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The True Cost of Owning a Home

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Created on
July 8, 2022


What’s Inside

The price of a property plays a pivotal role in determining your financial preparedness for buying a house or whether you should postpone this significant financial decision until you've accumulated sufficient funds. Often, people focus solely on the property's purchase price as the ultimate cost of homeownership.

However, this perspective can be misleading, particularly if you're considering a home loan. The true cost of owning a home encompasses various concealed expenses that go beyond your monthly mortgage payments. It's imperative to account for these costs to prevent financial strain. Additionally, these expenses can vary depending on the city and the type of property you intend to purchase. Let's illuminate the key factors involved in accurately gauging the genuine cost of homeownership.

Purchase price

This price tag is the introductory purchase price of the house you’re looking at. And it is the most obvious expense associated with buying a home. A few years later, if I ask you the price at which you purchased your dream home, this is the first number that may pop up in your head.

Like a 2BHK flat for sale in Bangalore for ₹50 lakhs. Or a 3BHK in Noida for ₹1 crore. Or even a villa for sale in Mumbai for ₹1.5 crore.

But is it truly the cost of your home? No. 

At least not, unless you pay the entire house cost upfront. 

Stamp duty and registration charges

In India, stamp duty charges are typically around 5% to 7% of the property’s market value, while the registration charges come in at 1%. So, here’s how that would go for a house with a market value of ₹50 lakhs:

  • The stamp duty charges may begin at around ₹2.5 lakhs
  • The registration charges may be around ₹50,000

That means you’ll have to pay at least ₹3 lakhs upfront - over and above the purchase price. 

The Down Payment 

For most of us, coughing up a massive amount like ₹50 lakh or above may not be practical. Here’s where a housing loan can prove to be the new best friend on the block. But you cannot avail of a loan to cover the entire cost of your house. Lenders generally require that you pay a portion of the cost of the house upfront - as a down payment.

Typically, this is around 15% to 20% of the price of the house. So, for a house costing ₹50 lakhs, your down payment would be around ₹7.5 lakhs to ₹10 lakhs. 

Your Home Loan EMIs

A home loan makes it easier to achieve your dream of home ownership. But it comes with its own cost - the big, bad interest. Home loan interest rates in India are typically 7% to 9% per year. If you're worried about all the nuances of the Indian home loan, take a tour of the 2022 home loan guide to be better informed.

Here are the interest costs associated with homeownership for a ₹50 lakh house, assuming a down payment of ₹10 lakhs, a loan of ₹40 lakhs spread over 20 years, and an affordable interest rate of 7% per annum.



The principal amount of the home loan


Interest due over 20 years


Total cost 


Yes, that is the correct number. To repay your home loan amount of ₹40 lakhs over 20 years, you must pay ₹34 lakhs as interest alone. 

The Tax Implications of Owning a House

Property tax, or house tax, is important to understand when buying a house in India. It is collected by state governments, and the amount varies depending on the state where the property is located. Even if you rent out your house, you are responsible for paying this tax as the owner. There are different methods used to calculate property tax, which vary by location.

There are three methods used to calculate property tax. The method chosen varies from one place to another.

Method of calculating property taxes


Examples of cities that use this method

Capital Value System

Here, the property tax is calculated as a percentage of the market value of the property


Unit Area Value System

Here, the property tax is calculated based on the property’s built-up area, according to the per-unit price 

Delhi, Bengaluru, Kolkata and Patna 

Annual Rental Value System 

Here, the property tax is calculated on the annual rental value of the house

Hyderabad and Chennai

Regular Maintenance And Upkeep

Buying a house is a one-time thing. But maintaining it is an everyday affair. When we talk of maintenance costs, there are two kinds you should account for - the expected and the unexpected.

Expected Maintenance Costs

Gated communities offer various amenities like parks, gyms, and play areas. The maintenance costs for these facilities are divided among homeowners and billed monthly or quarterly. The charges are typically calculated per unit, such as ₹2, ₹3, or ₹4 per sq. ft. For a ₹50 lakh home with a carpet area of 1,000 sq. ft and maintenance costs of ₹3 per sq. ft, the monthly maintenance would amount to ₹3,000.

Unexpected Maintenance Costs

Unexpected maintenance costs for a house, such as repairs, damages, and renovations, cannot be accurately predicted. However, you can estimate and set aside funds for these expenses. A general rule is to allocate around 1% to 2% of the house's cost for maintenance. For a ₹50 lakh home, you can assume an annual maintenance cost of ₹50,000.

The Cost Of Utilities And Furniture 

A fully furnished house. A modular kitchen. A comfortable sofa in the living room. All the newest appliances in town. Some quaint, charming patio furniture. And a quirky accent chair in your favourite corner. This paints quite a fine picture, right? But it also comes with its price tag. 

These expenses can be easily overlooked when buying and owning a home. The cost of interior and furnishings is subjective, ranging from ₹15 lakhs to ₹20 lakhs for some, while others may spend ₹30 lakhs or more. 

The Cost Of Home Insurance 

What’s the first rule of the homeowners’ club? Get your property insured. Despite being a country with a penchant for having their ‘own house,’ home insurance penetration in India is remarkably low, at around 1%. All the money spent on buying, building and making a house into a home becomes futile without a home insurance plan.

Some factors that determine the cost of home insurance are the amount and type of coverage, the duration of coverage, the type of construction used for your house, the value of the assets in your house and the age of your house.

Let’s Add Up All These Costs Of Owning A House




Stamp duty and registration charges



The down payment 



Loan EMIs over the course of 20 years



Property tax 

(calculated for a 1000 sq. ft. house in Bangalore, assumed to have been constructed in 2002)

₹5,000 per year - for 20 years


Expected maintenance costs 

₹3,000 a month - for 20 years


Unexpected maintenance costs

₹50,000 per year - for 20 years


Utilities and furniture



Property insurance

(calculated for a 1000 sq. ft. house in Bangalore, with a market value of ₹75 lakhs and belongings worth ₹10 lakhs)

₹5,000 per year - for 20 years



Total cost of owning a house for 20 years


Average cost of owning a house per month


So, what is the true cost of owning a 1000 sq. ft. house with a price of ₹50 lakhs - for around 20 years? Well over ₹1 crore. 


There's a lot you need to decide on before you buy a house or tap into a loan; looking into how you can best plan to buy a house should be your first step once you decide on buying one. Know that you can take all the time with your decision here because it's crucial.

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Frequently Asked Questions

1. Should you rent or buy a home?

While there isn't a one-size-fits-all answer to this, it's always good to calculate where you stand. Fi has a rent vs buy calculator that can quickly help you assess which decision would be better for you in the long term.

2. What should you consider before buying a house?

From job security debt, there are many things you should consider before buying a house. A few of these are:

  • Loan and interest rate
  • Insurance
  • Job security and predicted growth
  • Local and global market conditions

3. Is buying a house a good investment? 

Buying a house can be a good investment because it adds up to your wealth and as a personal asset. But it also depends on location, market conditions, and individual circumstances.

4. Which city has the cheapest houses in India?

The city with the cheapest houses in India can vary, but some cities are known for relatively affordable housing including Jaipur, Ahmedabad, Kolkata, Bhopal, Pune, Ghaziabad, Coimbatore, and Lucknow.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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