To access the old website
Click Here
Mutual Funds
Can ₹5000 a month get you your dream home? Let’s find out
Key takeaways
- Starting SIPs in Mutual Funds early can help you save a lot over time.
- The longer you invest, the more your money grows.
- You can start small and increase the amount later.
- SIPs help, but spending less and earning more also count.
‘Buying a house’ quickly finds its way onto everyone's financial bucket list once they start earning. After all, who doesn’t dream of having a place to call their own? But if you're just starting your career, especially between the ages of 18 and 25, owning a home can feel like a distant dream—something that might only become a reality much later in life.
But if you start planning now—yes, like, right now—you can totally make that down payment feel less scary. And one of the easiest ways to get started? SIPs in Mutual Funds.
Can SIPs really help you buy a house? It’s important to note that SIPs are actually a budget-friendly way to start investing in Mutual Funds. And yes, they can help you.
Why it helps to start early
Property prices in India — especially in urban areas — have been steadily rising. For example, a 2BHK flat in a mid-tier area of a metro city could easily cost ₹40–₹60 lakhs or more. Even if you plan to take a home loan in the future, building a sizable down payment early can ease your EMI burden later.
A house is usually one of the largest financial commitments you will ever make. Starting early gives you more time, and more time means you can invest small amounts while allowing compounding to work in your favour.
For example, if you plan to buy a house in 8 to 10 years, you can break the large financial goal into manageable monthly contributions through a SIP. This reduces pressure and keeps you disciplined without disrupting your lifestyle.
When you start saving in your early twenties, you can use the full advantage of time on your side. Even investing ₹5,000 to ₹10,000 per month can add up significantly over the years.
What is a SIP and how does it work?
A SIP, or Systematic Investment Plan, allows you to invest a fixed amount of money regularly in a Mutual Fund scheme. This helps you average out the cost of investment over time and build a habit of saving consistently.
SIPs that are linked to Equity Funds have the potential to deliver higher returns over the long term compared to traditional savings instruments.
Estimating how much you may need
Let’s assume you want to make a down payment of ₹15 lakhs in 10 years.
Here’s an example of how SIPs might help:
- If the expected return from your Mutual Fund investment is 12% annually (compounded), you will need to invest around ₹6,500 per month for 10 years to reach ₹15 lakhs.
- At the same 12% return (assumed), your monthly SIP needs to be about ₹11,000 for 10 years.
If you aim for a higher amount, say ₹25 lakhs, then:
This shows how starting early reduces the amount you need to set aside each month. You can use online SIP calculators to work out your numbers more precisely.
Why SIPs in MF are suitable for long-term goals like home buying
- Disciplined saving: Since SIPs deduct a fixed amount automatically, they help you save regularly without fail.
- Power of compounding: Over a longer period, your returns start generating more returns. The earlier you start, the more you benefit.
- Market volatility management: Since you invest in parts over time, SIPs reduce the risk of market timing. When markets are down, you get more units. When they go up, your investment grows.
- Flexibility: You can start with a small amount and increase it as your income grows. Some platforms also offer step-up SIPs that automatically increase your monthly contribution each year.
- No lock-in: Most SIPs in open-ended Mutual Funds don’t have a lock-in period. You can pause or stop anytime, though this may affect your long-term goal.
Can SIPs through equity mutual funds be enough?
Investing in Mutual Fund schemes via SIPs is just one part of the equation. To reach your goal, you also need to:
- Keep your expenses in check
- Avoid unnecessary loans
- Boost your income over time
Also, depending on how the real estate market moves, your home-buying cost may change. So it’s wise to keep some buffer in your plan.
Taxation on Mutual Funds
Under the new income tax structure, Mutual Fund are taxed based on holding period and type of fund:
Equity Funds:
- Gains held over 1 year are taxed at 12.5% if they exceed ₹1.2 lakh in a financial year, as Long-Term Capital Gains (LTCG)
- Gains from units sold within a year are taxed at 20%, as Short-Term Capital Gains (STCG)
Debt Funds: They have different tax rules. They are taxed as per your tax slabs irrespective of any holding period.
It’s important to be aware of the tax rules before redeeming your SIPs when you're ready to buy your house.
Final thoughts: Challenge accepted?
Buying a house starts way before you walk into a bank for a loan. It starts with a plan, and honestly, investing through SIPs in Mutual Funds can be one of the easiest ways to stick to that plan without feeling overwhelmed. Starting early with SIPs can help you gradually build the financial base you need to turn your dream home into reality.
You can explore Mutual Fund SIPs via fund houses or investment platforms registered with SEBI. Look for schemes that match your goal duration and risk comfort.
So, next time someone says homeownership is impossible, you can confidently say, “Challenge accepted.”
Disclaimer: This article is intended solely for informational purposes. The views expressed in this article are personal. Axis Bank and/or the author shall not be liable for any direct or indirect loss or liability incurred by the reader arising from reliance on the content herein. Readers are advised to consult a qualified financial advisor before making any financial decisions. Axis Bank does not endorse or guarantee the accuracy of any third-party content or links included in this article.
Table of Contents
Related Services
Learning Hub
Look through our knowledge section for helpful blogs and articles.
Copyright@ 2025 Axis Bank