How To Buy A Home With A Salary Between Rs 33K To 1 Lakh - Expert Explains

Can India’s middle class still afford to buy a home in 2025? Absolutely, with the right planning and smart choices.

Rising property prices might seem daunting, but real estate is still within reach for middle-class families. Chirag Mehta, Founder of Arbour Investments, explains how saving early, using schemes like PMAY, and choosing the right locations can make homeownership a reality.

Mehta explained with a comprehensive guide that how middle-class families can successfully integrate real estate investments into their financial portfolios in 2025.

Decoding the middle-class budget

India’s middle class typically earns between Rs 4 lakh and Rs 12 lakh annually, translating to a monthly income of Rs 33,000 to Rs 1,00,000.

Financial prudence dictates that housing expenses, including loan EMIs, should not exceed 40–50% of monthly income.

This provides a comfortable property price range of Rs 30 lakh to Rs 60 lakh, assuming a balanced lifestyle and controlled financial liabilities.

Smart budgeting for property purchase

• Emergency fund- Maintain reserves for at least 6–12 months of expenses to mitigate financial stress during emergencies.
• Down payment preparation- Start saving early for the 20% down payment required for most home purchases.
• Tax optimisation- Maximize savings by leveraging home loan-related tax benefits under Sections 80C and 24(b).

Current property opportunities

    Tier 1 cities

• Mumbai: Rs 26,780/sq. ft.
• Delhi NCR: Rs 17,229/sq. ft.
• Bengaluru: Rs 9,299/sq. ft.

    Tier 2 cities

• Ahmedabad: Rs 5,738/sq. ft.
• Pune, Hyderabad, and Kochi: Entry-level properties start at Rs 25–Rs 30 lakh, ideal for middle-class buyers.

Market trends in 2024

• Price growth- Property prices increased by 6–8% YoY, with Bengaluru leading at 9% growth.
• Demand for mid-range housing- Properties priced between Rs 40–Rs 70 lakh accounted for 32% of all sales.
• Rental yields- Cities like Bengaluru and Hyderabad offer returns of 4–4.5%, making them lucrative for dual-purpose investments.

Financial planning to afford

Example: Buying a Rs 40 lakh property

1. Down payment- Rs 8 lakh (20% of property value).
   Sources: Personal savings, family assistance, or government subsidies like PMAY.
    
2. Loan and EMI- Rs 32 lakh loan at 9% interest (20 years).
   Monthly EMI: Approximately Rs 28,800, feasible for households earning Rs 60,000 or more.
    
3. Additional costs- Registration, stamp duty, and legal fees (6–8%): Rs 2–Rs 3 lakh.
    
4. Furnishing and interiors- Rs 2–Rs 5 lakh (optional).

Best Locations for Middle-Class Real Estate Investments

Emerging suburbs and tier 2 cities are most suitable for a middle-class buyer

1. Pune: Suburbs like Wagholi and Hinjewadi offer properties in the Rs 30–Rs 50 lakh range, alongside excellent rental demand.
2. Hyderabad: Fast-growing areas like Bachupally and Tellapur feature affordable housing options with high appreciation potential.
3. Greater Noida West: Flats start at Rs 25–Rs 40 lakh, supported by robust infrastructure projects.

Affordable housing hotspots

Cities like Ahmedabad, Kolkata, and Lucknow have recorded an increase in housing stock under Rs 40 lakh, driven by government initiatives and demand from middle-income groups.

How to maximise affordability and returns

Government incentives

Pradhan Mantri Awas Yojana (PMAY): Families earning up to Rs 18 lakh annually can avail of interest subsidies of up to Rs 2.67 lakh, reducing EMIs by Rs 2,000–Rs 3,000 per month.

Invest early in pre-launch projects

Builders often offer properties at 10–20% discounts during the pre-launch phase, leading to significant savings.

Opt for residential plots

Plots priced between Rs 500–Rs 2,000/sq. ft. in Tier 2 cities offer flexibility for future construction and potential appreciation.

Focus on rental income

Properties in cities like Bengaluru and Hyderabad yield monthly rentals of Rs 8,000–Rs 15,000 for mid-range homes, offsetting EMI costs significantly.

Co-investing with family or friends

Pooling resources allows buyers to enter higher-value markets or purchase larger properties with better growth potential.

Case study by expert

Mehta shared a success story of Anita and Rajesh Verma

Profile

• Combined Monthly Income: Rs 70,000.
• Property Purchased: A 2BHK apartment in Hyderabad for Rs 40 lakh in 2023.

Financial details

• Down payment: Rs 8 lakh (Rs 4 lakh from savings and Rs 4 lakh from family assistance).
• Loan: Rs 32 lakh at 9% interest over 20 years.
• Monthly EMI: Rs 28,800.

Outcome

1.    Appreciation: Property value increased by 12% in one year, reaching Rs 44.8 lakh.
2.    Rental Income: Rs 10,000/month rental offset 35% of EMI costs.

Risks and challenges

Real estate investments come with certain risks and challenges that buyers must navigate.

High initial costs, including down payments, registration fees, and taxes, can add 25–30% to the overall expense.

Interest rate fluctuations can significantly increase EMIs, putting additional strain on budgets, while infrastructure delays in emerging areas might slow property appreciation and development.

Additionally, market volatility due to economic downturns or policy changes can impact property demand and prices.

Why should real estate be in a middle-class portfolio

Real estate is a reliable path to long-term wealth creation, offering capital appreciation and rental income that often outpace inflation. It also acts as a hedge against inflation, preserving the value of money over time. Beyond financial gains, owning a home provides families with pride, stability, and security unmatched by other investments. Additionally, real estate offers tax savings, better credit scores, and diversified income through rentals. With strategic planning, leveraging government schemes, and focusing on high-growth locations, middle-class families can achieve financial growth and stability.