Let’s say you to want to buy a home in the next few years worth Rs 1 crore. You will need to account for:

  • Downpayment: An amount of 15 -12% or Rs 20 lakhs to make the down payment.
  • Income Tax Proof: that you earn enough to pay the monthly EMI’s on the balance loan of Rs 80 lakhs or about Rs 70k per month.

Most folks who want to buy a home earn enough to pay the monthly EMI of Rs 80 but usually don’t have Rs 20 lakhs for down payment. A SIP can help you accumulate enough money over the next 5 years to makeup the shortfall in downpayment as well.

Okay, But How Do I Go About It ?

Step 1: Assume that you have already bought a house today.

Step 2: Start a SIP in Mutual Funds for the amount that you would have paid as EMI.

Instead of paying a loan EMI of Rs 70k, you invest that money in a monthly SIP. If you continue doing this in balanced equity fund , you can have approximately:

  • Rs 36 lakhs at the end of 3 years, or
  • Rs 68 lakhs at the end of 5 years.

Now, you not only have more money for downpayment but also have some left over for interior decorations.

But wait, what about house rent of Rs 20k that I have to pay every month ?

Yes, if you are paying house rent and cannot afford to invest Rs 70k, let’s look at the alternate scenario scenario. Rs 50k can become:

  • Rs 22 lakhs at the end of 3 years, or
  • Rs 42 lakhs at the end of 5 years.

You can also do this for a lumpsum amount that you may have currently in your bank account or fixed deposit as your returns over the next 3 to 5 years will be much better compared to savings account or fixed deposit.


The earlier you start planning and saving AND investing for a house the LESSER you will need at the time of buying your house.

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