Buying a home is four decisions, not one. What you can afford, what you are legally buying, how you fund it, and what you sign. Most buyers spend their effort on the first and their money on the last. This guide runs the sequence in order, with the rules that actually bind, and the law they come from.
What can you actually afford?
Start with the cash you must produce yourself. A lender funds a share of the property value, and that share falls as the loan gets larger. The RBI’s published loan-to-value ceilings tighten by loan size.
One rule inside that circular matters more than the percentages. Banks may not include stamp duty, registration and documentation charges in the cost of the property when computing loan-to-value. The RBI’s stated reason is blunt: those charges “are not realisable” and including them dilutes the margin.
So the transfer costs come out of your pocket, on top of the down payment. Budget for them separately from day one. Estimate your borrowing capacity with the home loan eligibility rules and the affordability calculator.
A caution on the numbers. The RBI loan-to-value table we could open is dated 1 July 2013 and has been amended since. Treat the shape of the rule as current and ask your lender for its live grid in writing.
What does RERA guarantee you?
The Real Estate (Regulation and Development) Act, 2016 is the buyer’s strongest tool for an under-construction property. These provisions are in the Act itself.
| Rule | What it says | Applies to | Source |
|---|---|---|---|
| Project registration | Registration is not required where the land does not exceed 500 square metres or the apartments do not exceed eight, across all phases. | Every real estate project above that threshold | RERA Act 2016, section 3(2)(a) |
| 70% in a separate account | Seventy per cent of the amounts realised from allottees must sit in a separate scheduled bank account, used only for construction and land cost. | Registered projects | RERA Act 2016, section 4(2)(l)(D) |
| Advance cap before agreement | A promoter cannot take more than ten per cent of the cost without first entering into a written agreement for sale and registering it. | All buyers | RERA Act 2016, section 13(1) |
| Defect liability | Defects reported within five years of possession must be rectified free of charge within thirty days. | All allottees | RERA Act 2016, section 14(3) |
| Carpet area | Net usable floor area, excluding external walls, service shafts, exclusive balcony and open terrace, but including internal partition walls. | All sale agreements | RERA Act 2016, section 2(k) |
Two of these change how you negotiate. If a builder asks for more than ten per cent before a registered agreement, that demand is contrary to section 13(1). And price the flat on carpet area, never on a super built-up figure, because carpet area is the term the Act defines.
What should you check before you pay anything?
Title work is where buyers lose money quietly. Do it before the token, not after.
- Confirm the RERA registration number on the state authority’s website. Read the filed completion date.
- Get the chain of title for at least the last thirty years, checked by a lawyer you appointed.
- Ask for the encumbrance certificate from the sub-registrar.
- Check the approved building plan and the occupancy or completion certificate for a ready property.
- For a resale flat, get the society’s no-dues certificate and the latest property tax receipt.
Our property legal checklist sets out the documents in detail. Do not accept a builder’s lawyer as your own.
What does the purchase actually cost?
The sticker price is not the cost. Four charges sit on top and none of them are funded by the loan.
| Item | Details |
|---|---|
| Stamp duty. | Set by your state, and it varies widely. Several states charge less when the buyer is a woman. Use the stamp duty calculator for your state. |
| Registration fee. | Also state-set, charged by the sub-registrar’s office. |
| GST. | Payable on under-construction property. A completed property with an occupancy certificate does not attract it. |
| Loan costs. | Processing fee, legal and technical valuation, and CERSAI charges. Processing fees carry 18% GST, which comparison tables usually omit. |
There is also tax to deduct. Section 194-IA of the Income-tax Act requires the buyer to deduct TDS on a property purchase above a threshold, and to file the return for it. We are not quoting the rate here, because the Income Tax Department’s site did not open for us. Confirm the current rate and threshold on the department’s portal, and read our page on TDS on a property sale.
How do you fund it without overpaying?
Compare the all-in cost, not the advertised rate. Advertised rates are floors, offered to strong applicants at low loan-to-value.
Two structural points decide more than the headline number. Banks price floating retail loans off an external benchmark, so a policy cut reaches your EMI within a reset cycle. Housing finance companies price off an internal reference rate, and cuts reach borrowers more slowly.
The second is loan protection insurance. Lenders often bundle it at sanction and present it as compulsory. It is not. A plain term policy for the same cover usually costs far less, and it does not sit inside the loan accruing interest for twenty years. Compare lenders on our best home loans page.
What happens at registration?
Registration is the moment ownership transfers on record. Both parties attend the sub-registrar’s office with witnesses and identity documents. Stamp duty must already be paid.
Read the sale deed line by line before that day. Check the carpet area, the parking allocation, the payment schedule and the possession date. Once registered, changing it is a fresh document and fresh duty. The step-by-step sequence is in our guide to property registration.
Frequently asked questions
Should I buy an under-construction or a ready property?
Ready property removes delivery risk and attracts no GST once the occupancy certificate is issued. Under-construction is usually cheaper and lets you pay in stages. If you rent while you wait, count that rent as part of the cost.
Is RERA registration compulsory for every project?
No. Section 3(2)(a) exempts a project where the land does not exceed 500 square metres or the apartments do not exceed eight, across all phases. State governments may lower that threshold. An exempt project simply means fewer protections for you.
How much down payment do I need?
Plan for the lender’s margin plus all transfer costs. Loan-to-value ceilings tighten as the loan grows, and stamp duty and registration cannot be added to the property cost for that calculation. Ask your lender for its current grid in writing.
Can the builder change the carpet area after booking?
Carpet area is defined in section 2(k) of the Act and stated in the registered agreement for sale. A change to it is a change to what you bought. Raise it with the promoter in writing, then with the state RERA authority.
What if possession is delayed?
The agreement for sale carries the committed date, and the Act provides remedies for delay. Keep every payment receipt and every written communication. Complaints are filed with the state RERA authority, not the civil court, in the first instance.
Sources
- The Real Estate (Regulation and Development) Act, 2016, Act 16 of 2016, as published by UP RERA. Sections 2(k), 3(2)(a), 4(2)(l)(D), 13(1) and 14(3) read directly from the text.
- Reserve Bank of India, Loan to Value (LTV) Ratio, dated 1 July 2013, for the loan-to-value structure and the exclusion of stamp duty and registration charges from property cost. Amended since; confirm current figures with your lender.
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