Owning a House: Purchasing a house is a dream for most, but banks adhere to strict guidelines before sanctioning a home loan. They typically determine your eligibility based on your monthly income. In India, all major banks permit you to spend 40–50% of your take-home salary on EMIs.

Owning a House with a 20k Salary: Possible or Myth?

For instance, if your monthly salary is ₹20,000, banks will look at your safe range of EMI as ₹8,000–10,000. For a 20-year loan period, this amounts to a loan of approximately ₹8–12 lakh, based on the interest rate (about 9%). If you combine this with some savings, e.g., ₹2–3 lakh, your total house budget will be between ₹10–15 lakh. Although this cannot possibly fetch you an apartment in metropolitan cities, you might be able to afford one in smaller towns.

If your goal is to have a ₹40–50 lakh home in a city, you must increase your monthly earnings to at least ₹60,000–80,000. That salary will allow you to handle an EMI of ₹25,000–30,000 without leaving you with nothing for expenses and savings.

Also Read: Top 5 Financial Tips to Become Wealthy Faster

So, what do you do now? Concentrate on increasing your income through job growth, side jobs, or freelancing. While doing that, aggressively save for a down payment. Note that even a 20% down payment on a ₹40 lakh property will need you to save at least ₹8 lakh. You can also look into real estate investments in Tier-2 cities, where houses with prices ranging from ₹15–25 lakh still exist.

With a salary of ₹20,000, you can’t afford to buy a house unless you compromise by opting for a smaller one in a small town. But if you can increase your earnings to ₹60,000–80,000 in the next few years, you can definitely plan for a decent city home.

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