A young couple in Pune or Hyderabad shortlisting flats usually asks one question before visiting a bank: how much home loan can I afford? Banks answer it with two limits, one based on income and one based on the property's value. Knowing both, and the costs that come on top, keeps a family from falling in love with a flat the budget can't carry.
Limit 1: income (FOIR)
Lenders cap how much of a borrower's monthly net income can go to all EMIs together. This is the fixed obligation to income ratio (FOIR), commonly around 40–50% of net income depending on income level and lender.
Affordable new EMI = Net monthly income × FOIR − existing EMIs Loan amount = EMI × ((1 + r)^n − 1) ÷ (r × (1 + r)^n)
At 8.5% for 20 years, every ₹868 of EMI supports about ₹1 lakh of loan.
Limit 2: the property (LTV)
| Loan amount | Maximum LTV |
|---|---|
| Up to ₹30 lakh | 90% |
| ₹30–75 lakh | 80% |
| Above ₹75 lakh | 75% |
The rest of the price is the down payment, from the buyer's own funds. Stamp duty and registration are usually not funded by the loan.
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How much home loan can I afford? A worked example
Net take-home income ₹1,00,000 a month, an existing car EMI of ₹10,000, lender FOIR 50%, rate 8.5%, tenure 20 years:
Room for EMIs = 1,00,000 × 50% = ₹50,000 New EMI allowed = 50,000 − 10,000 = ₹40,000 Loan by income ≈ ₹46 lakh
For a ₹60 lakh flat, the LTV cap is 80% = ₹48 lakh, so the income limit (≈ ₹46 lakh) decides. Down payment = ₹14 lakh, plus stamp duty and registration (often 6–8% of the value depending on the state), interiors and moving costs.
Should I borrow the maximum the bank offers?
Not necessarily. The bank's limit is what it is willing to lend, not what is comfortable. Many planners suggest keeping the home EMI around a third of take-home pay, so savings, insurance and emergencies are still covered.
Costs families forget
- Stamp duty and registration charges (state-specific).
- Processing fee and legal/technical charges.
- Society transfer charges, maintenance deposit and GST on under-construction property.
- Home and life insurance linked to the loan (optional, but often offered).
- An emergency fund of 6 months' expenses including the new EMI.
The finance calculators help at each step: the EMI calculator for instalments and prepayment, the income tax calculator for the old vs new regime, and SIP tools for saving the down payment.
Frequently asked questions
How much home loan can I get on a ₹1 lakh salary?
With 50% FOIR and no other EMIs, around ₹57 lakh at 8.5% over 20 years; less with existing loans. Each lender's FOIR differs.
What is FOIR?
Fixed obligation to income ratio: the share of net income lenders allow for all EMIs combined.
What is the maximum LTV for a home loan?
90% up to ₹30 lakh, 80% for ₹30–75 lakh, and 75% above ₹75 lakh, under RBI norms.
Does the home loan cover stamp duty?
Usually not; stamp duty and registration are paid from your own funds.
What EMI is comfortable?
Many planners suggest about a third of take-home pay for the home loan EMI.
Keep reading
- Finance calculators: the free tool this guide explains.
- All finance calculators
- SIP vs Lump Sum: Which Works Better in a Volatile Stock?
Sources: RBI loan-to-value limits for housing loans; reducing-balance EMI formula.