As the Finance Minister prepares to present Budget 2026 on February 1, homebuyers are closely tracking policy signals that could influence housing affordability and access to finance. Personal finance experts say the spotlight should be on borrowing costs, tax relief, and credit availability, especially for first-time buyers navigating higher prices and tighter budgets.

Currently, homebuyers can claim a ₹2 lakh deduction on home loan interest under Section 24 of the Income Tax Act. Experts argue this ceiling no longer reflects market realities and should be raised to ₹4 to ₹6 lakh. A higher limit, they say, would ease monthly cash flows, improve loan eligibility, and make ownership more viable for first-time buyers.

"The ₹2 lakh cap has become a relic of an earlier price cycle," said Reran Robin, Principal Associate at B. Shanker Advocates. Introduced in 2014, the threshold has not kept pace with sharp increases in property values and borrowing costs, particularly in metro cities.

Echoing this view, Ritika Nayyar, Partner at Singhania & Co, said raising the limit would meaningfully reduce the effective cost of borrowing. "A higher deduction would support household cash flows, stimulate housing demand, and create positive spillovers for allied industries," she noted.

Experts also see room for targeted policy support to improve predictability for borrowers. "First-time buyers need measures such as interest subvention or EMI relief during the initial years of a loan," said Raoul Kapoor, co-CEO of Andromeda.

Industry observers add that the market's tilt toward luxury housing has widened the affordability gap for middle-income buyers. The Forum for People's Collective Efforts has proposed a subsidised interest scheme for allottees in affordable and mid-segment projects, linked to timely EMI payments and promoter compliance.

Another key demand ahead of Budget 2026 is a revision to the affordable housing price threshold. Data show that the share of homes priced under ₹50 lakh has fallen sharply, from 54% in 2018 to 21% in 2025, while affordable housing sales declined 17% year-on-year in 2025 despite stable overall volumes.

Experts suggest raising the cap to ₹75 to ₹85 lakh, especially in metros where land and construction costs have surged. "This would expand access to scheme-linked benefits and higher loan eligibility for first-time buyers, while broadening formal credit penetration without adding material risk," said Atul Monga, CEO and co-founder of BASIC Home Loans.

Granting industry or infrastructure status to real estate is another long-standing ask. Such a move could lower developers' financing costs by improving access to long-term capital. "For homebuyers, that translates into steadier prices, faster project completion, and reduced credit risk," Monga added.

Experts also point to the need to strengthen the rental housing ecosystem. While existing support for Affordable Rental Housing Complexes (ARHCs) focuses on urban migrants, many sub-₹50 lakh homes remain vacant due to weak rental yields.

"The budget could consider a 100% exemption on rental income up to ₹3 lakh for homes priced up to ₹50 lakh," said Gulam Zia, Senior Executive Director at Knight Frank India. Such a step could incentivise owners to lease homes and ease supply constraints in the most affected segments.

Homebuyers are also seeking relief on capital gains reinvestment rules. Under Section 54, exemptions on long-term gains require a new home to be completed within three years if it is under construction, often unrealistic given longer project timelines.

"Extending the completion window to five years would better align with current delivery cycles," Zia said. He also suggested relaxing timelines for purchasing a new property before selling an existing one, allowing sellers more flexibility to secure fair prices.

With affordability under pressure, homebuyers and experts see Budget 2026 as an opportunity to recalibrate tax and policy levers to today's housing market. Raising the home loan interest deduction to ₹4 to ₹6 lakh, updating affordable housing thresholds, and easing capital gains rules could together improve cash flows, expand access to credit, and restore confidence among first-time buyers, without diluting lenders' risk standards.

As housing affordability comes under increasing pressure, homebuyers and experts see Budget 2026 as a critical opportunity to recalibrate long-standing tax and policy thresholds. Raising the home loan interest deduction to ₹4 to 6 lakh, revising affordable housing caps, and easing capital gains norms could collectively improve access to credit, strengthen buyer confidence, and support first-time homeowners. While these measures may not directly lower property prices, they have the potential to meaningfully ease financial strain and align housing policy with current market realities.