Home loan eligibility by salary: ₹50,000 to ₹3 lakh a month

Two tests, and the lower one wins

A lender sizes a home loan twice and offers the smaller answer.

The income test caps all your EMIs, the new one included, at a share of take-home pay called the fixed obligation to income ratio, or FOIR. There is no RBI-prescribed FOIR. Banks such as SBI and HDFC Bank, and housing finance companies such as LIC Housing Finance and Bajaj Housing Finance, each set their own in their credit policy, usually somewhere between 40% and 65% and higher for bigger incomes.

The property test is the RBI's loan-to-value cap: 90% of the property's cost for loans up to ₹30 lakh, 80% up to ₹75 lakh and 75% above that. Stamp duty and registration are left out of the cost, so you pay them in cash on top of the down payment.

Our home loan eligibility calculator runs both. Below we use its defaults: an assumed 8.5% rate, a 20-year tenure, a borrower aged 32, 50% FOIR, and 7% of the price for stamp duty and registration. The rate is a placeholder, not a quote.

Four salaries

Income here means take-home pay, with no other EMIs. The last two columns are the cheapest property the full loan fits under the LTV cap, and the cash you would bring to buy it.

Two things stand out. The loan rises in a straight line with income: at these settings it is about 57.6 times monthly take-home, or 4.8 times a year's. The cash does not. Because the LTV cap tightens as loans get bigger, the ₹50,000 earner brings 17% of the property's price in cash and the ₹3 lakh earner 32%. Above ₹75 lakh, a quarter of the price plus every charge comes out of savings, which is why higher earners are more often held back by the down payment than by income.

FOIR is the number you do not set

The same four incomes at three FOIRs:

Ten points of FOIR move the loan by a fifth. Since lenders tend to allow a higher ratio to higher incomes, the gap between the first row and the last is in practice wider than the income gap. Ask the lender what FOIR it will apply to you before you look at property.

What moves it

Starting from ₹1 lakh of take-home and the ₹57.6 lakh base:

Existing EMIs are subtracted from the allowance in full, so a ₹10,000 EMI costs ₹11.5 lakh of eligibility, more than the outstanding balance on most car loans. Clearing a small loan before applying is often the cheapest way to borrow more. If a car is in the plan too, the 20/4/10 car rule is a check on how much EMI it should take.

Age caps the tenure, because a salaried borrower's repayment normally has to finish by 60. At 50 you get 10 years whatever you ask for.

Tenure helps less than it seems. Going from 20 to 30 years adds ₹7.4 lakh of loan and, at the same ₹50,000 EMI, about ₹52.6 lakh more interest: ₹1.15 crore in all instead of ₹62.4 lakh. Our post on shorter tenure or smaller EMI runs that trade-off on a ₹50 lakh loan.

The rate moves the loan by about ₹4 lakh per percentage point at this income, and your credit score moves the rate; see how your CIBIL score is calculated.

A co-applicant is the biggest lever, because their income is added for the FOIR test. It does nothing to the LTV cap, so it only helps when income, not the property, is the limit.

The rule of thumb

At 8.5% over 20 years, every ₹1,000 of EMI supports about ₹1.15 lakh of loan. At 50% FOIR that is close to 58 times your monthly take-home. Use it to check a lender's figure, then size the loan to the EMI you can carry, not the one you are allowed. The home loan EMI calculator works it the other way round.

Pitfalls

1. Using CTC as income. The calculator wants take-home pay; employer PF, gratuity and variable pay are not in it. The CTC breakdown calculator and decoding your CTC get you to the right figure. Self-employed applicants are usually assessed on two or three years of declared income instead.
2. Forgetting the cash. Stamp duty, registration, brokerage and fees sit outside the loan, and 7% is only a stand-in that varies by state.
3. Borrowing the whole sanction. A 50% FOIR leaves half your pay for everything else, including the SIPs for your other goals and an emergency fund that should survive the purchase. Our guide, what a bank will lend is not what you can afford, covers that gap.
4. Skipping the buy-or-rent question. Eligibility says how much you can borrow, not whether to. The rent vs buy calculator answers that first.

The RBI's loan-to-value limits are in its master circular on housing finance on the RBI website; each lender's FOIR is in its own credit policy, so the figures above are a starting point for the conversation, not an offer.

This post is for education only and is not financial advice. The rate, FOIR and charges are assumptions; lenders' terms differ and change.