How banks decide your home loan eligibility
Lenders look at three limits and sanction the lowest of them: your repayment capacity (FOIR), the loan-to-value ratio allowed on the property, and the maximum tenure permitted by your age. This calculator applies all three so the figure you see is close to what a bank will actually offer.
FOIR — Fixed Obligation to Income Ratio
FOIR = (existing EMIs + proposed EMI) ÷ net monthly income. Most banks allow 50% for incomes up to about ₹1 lakh per month and 55–65% for higher incomes. The EMI capacity left after existing obligations is converted into a loan amount using the EMI formula in reverse: Max loan = EMI capacity × ((1 + r)n − 1) ÷ (r × (1 + r)n).
Worked example
Net income ₹1,00,000, existing EMIs ₹10,000, FOIR 50%: EMI capacity = 50,000 − 10,000 = ₹40,000. At 8.5% for 20 years, each ₹1 lakh of loan costs ₹868 per month, so the maximum loan is 40,000 ÷ 868 × 1,00,000 ≈ ₹46 lakh. If the property costs ₹50 lakh, the LTV cap of 80% limits the loan to ₹40 lakh and you must arrange ₹10 lakh plus stamp duty yourself.
Age and tenure
Salaried borrowers must normally close the loan by age 60 (retirement); self-employed borrowers get up to 65–70. A 45-year-old salaried applicant therefore gets at most 15 years, which raises the EMI per lakh and lowers eligibility. Adding a younger earning co-applicant can extend tenure and add income.
LTV limits set by RBI
- Property up to ₹30 lakh: loan up to 90% of value
- ₹30–75 lakh: up to 80%
- Above ₹75 lakh: up to 75%
Ways to increase eligibility
- Add spouse or parent as co-applicant.
- Close small personal loans or credit card EMIs before applying.
- Choose the longest tenure available and prepay later.
- Maintain a CIBIL score above 750 for the best rate, which itself raises eligibility.
Frequently Asked Questions
What income do banks consider?
Net take-home salary after tax and PF. Variable pay, bonus and rental income are usually counted at 50–100% depending on the lender.
Does a co-applicant increase eligibility?
Yes. Income of a spouse, parent or sibling co-applicant is clubbed, and a younger co-applicant may allow a longer tenure.
Is stamp duty funded by the bank?
No. Stamp duty, registration and GST on under-construction property must come from your own funds, over and above the down payment.
Why does my eligibility fall as I age?
Because the maximum tenure shrinks so that the loan closes by retirement age. A shorter tenure means a higher EMI per lakh and a smaller loan for the same EMI capacity.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.