Advantages and Disadvantages for First Time Home Buyers:

Advantages and Disadvantages for First Time Home Buyers:

Buying a home is an important decision and its advantages and disadvantages depend on the financial condition of the individual, family requirements, local market conditions and various other factors.


  • Buying a home gives you stability.
  • Having your own home will make you feel like you have your own personal space.
  • Buying a home can be a good investment, especially if you do not plan to sell your home.
  • The price of the house may increase and you may get profit.
  • By purchasing a home, you do not need a rented residence, which relieves you of daily living costs.
  • Buying a home gives you freedom as you can make changes to your home as per your choice.


  • The process of buying a home recommends a large investment, in which you may have to pay various transactions such as taxes, insurance, inspections, etc.
  • Becoming a home owner may come with both personal and professional challenges, such as home maintenance, layout improvements, permission for new purposes, etc.
  • Due to decline in home prices or lack of economic performance, there may be a risk of loss.
  • Due to large investments, it is important for you to take care of your financial position as per the estimated income and expenditure.

Keeping these elements in mind, a person should take the decision of buying a house by arbitrarily considering his financial situation, availability of options, and future planning.

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Who is Considered a First-Time Homebuyer?

In various contexts, a “first-time homebuyer” typically refers to someone who has not owned a principal residence within the past three years. This definition may vary slightly depending on the specific programs or incentives being offered, such as those provided by government agencies or financial institutions.

It’s important to note that the definition can differ based on location and the criteria set forth by the organization offering benefits to first-time homebuyers. Therefore, individuals should always check the specific eligibility requirements for any programs they are considering.

Benefits for First-Time Homebuyers

First-time homebuyers often enjoy several benefits, which can vary depending on their location, financial circumstances, and the specific programs available to them.

Down Payment Assistance:

Many governments, local authorities, and financial institutions offer programs to help first-time homebuyers with their down payment. This assistance can come in the form of grants, low-interest loans, or forgivable loans.

Lower Interest Rates:

Some lenders offer special mortgage programs with lower interest rates or discounted fees specifically designed for first-time homebuyers. These programs can result in significant savings over the life of the loan.

Tax Credits and Deductions:

First-time homebuyers may be eligible for various tax credits and deductions, such as the First-Time Homebuyer Credit (if available), mortgage interest deduction, and property tax deduction. These tax benefits can help reduce the overall cost of homeownership.

Government Programs:

Governments may offer specific programs aimed at assisting first-time homebuyers, such as FHA loans, VA loans (for eligible military personnel and veterans), USDA loans (for rural homebuyers), and other state or local assistance programs.

Homebuyer Education and Counseling:

Many programs require or provide access to homebuyer education courses and counseling services. These resources can help first-time homebuyers navigate the complexities of the homebuying process, improve their financial literacy, and make informed decisions.

Access to Affordable Housing Programs:

Some first-time homebuyers may qualify for affordable housing programs that offer subsidized or income-restricted housing options. These programs aim to make homeownership more accessible to low- and moderate-income individuals and families.

It’s important for first-time homebuyers to research and explore all available options, including government programs, lender incentives, and homeownership education resources, to maximize the benefits and support available to them.

Below is a comparison of the basic difference between the two sections:

Particulars Section 80 EE Section 80 EEA
Maximum deduction limit Rs. 50,000 (on the interest component of the loan EMIs paid in a year) Rs. 1.5 lakh (only on the interest portion of the EMIs paid annually)
Applicable to Home Loans availed in FY 2016-17 House loans secured between 2020 to 2022
Other conditions
  • Only first-time owners qualify for the provision benefits
  • The value of the property must not be over Rs. 50 lakh
  • The loan amount must not exceed Rs. 35 lakh
  • Applies to first-time owners only
  • The carpet area of the property should be within 60 sq. m. (645 sq. ft.) for metro cities and 90 sq. m. (968 sq. ft.) in case of other towns and cities
  • The stamp duty paid on the house should be below Rs. 45 lakh


Tax Concession for Non-Receipt of House Rent Allowance (HRA)

Individuals who buy a house for the first time can secure rebates under Section 80 GG if they are not entitled to HRA from their employers. This provides relief on expenses exceeding 10% of total income towards their rent payment.

Deduction on GST

A 12% subsidy, previously levied on houses acquired under the Pradhan Mantri Awas Yojana, has been reduced to 8% since 2018. This means that first-time homeowners with average earnings of Rs. 18 lakh can enjoy benefits up to Rs. 2.7 lakh instead of the earlier sum of Rs. 2.5 lakh.

Pradhan Mantri Awas Yojana (PMAY) 

First-time home buyers belonging to the Economically Weaker Sections (EWS), Lower Income Groups (LIG) and Middle-Income Groups (MIG) can claim the following tax concessions on Home Loans under PMAY:

Income Group Limit of Loan Grant Income Eligibility Subsidy on Interest
EWS Up to Rs. 6 lakh Earnings below Rs. 3 lakh per annum 6.5% on interest
LIG Up to Rs. 9 lakh Annual income under Rs. 6 lakh 4% on interest
MIG Up to Rs. 12 lakh Annual salary less than Rs. 12 lakh 3% on interest

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