 lakh, she needs a down payment of at least Rs. 15 lakh plus additional funds for upfront costs.
2. What CIBIL Score do you need for a home loan?
For a home loan, a CIBIL Score of 725 or above is considered suitable. A score above 750 can strengthen your case for better pricing. A lower score doesn’t guarantee rejection, but it may result in a higher interest rate or a reduced loan amount.
Quick steps to improve your score before applying:
●Pay all credit card bills in full and on time for at least 3–6 months
●Clear any outstanding small loans or overdue balances
●Avoid multiple loan or credit card applications in a short period
●Check your credit report for errors and raise a dispute if any are found
3. The real upfront cost: it is more than the down payment
Most first-time buyers underestimate what they need in hand before the loan kicks in. Per RBI guidelines, no lender in India can finance 100% of a property’s value. You must arrange a down payment of 10–20% of the purchase price.
Illustrative cost breakdown for a Rs. 60 lakh property in a metro:
Cost component Approximate range Estimated amount
Down payment (10–20%) 10–20% of property value Rs. 6–12 lakh
Stamp duty 4–7% (varies by state) Rs. 2.4–4.2 lakh
Registration charges 0.5–1% Rs. 30,000–60,000
GST (under-construction only) 1–5% of property value Rs. 60,000–3 lakh
Legal and valuation fees Fixed costs Rs. 10,000–30,000
Interior and moving costs Varies widely Rs. 1–5 lakh
Plan to keep a buffer of 15–20% of the property price in liquid savings before you approach a lender.
4. What loan types are available for first-time buyers?
Understanding your options before you apply helps you pick the structure that suits your situation.
Loan type Best for Key detail
Fresh home loan First-time buyers Rates from 7.25% p.a. at Bajaj Finance; tenure up to 32 years
Balance transfer Existing borrowers Move your loan to a lower rate; Bajaj Finance offers rates from 7.30% p.a.
Top-up loan Existing customers Additional funds up to Rs. 1 crore with no end-use restrictions; can be used as a home renovation loan or for education fees, medical costs, or other expenses.
Fixed vs floating interest rate: the key trade-off
Feature Fixed rate Floating rate
Rate movement Stays constant through tenure Changes with RBI repo rate revisions
EMI predictability High Variable
Prepayment charges May apply Nil for individual borrowers (non-business) per RBI mandate
Best suited for Low-rate environments When rates are expected to fall
Bajaj Finance also offers externally benchmarked floating rates linked to the RBI repo rate, which means your rate adjusts when the repo rate changes – up or down.
5. Who is eligible for a home loan?
Bajaj Finance Home Loan eligibility at a glance
Parameter Criteria
Nationality Indian citizen residing in India
Age at application 23–67 years (salaried); 23–70 years (self-employed)
CIBIL Score 725 or above (recommended)
Employment type Permanent salaried employee, professional, self-employed applicants
The upper age limit is considered at the time of loan maturity, not application.
Documents required
Document category Salaried Self-employed
KYC Identity and address proof
Income proof Last 3 months’ salary slips Profit and loss statement
Business proof Not applicable Business registration documents
Bank statements Last 6 months
Adding a co-applicant with a high income and credit profile can increase the loan amount you are eligible for.
6. How to compare lenders properly
Do not compare lenders only on the headline interest rate. The effective cost of a loan includes several other charges.
What to look at when comparing
●Annual Percentage Rate (APR), which includes processing fees amortised over the tenure
●Processing fees – Bajaj Finance charges up to 4% of the loan amount plus GST
●Prepayment and foreclosure charges – nil for individual floating rate borrowers at Bajaj Finance for non-business purposes
●Bounce charges – these vary by loan amount (Rs. 500 for loans up to Rs. 30 lakh; Rs. 1,000 for Rs. 30 lakh to Rs. 1 crore)
Negotiation tip: If your CIBIL Score is above 775 and your income is stable, ask the lender directly whether the processing fee can be reduced. Many lenders accommodate this during promotional periods.
7. Tenure trade-offs: shorter vs. longer repayment
Tenure is one of the most important decisions you make when taking a home loan. Here is why:
Tenure Monthly EMI (on Rs. 40 lakh at 8.50% p.a.) Total interest paid
10 years Rs. 49,594 Rs. 19.51 lakh
20 years Rs. 34,713 Rs. 43.31 lakh
30 years Rs. 30,757 Rs. 70.72 lakh
Shorter tenure = higher EMI, but significantly lower total interest paid. Longer tenure = lower EMI, but a higher total cost over time. Choose a tenure where your EMI stays within 40–50% of your take-home income, and consider making part-prepayments when your income grows. You can plan them using the home loan repayment calculator available on the Bajaj Finance website.
At Bajaj Finance, individual floating rate borrowers can make part-prepayments with no additional charges, which makes it practical to shorten your effective tenure without refinancing.
8. Legal and property due diligence: do not skip this
Before the bank sanctions your loan, its legal team will verify the property. But you should do your own checks independently.
Key checks before you commit
●Verify the project is registered on your state’s RERA portal.
●Confirm the seller has legal ownership and there are no existing claims on the property.
●Ensure the encumbrance certificate (from the sub-registrar’s office) confirms no loans or legal dues are outstanding on the property.
●Check that the structure matches the sanctioned building plan from the local municipal authority.
●For ready-to-move properties, the Occupancy certificate (OC) confirms the building was constructed per approved plans and is fit for habitation.
Skipping these checks can lead to delayed registration, legal disputes, or the lender refusing to disburse.
9. Under-construction vs. ready-to-move: what changes?
Factor Under-construction Ready-to-move
Disbursement In tranches (construction-linked plan) Full amount at once
GST 1–5% applicable No GST
Possession risk Subject to builder delays Immediate
Pre-EMI Interest on disbursed amount until full disbursal Full EMI starts immediately
Key safeguard Verify RERA registration and builder track record Confirm OC and title
For under-construction properties, ask the builder for a clause in the agreement that specifies a penalty for delayed possession. This is your protection if the project gets delayed.
10. Insurance and contingency: plan for the unexpected
A home loan runs for 10–32 years, long enough for circumstances to change. Here are two protections worth considering:
1.Home loan protection/ term insurance: A term plan that covers your outstanding loan amount if the borrower passes away. This protects the family from having to sell the property.
2.Home insurance: Covers structural damage from fire, floods, or natural events. It is distinct from loan insurance.
Alongside insurance, keep an emergency fund equal to at least 6–12 months of your EMI amount in a liquid account. This covers periods of job loss, illness, or income disruption without putting your loan repayment at risk.
11. From application to disbursement: what the timeline looks like
Typical home loan process timeline
Stage What happens Typical duration
Pre-approval/ eligibility check Income and CIBIL assessment 1–3 days
Document submission KYC, income proof, property docs 1–5 days
Legal and technical verification Lender checks title and property value 5–10 days
Loan sanction Offer letter issued Within 48 hours* of complete documents at Bajaj Finance
Agreement signing Borrower signs loan agreement 1–2 days
Disbursement Amount transferred to seller/builder 1–3 days after agreement
How to apply for a Bajaj Finance home loan online
1.Go to the Bajaj Finance home loan page and click the ‘Apply’ button.
2.Enter your full name, mobile number, and employment type.
3.Select the type of loan you want – fresh, balance transfer, or top-up.
4.Generate and submit your OTP to verify your mobile number.
5.After OTP verification, enter your monthly income, required loan amount, and property status.
6.Enter your date of birth, PAN number, and any other details based on your occupation type.
7.Click ‘Submit’. A Bajaj Finance representative will contact you to guide you through the next steps.
Common red flags and scams to watch for
●A lender or agent guarantees approval before reviewing your documents – legitimate lenders do not do this.
●You are asked to pay a large upfront fee in cash before your application is processed.
●The builder or agent pressures you to make off-the-books payments to reduce stamp duty.
●The project has no RERA registration, or the developer has a history of incomplete projects.
●The property’s ownership history is unclear or incomplete beyond 10–15 years.
If something feels rushed or opaque, slow down. Asking a lawyer to review documents before you sign costs a fraction of what disputes cost later.
Post-loan: track your loan, consider your options, claim your deductions
Once your loan is active, track your amortisation schedule – this shows how much of each EMI goes towards interest vs. principal. In the early years, most of your EMI is interest. This is relevant for tax planning.
Under Section 80C of the Income Tax Act, you can claim a deduction of up to Rs. 1.5 lakh per year on principal repayment. Under Section 24(b), you can claim up to Rs. 2 lakh per year on interest paid for a self-occupied property. Consult a tax adviser to understand how these apply to your specific situation, particularly if you have joint applicants.
If rates fall significantly after you take your loan, a balance transfer can reduce your interest outgo. At Bajaj Finance, balance transfer customers also become eligible for a top-up loan of up to Rs. 1 crore.
Getting a home loan right starts well before the application. Check your affordability, build your CIBIL Score, understand the full upfront cost, and verify the property legally before you sign anything. If you meet the eligibility criteria, Bajaj Finance offers home loans up to Rs. 15 crore at interest rates starting from 7.25% p.a. with a repayment tenure of up to 32 years and no foreclosure charges for individual floating rate borrowers. Apply online in a few steps, and a representative will guide you from there.