There was a time when buying a home came after years of saving. Families would build a down payment over time, buy within their means and take a home loan that could be comfortably repaid before retirement.
Today, that journey is beginning to look very different.
Across India’s biggest cities, homebuyers are increasingly starting their housing search not by deciding what they can afford, but by asking banks how much they can borrow. The answer often determines not just the home they buy, but how much of the next 20 to 30 years of their income is already committed.
in many urban centres, homeownership is increasingly being supported by longer loan tenures, larger mortgages, dual-income households and future earnings that have not yet been made.
The result is a growing concern among economists, experts and professionals: , or with money they hope to earn over the next three decades?
One of the clearest signs of the shift can be seen in how people shop for homes today.
“A few years ago, buyers would typically choose the asset, accordingly,” says Pratyush Pandey, Founder of AARE Consulting.
“Today, a large number of buyers begin the process by asking lenders what their maximum eligible loan amount is and then searching for homes within that financing capacity.”
Pandey says this trend is particularly visible among first-time homebuyers in cities such as Mumbai, Delhi-NCR, Bengaluru and Hyderabad.
“The focus has moved from ” he says.
That distinction may sound subtle, but financial advisers say it is reshaping how Indian households approach one of the biggest financial decisions of their lives.
Abhishek Kumar, Sebi-registered investment adviser and founder of Sahaj Money, says many buyers confuse what a bank is willing to lend with what they can comfortably afford.
“The most common mistake is confusing maximum bank loan eligibility with true personal affordability,” he says.
“Buyers often look only at the basic EMI while completely ignoring maintenance costs, property taxes, registration expenses and the impact of future interest-rate hikes.”
The reason behind this shift is simple: homes are becoming harder to afford.
According to Dr Manoranjan Sharma, Chief Economist at Infomerics Ratings, sharply.
He points out that price-to-income ratios in major cities now range between 7 and 10, compared to the globally accepted affordability benchmark of below 5.
“Rising prices, together with stagnant or modest wage growth, are rather than accumulated savings,” Sharma says.
This, he argues, is changing the very nature of homeownership.
“A structural shift towards 20-30-year tenures reflects the infeasibility of standard 10-15-year loans at prevailing price-to-income ratios.”
Perhaps Sharma’s most striking observation is this:
” time rather than genuine price-income alignment.”
In other words, homes are not necessarily becoming affordable. They are simply being paid for over a much longer period.
Pandey sees the same trend on the ground.
“Many homebuyers are now compensating through higher loan-to-value ratios, longer repayment tenures extending up to 25 to 30 years, and a greater dependence on dual-income eligibility,” he says.
“The objective is often not to reduce the overall cost of ownership but to bring monthly EMIs within an acceptable range.”
India’s housing finance market has expanded to nearly Rs 37 lakh crore, according to Economic Survey estimates, reflecting the growing role credit is playing in supporting homeownership.
The consequences extend well beyond housing.
Experts say one of the biggest hidden costs of high EMIs is the pressure they place on other financial goals.
Ideally, a home loan EMI should not exceed 30% to 35% of a household’s net monthly income, says Kumar.
But increasingly, buyers are crossing that threshold.
“Many buyers are dedicating 40% to 50% or more of their monthly take-home pay to satisfy bank lending caps,” he says.
That leaves little room for anything else.
“Families frequently pause or lower their investment plans, stop scaling up their retirement corpus and fail to build a six-month emergency buffer because the house EMI consumes their entire investable surplus.”
Sharma says the trend is showing up in national savings data as well.
Financial savings have fallen from around 22.7% of GDP in 2020 to about 18.1% in 2024.
According to him, growing mortgage obligations are crowding out retirement planning, insurance and long-term wealth creation.
“Long-term financial resilience is being compromised to attain ownership,” he says.
For many buyers, the biggest risk is not today’s EMI but tomorrow’s.
As loan tenures stretch to 25 and 30 years, a growing number of borrowers are likely to carry housing debt into retirement.
That worries both economists and financial planners.
“When home loans extend into retirement, they collide with lower, often uncertain, post-retirement income streams,” Sharma says.
Servicing EMIs from pension income or retirement savings reduces money available for healthcare and everyday living expenses.
“If property prices stagnate, retirees may be left asset-rich but cash-poor.”
Kumar shares a similar concern.
“Letting a loan stretch into retirement actively drains wealth that should be funding post-work living expenses.”
The risk becomes even greater when a home purchase depends on two salaries remaining intact for decades.
“This creates an extremely fragile financial structure because it leaves absolutely zero margin for life’s disruptions,” Kumar says.
“Relying on an uninterrupted dual income for 20 to 30 years exposes a household to severe default risks during career breaks, health crises or industry layoffs.”
The problem with financial plans built around future income is that life rarely follows a straight line.
Kumar recalls a young professional couple who purchased a premium apartment in a metro city.
To make the purchase work, they allocated nearly 55% of their household income towards EMI payments.
The arrangement looked manageable on paper.
Then one spouse lost their job during a corporate restructuring.
“Within a year, the household was in severe cash crunch because they lacked a liquid emergency fund and had completely stopped their regular financial investments,” Kumar says.
It is precisely this dependence on future salary growth that worries experts.
“The current real estate trend indicates that a large segment of urban buyers is purchasing properties heavily leveraged against future, unearned income rather than accumulated wealth,” Kumar says.
“Individuals are essentially banking on decades of uninterrupted career growth and salary increments to afford their present-day lifestyle decisions.”
The affordability challenge is also changing who gets to own a home.
According to Sharma, salaried households are increasingly struggling to buy homes from current earnings alone.
He points to striking affordability metrics in some cities.
For top earners, it can take decades of income to buy a mid-sized home without leverage.
As a result, family wealth is playing a bigger role than before.
“Rising reliance on family capital, inheritances and inter-generational support for down payments is now common,” Sharma says.
He describes this as an emerging “insider-outsider housing market”.
Those with family wealth or parental support find it easier to enter the market.
Those without it often have fewer options: move farther away, buy smaller homes or take on significantly more debt.
Pandey says many buyers are already making such compromises.
“Buyers are moving further from central business districts, accepting smaller apartment sizes, delaying upgrades or committing to longer repayment periods,” he says.
Not necessarily. This is where the picture becomes more nuanced.
Luxury housing continues to see strong demand, particularly from entrepreneurs, business owners, senior professionals and high-net-worth individuals.
Industry experts point out that many luxury buyers are bringing substantial equity into transactions and are not relying solely on debt.
This suggests that while affordability pressures are becoming increasingly visible among middle-income households, not every segment of the housing market is experiencing the same level of financial stress.
But even industry stakeholders agree that access to credit alone should not define affordability.
As Pandey puts it: “Housing affordability should not be measured only by access to credit.”
“Sustainable homeownership occurs when buyers can comfortably service their loans while maintaining healthy savings, consumption and financial security.”
India’s aspiration to own a home remains as strong as ever.
Urbanisation is accelerating. Nuclear families are increasing. Demand remains healthy.
But the way that dream is being financed is changing.
Higher property prices are being matched with longer tenures. Larger loans are being supported by future salary expectations. Retirement timelines are increasingly overlapping with mortgage schedules.
The housing market may still be booming, but experts warn that a growing part of that boom is being financed by income that households have not yet earned.
As Sharma puts it, “India’s urban housing boom is being financed substantially by income households hope to earn over 20-30 years.”
That may be the defining question facing India’s homebuyers today.
Not whether they can get a home loan.
But whether they can buy a home without giving up too much of their financial future in the process.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)