How banks work out your eligibility
- Affordable EMI = take-home pay × FOIR (often 40–60%) − EMIs you already pay. Add a co-applicant's income if you have one.
- Tenure = the tenure you want, but no longer than the years left until about age 60 (or the age your bank uses), and at most 30 years.
- Loan from income = the amount whose EMI equals the affordable EMI, at the bank's rate and that tenure.
- Loan from the property = RBI's loan-to-value limit: 90% of the property value up to ₹30 lakh, 80% up to ₹75 lakh, 75% above. Your eligible loan is the lower of the two.
Worked example
₹1 lakh take-home pay, age 30, 8.5% for 20 years, banks allowing 50% of income for EMIs:
| No other loans | ₹57,61,000 |
| With a ₹15,000 car loan EMI | ₹40,33,000 |
| Adding a co-applicant earning ₹50,000 | ₹86,42,000 |
| EMI on the loan with no other loans | ₹49,995 |
The ₹15,000 car EMI cuts eligibility by about ₹17,28,000. Closing it before applying, or adding a co-applicant, changes what you can buy.
How to improve your eligibility
- Close or prepay small loans and clear credit card dues before applying.
- Add an earning co-applicant, such as a spouse or parent.
- Choose a longer tenure if your age allows; you can still prepay later.
- Keep your credit score healthy: pay every EMI and card bill on time.
- Show all regular income, such as rent or stable variable pay, with documents.
Assumptions
- Banks set their own FOIR, age and income rules; this is an estimate using common values you can change.
- Your credit score, job stability and the property's legal checks also affect the final offer.
- The down payment excludes stamp duty, registration and other costs. See the full cost of the loan with the home loan EMI calculator.
Frequently asked questions
How much home loan can I get on my salary?
Banks first work out how much EMI you can afford: usually 40% to 60% of your take-home pay, minus EMIs you already pay. The loan you can get is the amount whose EMI fits that limit at the bank's rate and your tenure. As a rough guide, on ₹1 lakh take-home at 8.5% for 20 years with no other loans, that is about ₹57.6 lakh.
What is FOIR?
FOIR (fixed obligation to income ratio) is the share of your monthly income that goes to all EMIs together, including the new home loan. Many banks cap it around 40% to 60%, allowing a higher share for higher incomes. Lowering your existing EMIs is the quickest way to improve it.
Do my existing EMIs reduce my eligibility?
Yes, directly. Every rupee of EMI you already pay is a rupee less available for the home loan EMI. At 8.5% over 20 years, each ₹1,000 of existing EMI cuts your eligibility by about ₹1.15 lakh. Closing a small car or personal loan before applying can make a big difference.
Does adding a co-applicant increase eligibility?
Yes. Banks add the co-applicant's income (and their EMIs) when assessing the loan. A spouse or parent as co-applicant is common. Both are then responsible for repayment, and both may be able to claim tax benefits if they are also co-owners and pay the EMIs.
How much of the property price will the bank fund?
RBI caps home loans by loan-to-value (LTV): up to 90% of the property value for loans up to ₹30 lakh, 80% for loans above ₹30 lakh up to ₹75 lakh, and 75% above ₹75 lakh. You pay the rest as a down payment, plus stamp duty and registration, which banks usually don't fund.
Why does my age matter?
Banks usually want the loan repaid by about age 60 for salaried borrowers (often up to 65 to 70 for self-employed). If you are 45, the tenure may be capped at 15 years, which means a higher EMI and a smaller eligible loan.
Does my credit score affect eligibility?
Yes. This calculator works out the amount your income supports, but the bank also checks your credit score and history. A higher score (often 750 or above) usually means a better rate and smoother approval; a low score can mean a smaller loan, a higher rate or rejection.