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Buying your first home is not just an emotional milestone—it is also one of the most important financial decisions of your life. Beyond choosing the right property, smart planning around home loans, EMIs, and tax benefits can help you save several lakhs of rupees over the loan tenure. With home loan tax benefits continuing in 2026 and interest rates remaining relatively stable, first-time buyers have a valuable opportunity to reduce their overall cost—provided they plan correctly.

Financial experts agree that understanding tax provisions, structuring ownership wisely, and choosing the right loan tenure can significantly improve long-term savings.

Home Loan Tax Benefits Continue in 2026

Under the Income Tax Act, home loan borrowers can still claim multiple deductions if they opt for the old tax regime. The most commonly used benefits include:

• Section 80C: Deduction of up to ₹1.5 lakh per year on the principal repayment of a home loan

• Section 24(b): Deduction of up to ₹2 lakh per year on interest paid for a self-occupied property

These benefits can substantially reduce taxable income, especially during the initial years of loan repayment.

Smart Ownership and Loan Structuring Matters

Experts suggest that how you structure your loan and property ownership can make a major difference. According to Adhil Shetty, CEO of BankBazaar, couples can enhance tax efficiency by opting for a joint home loan in proportion to their individual incomes.

However, it is important to note that tax benefits become available only after possession of the property. Incomplete documentation or delays in possession can postpone deductions, so ensuring paperwork accuracy is critical.

Understanding EMI Structure Is Crucial

In the early years of a home loan, a large portion of the EMI goes toward interest rather than principal. Akshay Taneja, CEO of TDI Infrastructure, highlights that the first three to five years are the most interest-heavy period of the loan.

If loan disbursement and possession happen close together, borrowers can start claiming tax benefits sooner. Poor timing, on the other hand, can delay deductions and increase effective costs.

What If You Choose the New Tax Regime?

For taxpayers opting for the new tax regime, home loan deductions are largely restricted. In such cases, the focus should shift from tax savings to interest cost reduction.

Experts recommend:

• Making a higher down payment

• Choosing a shorter loan tenure

• Making periodic prepayments to reduce interest burden

According to Vishal Raheja, MD of InvestoXpert Advisors, taxpayers should reassess their tax regime choice every year, as the most beneficial option can change with income and policy updates.

Extra Tax Relief for First-Time Homebuyers

First-time buyers may be eligible for additional tax deductions under Section 80EEA, subject to specific conditions. These include limits on property value, loan amount, and approval timelines.

As per Ashish Narayan Aggarwal, MD of PropertyPistol, loan approval must be obtained before property transfer, and all documentation must be accurate to ensure smooth access to this benefit.

Choosing the Right Loan Tenure

Loan tenure plays a key role in determining both EMI affordability and total interest paid. A longer tenure reduces monthly EMI but increases total interest outgo, while a shorter tenure raises EMI but lowers interest costs.

Experts advise starting with a tenure that ensures comfortable EMI payments and gradually reducing the loan burden through prepayments. This approach balances cash flow stability with long-term savings.

Flexible EMI Options Can Help

Borrowers with rising income levels can opt for step-up or balloon EMI plans. These options allow lower EMIs initially, followed by higher payments later, helping reduce loan tenure without straining finances early on.

Making even small annual prepayments toward principal can significantly shorten the loan period and reduce interest paid over time.

Review Your Loan and Tax Benefits Regularly

Unused tax deductions cannot be carried forward to the next year. Therefore, borrowers must review their interest certificates annually and ensure deductions are fully utilized.

Regular reviews of loan terms, repayment strategy, and tax planning are essential to stay aligned with income changes and regulatory updates.

Final Takeaway

Buying your first home can be financially rewarding if backed by informed planning. By understanding tax rules, choosing the right loan structure, and actively managing EMIs, first-time homebuyers can unlock substantial savings while building long-term wealth.

Disclaimer: This article is for informational purposes only. Readers should consult certified tax or financial advisors before making investment or loan-related decisions.