Quick Answer: How Much Home Loan for Your Salary?
As a general rule, Indian commercial banks sanction a home loan where your monthly EMI does not exceed 50% of your net in-hand monthly salary (known as the FOIR limit). At current interest rates of 8.5% over a 20-year tenure (where the monthly EMI factor is approximately ₹868 per ₹1 Lakh borrowed): • Net Salary ₹50,00,000/month: Max EMI ₹25,000 → Loan Eligibility ≈ ₹28.8 Lakhs • Net Salary ₹75,000/month: Max EMI ₹37,500 → Loan Eligibility ≈ ₹43.2 Lakhs • Net Salary ₹1,00,000/month: Max EMI ₹50,000 → Loan Eligibility ≈ ₹57.6 Lakhs • Net Salary ₹1,50,000/month: Max EMI ₹75,000 (at 50% FOIR) → Loan Eligibility ≈ ₹86.4 Lakhs If you currently pay existing EMIs (car loans, personal loans, or credit card installments), that amount is deducted directly from your allowable EMI, significantly lowering your sanctioned borrowing.
What Is FOIR and Why Do Banks Use It?
FOIR stands for Fixed Obligation to Income Ratio. Underwriters use it to ensure you retain sufficient cash every month to cover living expenses, groceries, school fees, and medical care after paying your debt installments: FOIR (%) = [(Total Existing EMIs + Proposed Loan EMI) / Net Monthly Income] × 100 Standard FOIR Limits in India: • Net Monthly Salary under ₹35,000: FOIR capped at 40% to 45% • Net Monthly Salary ₹35,000 to ₹75,000: FOIR capped at 50% • Net Monthly Salary ₹75,000 to ₹1,50,000: FOIR capped at 55% • Net Monthly Salary above ₹1,50,000: FOIR capped at 60% to 65%.
Worked Example: How Existing EMIs Reduce Your Loan
Meet two colleagues, Amit and Vikas, who both earn an identical in-hand salary of ₹1,00,000 per month: • Amit has zero existing debt: Allowed EMI at 50% FOIR: ₹50,000. At 8.5% for 20 years, Amit qualifies for a home loan of ₹57.6 Lakhs. • Vikas pays a car loan of ₹15,000 and a personal loan of ₹5,000 (Total ₹20,000 EMIs): Allowed new EMI: ₹50,000 - ₹20,000 = ₹30,000. At 8.5% for 20 years, Vikas qualifies for a home loan of only ₹34.5 Lakhs. Having ₹20,000 in monthly debt obligations reduces Vikas's home loan eligibility by over ₹23 Lakhs!
The Loan-to-Value (LTV) Cap and Down Payment Requirements
Even if your salary technically qualifies you for a ₹1 Crore loan, the Reserve Bank of India imposes strict Loan-to-Value (LTV) limits based on the property valuation: • Properties up to ₹30 Lakhs: Maximum LTV is 90% (You must arrange at least 10% down payment). • Properties between ₹30 Lakhs and ₹75 Lakhs: Maximum LTV is 80% (You must arrange at least 20% down payment). • Properties above ₹75 Lakhs: Maximum LTV is 75% (You must arrange at least 25% down payment). Furthermore, banks do not finance stamp duty, registration charges, or interior fit-outs. On an ₹80 Lakh apartment: • Maximum Bank Loan (75% LTV): ₹60 Lakhs • Mandatory Down Payment (25%): ₹20 Lakhs • Stamp Duty & Registration (~7%): ~₹5.6 Lakhs • Total Cash Needed Upfront: ₹25.6 Lakhs.
5 Practical Steps to Increase Your Home Loan Eligibility
1. Add a co-applicant: Apply jointly with your spouse or working parent. Combining two salaries (e.g. ₹80,000 + ₹60,000 = ₹1,40,000) raises your eligible EMI limit to ₹70,000, boosting loan eligibility to over ₹80 Lakhs. 2. Close existing personal and car loans: Prepaying high-interest retail debt frees up your FOIR headroom immediately. 3. Choose a longer loan tenure: Selecting 25 or 30 years lowers the monthly EMI per lakh borrowed, fitting a larger principal under your salary cap. You can prepay principal early without penalty. 4. Maintain a high CIBIL credit score (750+): High credit scores earn lower interest rates (e.g. 8.35% instead of 9.0%), which automatically increases borrowing capacity. 5. Declare secondary income streams: Provide verified documentation for rental income, annual bonuses, or freelance retainers.
The Impact of Credit Card Limits on Bank Underwriting
Many loan applicants are surprised when their eligibility drops because of unused credit cards or Buy Now Pay Later (BNPL) accounts. Lenders check your credit bureau report for outstanding credit card balances. Even if you pay your bill in full every month, the bank assumes an ongoing obligation of 5% of your total outstanding credit card balance as an existing monthly debt obligation. Before applying for a major home loan, pay off all card balances, close dormant BNPL apps, and avoid opening new credit lines for at least six months.
Check Your Exact Loan Eligibility in Seconds
Instead of guessing banker calculations, enter your in-hand salary, existing EMIs, and expected tenure into our QuickCalc Loan Eligibility Calculator to see your sanctioned loan amount and monthly payment schedule.