Home Tips- If you want to buy a house, then the 10-20-80 formula will come in handy, know about this calculation

One of the biggest dreams of all of us is to have a house of our own and we work hard to fulfill this dream, but it often comes with many financial challenges. Buying a house requires spending your savings and potentially taking a home loan. In such a situation, the question arises that what is the right time to buy a house and how to buy it, let's know about it-

To simplify the decision-making process, consider the 10-20-80 formula. This guideline can help you assess whether you are financially ready to buy a house.

Understanding the 10-20-80 formula

Down payment and initial costs:

30% of the house price: Ideally, you should have about 30% of the total price of the house in cash. This amount covers both the down payment and additional costs.

20% down payment: Allocate 20% of the home price as down payment.

10% additional expenses: Use the remaining 10% for other expenses like registry fees and minor costs associated with home purchase.

80% home loan: The remaining 80% of the home price can be paid through a home loan.

Assess your home loan eligibility

Low interest rates:

Credit score: To get a home loan with favourable terms, you need to have a strong credit score.

Long-term investment:

EMI tenure: Buying a home is a long-term commitment. If you take a loan for a tenure of 30 years, you are committed to repaying it for a significant part of your life.

Calculating affordable EMIs

EMI ratio:

Budgeting: Your home loan EMI should ideally not exceed 20-25% of your monthly salary.