House Affordability Calculator

Seventy-two lakh, on a monthly income of one-fifty

With a monthly income of ₹1,50,000, existing EMIs of ₹10,000, a maximum EMI-to-income ratio of 40%, a rate of 8.5% over 20 years and a 20% down payment, the maximum property value is about ₹72,01,927.

The chain: 40% of ₹1,50,000 is ₹60,000 of total EMI capacity, less the ₹10,000 already committed, leaving ₹50,000 for a new home loan. At 8.5% over 20 years that supports a loan of ₹57,61,542, and with 20% down that implies a property of ₹72,01,927 requiring ₹14,40,385 of down payment.

How lenders decide

Maximum EMI = (income × ratio) − existing EMIs

The EMI-to-income ratio — often called FOIR or DTI — is the lender's core affordability test, and most Indian lenders use 40–50% of net monthly income for all obligations combined. Higher incomes are sometimes allowed a higher ratio, on the reasoning that a larger absolute residual remains after servicing debt.

The loan amount is then the principal that the maximum EMI supports at the given rate and tenure, derived by inverting the EMI formula.

Loan-to-value norms cap borrowing at roughly 75–90% of property value depending on loan size, which determines the down payment and therefore the property value the whole chain supports.

What the lender's limit does not account for

The ratio is a credit risk threshold, not financial advice. It answers whether you will probably repay, not whether the loan leaves you a reasonable life.

At the 40% figure here, ₹60,000 of a ₹1,50,000 income goes to debt service before rent-equivalent costs, utilities, food, school fees, insurance, savings and everything else. Many households find 30–35% a more comfortable ceiling, and the difference is a smaller house rather than a worse one.

Three things the calculation ignores entirely:

The cash needed beyond the down payment. Stamp duty and registration at 5–8%, plus processing fees, legal charges and moving costs. On this ₹72 lakh property that is roughly ₹4–6 lakh on top of the ₹14.4 lakh down payment.

Ongoing ownership costs — society maintenance, property tax, insurance and repairs, which together frequently run 1–2% of property value annually and continue for as long as you own it.

Income volatility. The EMI is contractually fixed for twenty years; your income is not. A common stress test is whether you could service the EMI for six months on one income, or on none.

The levers

Tenure raises the loan you qualify for and raises total interest sharply. Extending from 20 to 30 years increases borrowing capacity by roughly 15% and total interest by far more.

Rate matters enormously over twenty years — a 0.25% difference on this loan is worth over ₹2 lakh in interest.

Clearing existing EMIs before applying converts directly into borrowing capacity: the ₹10,000 of existing obligations here costs about ₹11.5 lakh of loan eligibility.

A co-applicant's income is added to the assessment, which is the largest single lever available to most buyers.

Credit score, which affects both eligibility and the rate offered.

Reading the result

Treat the figure as a ceiling imposed by a lender, and set your own lower. The most common regret among Indian homebuyers is not buying too little house but committing too much income for too long, which removes the flexibility to change jobs, take a risk, or absorb a shock.

Common mistakes

Borrowing to the maximum. The lender's limit is a risk threshold, not a recommendation.

Forgetting stamp duty. It is cash, on top of the down payment, and not financeable.

Ignoring maintenance and tax. Ownership costs continue indefinitely.

Extending tenure for eligibility. It buys capacity at a large interest cost.

Assuming income only rises. The EMI is fixed for two decades.