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Home Loan Guide

How Much Home Loan Can I Get on My Salary?

Indian banks use two rules together — FOIR (debt-to-income cap) and the salary-multiplier. Your loan is the smaller of the two. Here's how to compute yours.

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The two rules banks use

Every Indian bank — SBI, HDFC, ICICI, Axis, Kotak, PNB — uses the same two-rule system to decide how much to lend you. Your final sanction is the smaller of the two:

  1. FOIR cap — your total EMIs (all loans + rent) must stay under 50-55% of net monthly income (40-45% if self-employed).
  2. Salary multiplier — as a sanity check, most banks won't exceed 60× your monthly gross, regardless of FOIR. This protects against someone with very low existing EMIs borrowing beyond their long-term capacity.

FOIR — the primary constraint

FOIR = (sum of existing EMIs + new home loan EMI + monthly rent) ÷ net monthly income. Banks cap it at 50-55% for salaried applicants, based on RBI's responsible-lending guidelines. The RBI itself has no specific FOIR rule — banks set their own policy — but the 50-55% range is near-universal across lenders.

Why 50-55%?Above this, the statistical probability of default rises sharply. Banks protect themselves by keeping enough room in your monthly cash flow for surprise expenses, kids' education, health costs. It also protects you.

The 60× multiplier — the secondary constraint

Even if FOIR says you can afford ₹1 lakh EMI (rare on a ₹1.8L salary with no other debt), most banks cap the headline loan at 60× monthly income. This is a blunt but effective cap on over-leverage.

Some private banks stretch to 72× for CIBIL 800+ / listed-corporate employees; PSU banks stick closer to 54-60×.

Worked examples

₹50,000 monthly salary, no existing EMIs

  • FOIR room: 50% × 50,000 = ₹25,000/month EMI
  • Loan at ₹25K EMI, 8.5%, 20 years → ₹28.8 lakh loan
  • Multiplier cap: 60× ₹50K = ₹30 lakh
  • Eligible: ~₹28-30 lakh — the FOIR rule is slightly tighter

₹1,00,000 monthly salary, ₹10,000 car loan EMI

  • FOIR room: 55% × 1,00,000 − 10,000 = ₹45,000/month for new EMI
  • Loan at ₹45K EMI, 8.5%, 20 years → ₹52 lakh
  • Multiplier cap: 60× ₹1L = ₹60 lakh
  • Eligible: ~₹52 lakh

₹2,00,000 monthly salary, clean profile, CIBIL 820

  • FOIR room: 55% × 2,00,000 = ₹1,10,000/month EMI
  • Loan at ₹1.1L EMI, 8.5%, 20 years → ₹1.27 crore
  • Multiplier cap: 72× ₹2L (CIBIL 820 + bank-listed employer) = ₹1.44 crore
  • Eligible: ~₹1.25 crore

How to legitimately increase your eligibility

  • Clear small debts first. Closing a ₹15K/month car loan EMI adds ~₹17 lakh to your home loan sanction (at 8.5% × 20 years).
  • Add a co-applicant. Your spouse's salary adds to joint FOIR. Both names on the loan + property = each can claim ₹2L 24(b) + ₹1.5L 80C → double the family tax shield.
  • Bump up CIBIL by closing unused credit cards, never missing an EMI, keeping credit utilisation under 30%.
  • Choose the longest tenure your age permits — 30 years if you're under 35, 25 years if 35-45. Prepay aggressively in bonus years to neutralise the interest cost of the long tenure.
  • Include variable pay in the eligibility calculation. Banks typically average your last 2 years' bonuses. Show consistent bonus cash flow to lift eligibility 10-15%.

Frequently asked questions

How much home loan can I get on a ₹1 lakh monthly salary?

At ₹1,00,000 monthly take-home, most Indian banks will sanction ₹55-65 lakh — using the "60× monthly income" rule of thumb and a FOIR cap of 50-55% (meaning total EMIs including this one should stay under ~₹55,000/month). Higher credit score (750+) and profession category (bank-listed employer / govt / PSU) can push it to ~70 lakh.

What is FOIR and why does it matter?

FOIR (Fixed Obligation to Income Ratio) is the percentage of your monthly income consumed by fixed debt obligations — all loan EMIs, rent if applicable, credit card minimum dues. Banks cap total FOIR at 50-55% for salaried applicants (40-45% for self-employed). If you already have a ₹15,000 car-loan EMI on a ₹1L salary, your home-loan FOIR room shrinks to ~₹40,000/month.

Does credit score change how much loan I can get?

Yes — dramatically. CIBIL 750+ unlocks the best rates AND higher eligibility (up to 85-90% of the calculated maximum). 700-749 gets you sanctioned but at 0.25-0.5% higher rates, reducing the loan amount that same FOIR supports. Below 700: most banks reject or offer 50-60% of calculated eligibility. Check your CIBIL score free annually; every hard enquiry drops it 5-10 points.

Can I add my spouse's income to boost eligibility?

Yes — called co-applicant loans. Lenders add both incomes for FOIR calculation, so combined sanctioning goes up materially. Both applicants must co-own the property. Tax benefit: each co-owner can claim their own ₹2L interest deduction (Section 24b) and ₹1.5L principal deduction (80C) — effectively doubling the family's home-loan tax shield. But both are equally liable for repayment — a critical legal point.

Does the loan tenure affect how much I qualify for?

Yes. Longer tenure (25-30 years) means lower EMI for the same loan amount, so your FOIR permits a bigger loan. But total interest explodes: a ₹50L loan at 8.5% costs ₹56L interest over 20 years vs ₹86L over 30 years. Rule of thumb: pick the shortest tenure your cash flow permits, then prepay aggressively in bonus years.