With most metros becoming unaffordable for first-time homebuyers, Tier 2 cities like Nagpur, Greater Noida, and Mysuru offer a practical investment alternative.

With cities like Mumbai, Gurugram, and Bengaluru becoming increasingly unaffordable, even for high earners, it may be more practical for first-time homebuyers to continue renting in a metro while investing in property in a Tier 2 city, where they can benefit from potential capital appreciation and rental income. For those looking to buy their first home, Tier 2 cities nearby like Nagpur, Greater Noida or Mysuru may offer a better option. They may continue to stay in the city on rent, yet own a property which has the potential to appreciate in price and also earn them a rental income.

According to Deepak Mishra, Director and Head, North India, Residential Services, Colliers India, "tier 2 cities like Nagpur, Greater Noida, and Mysuru are increasingly becoming not just affordable alternatives but also compelling long-term bets for homeownership, provided you approach the investment strategically." These cities achieve a practical balance because of the government's growing emphasis on the infrastructure development of Tier 2 cities and their close proximity to important employment centers like Greater Noida to Noida, Mysuru to Bengaluru, and Nagpur to Pune.

Early planning is the solution. A monthly EMI of approximately ₹60,000 to ₹80,000 will be available to anyone with an annual income of ₹24 lakh. This provides a great deal of leverage for Tier 2 cities, where real estate costs between ₹3,500 and ₹6,500 per square foot. To maintain a healthy loan-to-value ratio, the buyer should strive for a down payment of at least 20–25% of the property's value, advises Daga. In addition to the regular EMI payments, it is advised to set aside money to lower the principle by 5% to 7% annually. According to Kumar, this will lessen the mortgage's term and the property's interest outflow.