How Much Home Loan EMI Can I Afford?
Lenders don't ask "how much do you want to borrow" — they calculate how much you're allowed to borrow using your FOIR (Fixed Obligation to Income Ratio): your total monthly loan/credit-card obligations, including the new EMI, as a share of your net take-home income. Most Indian banks cap this at 40–50% for salaried applicants. Here's what that means in real numbers.
The rule of thumb: 40% of net income
Using a representative current home loan rate of 8.5% p.a. over a 20-year tenure, here's the maximum loan a 40% FOIR allows at three income levels, assuming no existing EMIs:
| Net Monthly Income | Max EMI (40%) | Max Loan Eligible |
|---|---|---|
| ₹50,000 | ₹20,000 | ₹23,04,617 |
| ₹1,00,000 | ₹40,000 | ₹46,09,234 |
| ₹2,00,000 | ₹80,000 | ₹92,18,467 |
These are proportional — double the income, double the eligible loan, at the same rate and tenure. Use the Home Loan EMI Calculator to run the reverse direction: enter a loan amount and see the EMI, then compare it against 40% of your own net income.
Existing EMIs eat into this directly, rupee for rupee
FOIR counts all fixed obligations, not just the new home loan. A ₹1,00,000/month earner with an existing ₹10,000 car loan EMI has only ₹30,000 of FOIR room left instead of ₹40,000:
- No existing EMI: eligible for ₹46,09,234
- With a ₹10,000 existing EMI: eligible for only ₹34,56,925
That's a 25% drop in loan eligibility from a single ₹10,000 monthly commitment. This is exactly why paying off a car loan or personal loan before applying can materially increase what a bank will sanction — use the Loan Prepayment Calculator to see if clearing it first is worth the trade-off.
What actually changes your eligibility
- Tenure: A longer tenure lowers the EMI for the same loan amount, raising eligibility — but increases total interest paid. Model both in the EMI calculator before deciding.
- Co-applicant income: Adding a spouse's income as co-applicant is added to the FOIR base, directly raising the eligible loan amount.
- Credit score: This affects the rate you're offered, not the FOIR percentage itself — but a lower rate increases eligible loan amount for the same EMI.
Note: FOIR limits (40% here) and the exact obligations counted vary by lender and are set at the bank's discretion — treat this as a planning estimate, not a guaranteed sanction amount.