What is the best way for a first-time buyer to set a budget to purchase a home?
Your EMI should not be more than 30-40 percent of your take-home salary. If the property markets in your city are very expensive and you cannot afford the property that you want to stay in, invest in whatever is affordable even in the periphery.
Most banks allow you to exit one loan and take another. So, you can sell off the smaller priced property in a peripheral location and use that as seed money to buy where you would like to stay. Else, you will always be behind the market in terms of finance.
For calculating the monthly home loan installment, consider your monthly family income – now and expected in the future. Family income includes yours as well as your parent's or spouse's income. Secondly, your family's current expenses, including all other loans you are servicing, are very important to be considered. Do not spend more than 50 percent of the total income on EMI.