Since the early 2000s, when the IT boom started to take off, one of the biggest beneficiaries has been the real estate sector. Many realty companies started to build big apartments and townships in and around the cities. 

See any newspaper these days, you will see a big realty company advertising their offerings in the front page itself. Scroll through any real estate portal of any big city like NCR, Mumbai, Bengaluru, Hyderabad, etc., you will see many 2BHKs and 3BHKs casually priced above Rs 1 crore. If the apartment is coming up in a prime location within the city, the price is likely to be above Rs 5 crore or even Rs 7 crore. Even then, many people are buying these expensive apartments and builders are also reporting record bookings. Weekend site visits are packed with potential buyers and sold-out signs go up within a few weeks of launch.

For anyone tracking the median Indian salary which sits nowhere close to affording a housing loan where the EMIs runs into lakhs, people buying such expensive houses is unexplainable. It puzzles a lot of middle-class people and working class people. 

How is an entire generation of buyers, many in their late 30s or early 40s, casually signing up for properties that dwarf what their parents earned in a lifetime? It is a combination of shifting income structures, smarter use of debt, family wealth transfers and a change in how Indians think about risk and property ownership. Let us explore about this phenomenon and how math works towards owning a house in a big city.

Dual Income Advantage 

A decade ago, home loan eligibility calculations were built almost entirely around a single earning member usually the husband. While the wife’s income was treated as a bonus at best.  This arrangement changed as women started to join the workforce in large numbers and in some cases did better than men. 

Today, dual-income households are not an exception but a normal thing in urban India. You can see this dual-income household having jobs in sectors like IT, finance, consulting and healthcare sectors. 

So when a bank appraises the loan eligibility on a combined household income of Rs 35-40 lakh per annum instead of Rs 18-20 lakh, the affordable loan amount doesn’t just increase by a few percent but nearly doubles. This single shift explains a large chunk of the crore-plus purchases happening in cities like Bengaluru, Pune, and Hyderabad, where dual tech-sector incomes are increasingly common among home-buying couples in their late 30s or early 40s.

Home Loans Are Being Used More Aggressively

Indian home buyers have historically been conservative and they do not like taking big ticket loans. As a debt-averse society, they prefer to pay in cash or take small loans which they could close quickly and easily. This mindset has changed dramatically among millennials and Gen Z buyers, who view long-term home loans as a financial tool rather than a burden.

A few patterns have emerged where customers are fine with taking loans to own an  expensive house. Financial institutions like banks are ready to finance 80-90% loan-to-value because they are confident that the new homebuyers are aspirational and ready to pay 10% downpayment and also have the capacity to finance the rest. 

Housing loans which have longer tenures of 20 years or 30 years sharply reduce your EMI outflow even on large loan amounts, making a Rs 1.5 crore loan feel manageable on a strong monthly income and as you and your spouse rise up the corporate ladder.

Then there is this concept of step-up EMI plans which are provided by some scheduled commercial banks to homebuyers who are highly educated and have good earning capacity. Here, the EMI starts low and increases as the buyer’s income is expected to grow in the future. 

Co-applicant loans, where both spouses (or a parent and child) apply jointly, which increases the eligible loan amount and can improve interest rate slabs.

The result is monthly EMI outflow on a Rs 1.5-2 crore flat, when spread across 20-30 years with a working couple’s combined income, often looks similar to what a single-income buyer paid for a Rs 60-70 lakh flat 8-10 years ago, while property prices have moved up far faster than the wages needed to service them proportionally.

Family Wealth Is Quietly Doing the Heavy Lifting

This is the part that rarely gets discussed openly but plays a bigger role than most people admit. A significant share of crore-plus flat purchases are not funded purely from the buyer’s own savings and salary but they are backed by the following:

• Sale of ancestral property, particularly land in smaller towns or agricultural plots that have appreciated significantly and are liquidated to fund an urban flat purchase.
• Parental contribution toward the down payment, common in Indian families where parents view supporting a child’s home purchase as part of their financial responsibility.
• Inherited wealth or gold, converted into liquid capital for a property down payment.

Because Indian culture generally treats intra-family financial support as private, these contributions rarely show up in salary-based affordability discussions but they materially change what a “young buyer” can actually afford.

Owning a House: A Status Symbol for Indians

For a large segment of Indian buyers, a crore-plus flat is not just a home, but it is a financial and social statement. Property continues to be viewed as one of the safest long-term stores of value in India, alongside gold, and owning in a “good” address carries social weight that influences buying decisions independent of pure affordability math.

This means many buyers deliberately stretch their budgets by cutting other discretionary spending, delaying other financial goals, or taking on higher debt than a strict affordability calculator would recommend — specifically to buy into a preferred project, builder, or locality.

Who Buys These Costly Houses in Tier-1 Cities

It’s important to separate national average income data from the actual buyer pool in premium micro-markets. A luxurious and premium apartment costing Rs 5 – 7 crore in a prime area of Mumbai, NCR, Gurugram, Noida, Bengaluru, Hyderabad, Chennai, etc. is not being bought by a “typical” Indian middle-income household.  It is being bought by a very niche high-income segment who are working as senior professionals, business owners, C-suite executives, and in many cases NRIs. 

When you compare crore-plus flat prices against India’s median household income, the numbers look impossible. But when you compare them against the income of the top 1-2% of urban earners which is the actual buyer pool for these specific projects, the math starts making a lot more sense.

NRI Buyers in Realty

Non-resident Indians, earning in dollars, dirhams, or pounds, have become a significant demand driver in the premium and luxury housing segment, particularly in cities like Mumbai, Pune, Hyderabad, and increasingly Tier-2 cities like Kochi and Chandigarh. With favourable currency conversion, many NRIs find crore-plus Indian properties genuinely affordable relative to real estate prices in the countries they live in  and often purchase with minimal or no loan at all, paying largely in cash from foreign savings.

This segment doesn’t need to stretch EMI eligibility the way a resident Indian buyer does, and their purchasing power quietly pushes up average transaction values in premium projects.

Cash Component in Homebuying

The real estate sector is a place where a lot of transactions are settled in cash. But after demonetisation, RERA implementation and stricter income-tax scrutiny on large cash transactions, the cash component in real estate deals has reduced substantially compared to a decade ago. 

Most transactions today, especially in organised, RERA-registered projects, are largely on-book. However, especially in resale and land deals in smaller cities, a partial cash component still exists though this is no longer the primary explanation for how most crore-plus flats are being funded.

Higher Risk Appetite

Finally, there’s a behavioural shift worth noting among millennial and Gen-Z buyers. Many young Indians who are working in urban centres and cities have reasonably stable jobs, dual incomes and rising equity or stock-option wealth from the IT and startup boom. This has given them the confidence and they are more comfortable to take large, long-tenure loans than their parents’ generation. A Rs 1.5 crore home loan doesn’t feel as intimidating to a 36-year-old dual-income couple today as a Rs 40 lakh loan felt to a single-income household in 2002, because income growth expectations, job mobility and financial literacy around leveraging debt have all changed.

Conclusion

There’s no single answer to how Indians are able to afford crore-plus houses in cities and other urban centres. It is a combination of dual incomes, attractive interest rates offered by banks, special subsidies if the first loan applicant is a woman, quiet family wealth transfers, NRI purchasing power, etc. There is also a cultural shift in how younger Indians view real estate and debt. 

For the average middle-class single-income household, these prices will remain out of reach without proper family support or any financial support from their spouse. This is why affordability gaps and “real estate FOMO” continue to be such widely discussed topics in Indian personal finance circles and there is always a debate between whether to buy a house or rent a house.

Frequently Asked Questions (FAQs)

Is it realistic for a middle-class single-income family to buy a crore-plus flat in a metro city?

It’s difficult but not impossible. Without a dual income or family financial support, a single-income buyer would typically need a very high salary, a large down payment, or would need to consider a longer loan tenure and a more affordable location within the city to make the EMI sustainable.

What percentage of a monthly income should go toward a home loan EMI?

Most financial planners and banks recommend keeping EMI outflow at or below 40% of monthly take-home income, to leave room for other expenses, savings, and financial goals.

Do banks in India consider a spouse’s income while calculating home loan eligibility?

Yes. Most banks and housing finance companies allow combined income of co-applicants, typically spouses or parent-child pairs, to be considered for loan eligibility, which significantly increases the loan amount a household can qualify for.

Are NRIs allowed to buy residential property in India?

Yes, NRIs are permitted to purchase residential and commercial property in India under FEMA regulations, though there are restrictions on purchasing agricultural land, farmhouses, and plantation property.

Has the role of cash in Indian real estate reduced?

Largely, yes. Measures like RERA, demonetisation, and increased income-tax scrutiny on high-value transactions have significantly reduced the cash component in organised real estate deals, particularly in RERA-registered residential projects, though some cash dealings may still occur in unorganised resale or land transactions.

Is it financially wise to stretch a budget to buy a home in a prime locality in your city?

This depends on individual financial goals and risk tolerance. While property in a well-located area can appreciate well and hold long-term value, over-leveraging for a home can strain other financial priorities like retirement savings, emergency funds, and children’s education. So it is important to balance aspiration with financial discipline.

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