How Couples Can Smartly, Realistically Plan A Home Purchase

The rosy side of buying a house, the ‘imagine us here’ moments, the colour swatches, the joy of a shared address, is easy to imagine. However, the realistic side – looking at the numbers, and asking some brutally honest questions about your finances before you decide to hunt for a home – is what makes homebuying a reality.

A home is usually the largest shared asset a couple will ever acquire, and treating it solely as a symbol of togetherness rather than a complex financial instrument could turn out to be a costly mistake. For those getting ready to make this giant leap, especially during times that celebrate shared commitment, such as Karwa Chauth, here are some practical aspects every couple should look at before deciding to buy a home.

1. The Real Money Talk: Budget and Downpayment

Every couple should start with a combined number they are truly comfortable with. This is not the number the bank says you can afford, but one you can handle comfortably, factoring in an emergency fund and regular living and lifestyle expenses.

The foundational question should be: “What’s our total affordable budget and downpayment strategy?”

This will compel you to look at your combined incomes, calculate your actual monthly mortgage-plus-insurance payment, and figure out how you will pool the initial downpayment. Will the downpayment come from joint savings, or is one partner bearing this cost? Getting this clear at the outset is important, especially if one person feels they put up more initial capital than the other.

2. Differentiating Need from Want

Once the budget is set, you may run into the Great Compromise situation, which would revolve around the area that suits you best to own a house and how big a house you want.

This is where most people have to fight the emotional urge to look at homes that are clearly outside their price range because the required size of home combined with perfect accessibility is not easy to find.

Ask each other: “What are our non-negotiable home features vs ‘nice-to have’ features?"

List your features in two columns. If the non-negotiables are eating up the maximum (say 90 per cent) of your budget, it’s a good sign you need to adjust either the budget or your expectations. The goal should be to find a home that meets 80 per cent of your needs within 100 per cent of your established budget and not vice versa.

3. Splitting Costs

Buying a house is only just the beginning of building one. The house will demand money every month for decades, not just for the principal and the interest, but for utilities, landscaping, unexpected repairs, and upgrades.

The critical question here is: “How will we split the financial responsibilities (mortgage, bills, maintenance, and so on)?”

While a 50:50 ratio sounds fair, it often may not be the case if one partner earns significantly more than the other. Many couples find a proportional split (for instance – if one earns 60 per cent of the total income, they could pay 60 per cent of the house costs) which would feel more equitable and leave both people with similar discretionary spending.

Deciding who handles the actual bill paying, like the chore of setting up payment dates, is equally important to prevent late fees and arguments.

4. The Credit Score Check

Before you approach a lender, check where you stand in the credit score parameter. A lower credit score from one partner can drastically increase the rate of interest offered to joint borrowers.

This conversation requires transparency: “What’s our joint credit score and how can we improve it together?”

Check credit reports of both for errors, and focus on resolving any outstanding debts, especially if they are dragging down one’s score. Even a half-point decrease in the interest rate can save lakhs of rupees over a 20- or 30-year loan tenure. Consider the home loan as a group project where you both strive to pay a lower monthly instalment.

5. Future-Proofing the Investment

When you buy a home, you are not just buying one for today, but also for the future.

If you know a major career change or a family expansion is likely in five years, the home needs to accommodate that reality – which includes income change (any upgrade or downgrade), planning for children, and so on.

The forward-looking question: “What’s our 5-10 year life plan for this home (career changes, family, relocation, and so on)?”

Another important question that you should explore is: If you are likely to move closer to ageing relatives and parents? Will you be able to sell this home without losing money after five years?

Basically, try not to let short-term joy blind your long-term vision.

6. The Legal Fine Print and Contingency

This might be the most difficult talk, but perhaps the most vital. It’s planning for the worst so you can enjoy the best.

The tough, necessary question is: “Who will be the primary owner(s) on the legal documents, and what is our contingency plan?”

You must decide on the legal structure of ownership – joint ownership (where the surviving spouse automatically gets the whole property) or tenancy in common (where each person’s share can be willed to someone else).

In addition, you need a plan for difficult, but realistic, scenarios: What if one person loses his/her job for a year? What happens to the house if the relationship dissolves?

It is important to understand that a smart home purchase is not only defined by the house itself, but by the level of financial planning that goes behind it. Doing all the paperwork may seem uncomfortable, but ultimately it is what saves a relationship in such decision-making for the long term.