Allocation for the 5-7 year house goal
Pure equity over 5-7 years is risky — the Indian market can see a 20-30% drawdown that takes 18-24 months to recover. A 60/40 equity-debt mix (or an aggressive hybrid fund category) plans at roughly 10% CAGR with materially lower drawdown. For a goal you must hit on a specific calendar, this matters more than chasing the last 2% of return.
If the home purchase is more flexible (could be year 7 or year 8), you can carry a higher equity allocation; if it's tied to an external event (wedding, job relocation), derisk earlier.
Don't forget the all-in cost
The 20% down payment is the visible cost. Add stamp duty (5-7% in most states), registration (1%), broker fees (1-2%), home loan processing (~0.5%), interior fitting and furniture (5-10% of property value), and 12 months of EMI buffer. The all-in cash needed is often closer to 30% of the property value, not 20%.
Plan the SIP for the higher number. A 50-70% buffer over the visible 20% is what we'd recommend.
Tax implications at withdrawal
Equity funds attract 12.5% LTCG on gains above ₹1.25 L/year. Spreading the redemption across two financial years can preserve the LTCG exemption in both years — a useful trick when the down payment is large.
If you're claiming the home loan principal repayment under 80C, make sure your total 80C investments don't double-count. Request a callback for a goal-mapped house-down-payment plan.