How Much Home Loan Can You Afford on Your Salary? (2026 India Guide)

It is the biggest number in most people's lives, and the one nobody teaches you to work out: how much home can you actually afford? Ask a broker and you'll hear a price that suits their commission. Ask a bank and you'll be told the maximum they'll lend — which is rarely the amount you should borrow. The honest answer is a simple piece of arithmetic, and once you've seen it, you'll never guess again.

The 40% rule: the fastest way to know

Every safe home-loan decision starts with one guideline: your total monthly loan payments should stay under 40% of your net monthly income. Lenders use their own version of this called FOIR (Fixed Obligation to Income Ratio), and most cap it at 40–50%. Staying near the lower end leaves you breathing room for groceries, school fees, SIPs and the emergencies that always arrive uninvited.

So the first sum is easy. Take your take-home salary, multiply by 0.40, and subtract any EMIs you already pay. What's left is the EMI you can comfortably devote to a home loan. On a ₹1,00,000 salary with no other loans, that's ₹40,000 a month.

How much home loan can you afford on your salary?

Here's the comfortable loan amount for common salaries, assuming no existing EMIs, a 20-year tenure and an 8.5% interest rate. Treat these as starting points, not promises — your real figure moves with your credit score and other loans.

Add your down payment on top of the loan and you get the home price you can target. A quick way to skip the mental maths is our EMI calculator, which turns any loan amount, rate and tenure into a monthly figure in seconds.

The three numbers lenders actually check

Eligibility isn't decided by salary alone. When you apply, a lender weighs three things:

• Your FOIR (debt-to-income). All your EMIs added together, as a share of income. A running car or personal loan directly shrinks the home loan you qualify for.
• Your credit score. A CIBIL score of 750 or above wins the best rates and the fullest sanction. Below 700, expect a smaller loan, a higher rate, or a firm no.
• The LTV (loan-to-value). Banks fund only 75–90% of the property's value. The rest — your down payment — plus stamp duty and registration must come from your own pocket.

A real example: ₹1,20,000 a month

Suppose you and your household bring home ₹1,20,000 a month, and you're already paying a ₹8,000 car EMI. Apply the rule:

• 40% of ₹1,20,000 = ₹48,000 total EMI budget.
• Minus the ₹8,000 car EMI = ₹40,000 left for a home loan.
• ₹40,000 EMI at 8.5% over 20 years ≈ a ₹46 lakh loan.
• With a 20% down payment, that's a home of about ₹57–60 lakh.

That is a real, defensible budget — not a broker's wishful number. Change any input and the answer shifts, which is exactly why it's worth modelling your own figures rather than copying someone else's.

Down payment, stamp duty and the hidden costs

The sticker price of a flat is never the full cost. Budget for the whole picture:

• Down payment: typically 10–20% of the price, paid upfront.
• Stamp duty and registration: another 5–7% depending on your state.
• Interiors, moving and a buffer: easily a few lakh more.

A ₹60 lakh flat can quietly need ₹15–18 lakh in cash before you hold the keys. Planning for the total — not just the EMI — is what separates a smooth purchase from a stressful one.

Should you borrow the maximum? No — here's why

A bank's sanction letter tells you the ceiling, not the wise amount. If your loan is on a floating rate, a 1% rise can lift your EMI by thousands. A job change, a new baby, a medical bill — life doesn't pause for your repayment schedule. Borrowing a notch below your maximum keeps the home a source of pride rather than pressure. A good target is an EMI around 30–35% of income, leaving 40% firmly as the outer limit.

How to afford a bigger home, sensibly

• Add a co-applicant. A spouse's income raises your combined eligibility.
• Raise your credit score. Clear dues, keep card usage low, and don't apply for many loans at once.
• Clear small loans first. Closing a personal or car loan frees up FOIR immediately.
• Save a larger down payment. Every extra lakh down is a lakh less to borrow and pay interest on.
• Consider a longer tenure — carefully. It lowers the EMI but raises total interest, so weigh it up.

Knowing your number changes how you shop. You'll walk into every site visit with a firm budget, negotiate from strength, and never fall for a home that quietly breaks your finances. Work out yours in under a minute with HomeFin's free home affordability calculator — no signup, no sales call, just the honest maths. If you're weighing the bigger decision, our rent vs buy calculator settles that debate too.