India, July 19 -- 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.

Also, in a Tier 2 city, lenders tend to be slightly more flexible on account of lower property costs. In these cities, eligibility can go...