With the Union Budget 2026 scheduled for announcement on February 1, prospective home buyers and stakeholders in India's housing market are keenly observing how forthcoming policy announcements might shape borrowing costs and purchasing decisions in the coming months. This pre-budget period typically serves as a crucial evaluation window, helping buyers align their financial planning, loan arrangements, and market timing with anticipated economic conditions.
What Home Buyers Are Monitoring Closely
Tax Clarity and Enhanced Relief on Home Loan Interest
Tax treatment related to home ownership remains a focal point during every budget cycle. Currently, home buyers can claim up to ₹2 lakh annually as a tax deduction on interest payments for self-occupied properties. However, with property prices surging by 45–60% in numerous urban centers, this ceiling often falls short of covering actual interest burdens. The National Real Estate Development Council (NAREDCO) has proposed increasing this limit to ₹5 lakh, a revision eagerly awaited by first-time homeowners and existing buyers alike as they assess the Budget 2026 for potential adjustments.
Redefining "Affordable Housing" Thresholds
Affordability continues to challenge many potential buyers despite steady demand in select market segments. The government's current affordable housing benchmark stands at ₹45 lakh, a figure that frequently misaligns with reality in Tier-I and many Tier-II cities where even basic apartments in suburban locales exceed this price. Buyers are watching whether the budget will recalibrate this bracket, as it directly influences subsidy eligibility, applicable GST rates, and the availability of qualifying projects in desirable locations.
Extended Loan Tenures and Interest Support Mechanisms
Elevated monthly EMIs, driven by shorter loan tenures or higher interest rates, pose significant hurdles for first-time buyers. There is growing interest in loan structuring alternatives such as longer repayment periods, income-linked schemes, or temporary interest relief measures that could alleviate monthly financial outflows during early career stages. Industry proposals also advocate allowing tax deductions from the loan inception year rather than post-possession, potentially aiding buyers during construction phases.
GST Rationalization for Under-Construction Properties
Under-construction homes attract a 5% GST if priced above ₹45 lakh and 1% if below, but buyers do not receive input tax credits, leading developers to pass on input costs. This often prompts buyers to weigh under-construction options against ready-to-move properties, where GST doesn't apply but prices may be higher. Any budget initiative to streamline GST or enhance transparency regarding construction costs could significantly influence this trade-off analysis.
Stamp Duty Consistency Across States
Stamp duty and registration charges, which vary considerably across states and can substantially inflate overall home purchase expenses, are another area of buyer concern. Predictability in these charges is valued, as frequent alterations can delay decision-making. Although stamp duty falls under state jurisdiction, any indications of central coordination or standardization during the budget period tend to attract considerable attention.
Why These Factors Matter Ahead of the Budget
Home purchasing involves multiple interconnected elements, including down payment capacity, EMI affordability, tax implications, and long-term financial planning. Budget-induced changes in any of these domains can alter buyer timelines and strategies. For salaried individuals, tax provisions directly affect monthly cash flow; for self-employed buyers, loan eligibility and documentation norms often prove decisive; and for first-time purchasers, upfront costs like stamp duty, GST, and registration fees determine whether to proceed or postpone investments. The budget's stance on these issues will consequently play a pivotal role in shaping purchase decisions across India's diverse housing landscape.
During this preparatory phase, many borrowers are reviewing financing options from various lenders and banks, including entities like Kotak Home Loans, as they evaluate long-term housing finance solutions. This comprehensive assessment underscores the budget's broader impact on individual financial planning and market dynamics.
