Home loan EMI is taking up 55% of my monthly salary. Should I still buy this house?

Question

I am 32yr old and looking to buy my first home. The EMI for the loan I need will consume about 55% of my monthly in-hand pay.

My parents say I should stretch my budget now because real estate always goes up and my salary will increase eventually.

Is it financially wise to lock up this much of my income for the next 20yr just to own a home?

Mohan Gupta · Accepted Answer

If your home EMI is consuming 50% to 60% of your monthly earnings, it makes no financial sense. You are sacrificing your liquidity, your peace of mind, and your ability to invest in other wealth-building assets. Life is short, and in the grand scheme of things, we are all just renting our time here. Out of the few decades you have, you will spend 20yr just paying off a home to truly own it. Real estate goes through massive cycles. Between 2002 and 2012, real estate delivered a 15% CAGR, but from 2013 to 2025, that cooled to a 5% CAGR. You cannot control market appreciation, which is heavily dependent on micro-markets and infrastructure access. If appreciation drops to 2%, you could end up losing money in real terms while being choked by a massive EMI. If your EMI is a comfortable 10% to 20% of your income, by all means, buy the house. Real estate is deeply emotional, but you must ensure that you own the house, and not the other way around. Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.

Home loan EMI is taking up 55% of my monthly salary. Should I still buy this house?

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