As the countdown to the Union Budget 2026 begins, the real estate sector is buzzing with optimism. Following a year of stabilizing inflation and recent RBI repo rate cuts, the government is expected to introduce a "buyer-friendly" budget aimed at making homeownership more accessible for the middle class.

1. The Push for Section 24(b) Expansion

One of the most anticipated announcements is the revision of tax deduction limits on home loan interest. Currently capped at $₹2$ lakh, industry experts are urging the Finance Minister to increase this limit to $₹5$ lakh.

• The Benefit: This move would provide significant tax relief to taxpayers in the 30% bracket, effectively lowering the "real cost" of borrowing.

• Why Now? With property prices rising in Tier-1 cities, the existing $₹2$ lakh limit is seen as outdated and insufficient for modern loan sizes.

2. PMAY-Urban 2.0: Subsidies in Focus

The government’s flagship housing scheme, PMAY-U 2.0, is expected to get a massive budgetary allocation. This scheme targets 1 crore urban poor and middle-class families.

• Interest Subsidies: Eligible buyers can receive a 4% interest subsidy on loans up to $₹8$ lakh.

• Implementation: The subsidy is designed to be credited upfront, directly reducing the principal amount and making the monthly EMIs much lighter.

3. Redefining "Affordable Housing"

There is a strong possibility that the Budget will redefine the "Affordable Housing" criteria. Currently, houses priced up to $₹45$ lakh qualify for lower GST and better financing.

• The Proposal: Increase the cap to $₹90$ lakh in metro cities.

• Impact: This would allow a vast majority of urban apartments to qualify for the 1% GST rate instead of the standard 5%, saving homebuyers lakhs of rupees in upfront costs.

4. Direct Impact: Cheaper Home Loans

Thanks to the RBI's accommodative stance in late 2025, home loan rates have already dipped into the 7.10% – 7.50% range. If the Budget introduces additional liquidity measures for housing finance companies, we could see rates stabilize even further.

Conclusion

For those who have been waiting on the sidelines, the 2026 Budget could be the perfect entry point. The combination of lower base interest rates and potential tax sops makes this the most favorable environment for homebuyers in nearly a decade.