How Much Home Loan Can You Afford on Your Salary?

The short answer

As a rule of thumb, the EMI on your home loan should not push your total monthly loan repayments above 40–50% of your take-home salary. Most lenders cap your eligibility at this band, and staying near the lower end of it is what keeps a loan comfortable rather than crushing. On a ₹1,00,000 in-hand salary with no other loans, that means an EMI of roughly ₹40,000–₹50,000 — which at 8.5% over 20 years supports a loan of about ₹46–58 lakh.

But the rule of thumb hides a lot of detail. Lenders do not look at your CTC; they look at take-home pay, existing EMIs, your credit score, and your age. Below is how the number is actually built so you can calculate your own ceiling honestly.

What lenders actually check: FOIR

Banks use a metric called FOIR — Fixed Obligations to Income Ratio. It is the share of your monthly income already committed to fixed payments (existing EMIs, credit-card minimums) plus the proposed new EMI. Most lenders want your FOIR to stay under 50%, and the strictest cap it at 40%.

Crucially, FOIR is calculated on net take-home pay, not gross CTC. Your CTC includes employer PF, gratuity, and bonuses you never see monthly. Use a take-home figure — if you are unsure what yours is, our CTC calculator breaks a CTC down into in-hand salary.

• Add up every existing fixed EMI (car loan, personal loan, etc.).
• Add the new home-loan EMI you are considering.
• Divide by your monthly take-home pay.
• If the result is above 0.5, lenders will likely reduce your eligible loan amount or reject the application.

Worked examples by salary

₹50,000 take-home, no existing loans

At a 40% FOIR, your maximum EMI is ₹20,000. At 8.5% over 20 years, that supports a home loan of roughly ₹23 lakh. Stretch the tenure to 30 years and the same EMI supports about ₹26 lakh — but you pay far more total interest.

₹1,00,000 take-home, no existing loans

A 40% FOIR allows an EMI of ₹40,000, supporting roughly ₹46 lakh over 20 years. If you are comfortable going to 50% FOIR (₹50,000 EMI), eligibility rises to about ₹58 lakh — but you lose the cushion that protects you in a bad month.

₹2,00,000 take-home, with a ₹15,000 car EMI

Your fixed-obligation budget at 40% is ₹80,000. Subtract the ₹15,000 car EMI and ₹65,000 is left for the home loan — supporting roughly ₹75 lakh over 20 years. Notice how an existing loan directly eats into your home-loan ceiling.

Five things that change your real limit

• Credit score: a CIBIL score above 750 unlocks the best rates; below 700 can raise your rate by 1–2% and shrink eligibility.
• Age and tenure: lenders want the loan to end before you retire, so older borrowers get shorter tenures and therefore lower eligibility.
• Co-applicant: adding a working spouse pools both incomes and can roughly double your eligible amount.
• Interest rate: every 1% rise in the rate cuts the loan a fixed EMI can support by 8–10%.
• Down payment: banks fund up to 75–90% of the property value, so you must arrange the rest yourself.

Run your own numbers

The honest way to find your ceiling is to work backwards from the EMI you can comfortably pay — not the maximum a bank will sanction. Decide on an EMI at or below 40% of your take-home, then use the EMI calculator to see exactly what loan amount, tenure, and total interest that implies. Adjust the tenure to balance a manageable EMI against the total interest you will pay over the life of the loan.