{"id":13,"date":"2026-10-28T09:00:00","date_gmt":"2026-10-28T03:30:00","guid":{"rendered":"https:\/\/propraahi.com\/blog\/home-loan-eligibility-explained\/"},"modified":"2026-10-28T09:00:00","modified_gmt":"2026-10-28T03:30:00","slug":"home-loan-eligibility-explained","status":"publish","type":"post","link":"https:\/\/propraahi.com\/blog\/home-loan-eligibility-explained\/","title":{"rendered":"Home Loan Eligibility Explained: How Banks Decide How Much You Can Borrow"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">How much home loan you can get is decided by two separate limits. The first is based on <strong>your repayment capacity<\/strong>. The second is based on <strong>the property&#039;s value<\/strong>. Your actual loan is the lower of the two.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Limit 1: your repayment capacity (FOIR)<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Lenders look at what share of your monthly income can go towards EMIs. This is called the <strong>FOIR<\/strong> (fixed obligations to income ratio). Many lenders allow total EMIs (your new home loan plus existing loans such as a car loan or personal loan) of roughly <strong>40\u201360% of your net monthly income<\/strong>, depending on your income level, job stability and the lender&#039;s policy.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">From the EMI you can afford, the lender works backwards to the loan amount, using the interest rate and tenure.<\/p>\n\n\n\n<div class=\"wp-block-group is-style-pr-note\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"wp-block-paragraph\"><strong>A handy rule of thumb:<\/strong> at an interest rate of 8.5% a year over 20 years, the EMI is about <strong>\u20b9868 for every \u20b91 lakh<\/strong> borrowed. Rates differ between lenders and change over time, so use your lender&#039;s actual rate when you plan.<\/p>\n<\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Limit 2: the property&#039;s value (LTV)<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The Reserve Bank of India caps how much of a property&#039;s value banks can lend, called the <strong>loan-to-value (LTV) ratio<\/strong>:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Loan amount<\/th><th>Maximum LTV<\/th><\/tr><\/thead><tbody><tr><td>Up to \u20b930 lakh<\/td><td>90%<\/td><\/tr><tr><td>Above \u20b930 lakh and up to \u20b975 lakh<\/td><td>80%<\/td><\/tr><tr><td>Above \u20b975 lakh<\/td><td>75%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Lenders generally calculate this on the property&#039;s agreement value. Stamp duty and registration are usually excluded, which is why you need your own funds for them.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">A worked example<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Priya earns a net salary of <strong>\u20b91,20,000 a month<\/strong> and already pays a <strong>\u20b910,000 car loan EMI<\/strong>. Her lender allows a FOIR of 50%.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Maximum total EMIs: 50% \u00d7 \u20b91,20,000 = <strong>\u20b960,000<\/strong><\/li>\n\n\n<li>Available for the home loan: \u20b960,000 \u2212 \u20b910,000 = <strong>\u20b950,000 EMI<\/strong><\/li>\n\n\n<li>Loan at 8.5% over 20 years: \u20b950,000 \u00f7 \u20b9868 \u00d7 \u20b91 lakh \u2248 <strong>\u20b957.6 lakh<\/strong><\/li>\n\n\n<li>With an 80% LTV, she needs a property worth at least about \u20b972 lakh to borrow the full amount, and must bring at least 20% of the price plus stamp duty, registration and other charges herself.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\">What else lenders look at<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Credit score:<\/strong> a score of 750 or above generally gets you better rates and faster approval. Check your report and fix errors before applying.<\/li>\n\n\n<li><strong>Age and tenure:<\/strong> most lenders offer up to 30 years, but the loan usually has to end by a certain age (often 60\u201370), so older applicants may get shorter tenures and lower eligibility.<\/li>\n\n\n<li><strong>Employment and income stability:<\/strong> salaried applicants with a few years at a stable employer are simpler to assess; self-employed applicants typically need two to three years of income tax returns.<\/li>\n\n\n<li><strong>The property itself:<\/strong> the lender&#039;s legal and technical teams must approve the title and construction.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">How to improve your eligibility<\/h2>\n\n\n\n<ul class=\"wp-block-list is-style-pr-checklist\">\n<li><strong>Add a co-applicant<\/strong> with income, such as a spouse or parent. Combined income raises the EMI the lender will allow, and joint ownership can bring tax benefits to both.<\/li>\n\n\n<li><strong>Close small loans<\/strong> and clear credit card balances before applying.<\/li>\n\n\n<li><strong>Choose a longer tenure<\/strong> to reduce the EMI (you&#039;ll pay more interest overall, so prepay when you can).<\/li>\n\n\n<li><strong>Increase your down payment<\/strong> to stay within LTV limits and reduce the loan you need.<\/li>\n\n\n<li><strong>Compare lenders:<\/strong> FOIR policies, rates and fees differ.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-group is-style-pr-tip\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<p class=\"wp-block-paragraph\">For individual borrowers, banks cannot charge a prepayment penalty on <strong>floating-rate<\/strong> home loans. Most floating-rate retail loans are linked to an external benchmark such as the RBI repo rate, so your EMI or tenure moves with it.<\/p>\n<\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Bottom line<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Work out both limits before you start house-hunting: the EMI you can comfortably pay (not just the maximum a bank allows) and the down payment and charges you can fund yourself. Then use our guide to the <a href=\"https:\/\/propraahi.com\/blog\/real-cost-of-buying-a-flat-in-india\/\">real cost of buying a flat<\/a> to set a realistic budget.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Your loan amount is decided by two limits, your income and the property&#8217;s value. Here&#8217;s how lenders calculate both, with a worked example and tips to improve your eligibility.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[24,23,18],"class_list":["post-13","post","type-post","status-publish","format-standard","hentry","category-home-loans-finance","tag-credit-score","tag-emi","tag-home-loan"],"_links":{"self":[{"href":"https:\/\/propraahi.com\/blog\/wp-json\/wp\/v2\/posts\/13","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/propraahi.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/propraahi.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/propraahi.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/propraahi.com\/blog\/wp-json\/wp\/v2\/comments?post=13"}],"version-history":[{"count":0,"href":"https:\/\/propraahi.com\/blog\/wp-json\/wp\/v2\/posts\/13\/revisions"}],"wp:attachment":[{"href":"https:\/\/propraahi.com\/blog\/wp-json\/wp\/v2\/media?parent=13"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/propraahi.com\/blog\/wp-json\/wp\/v2\/categories?post=13"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/propraahi.com\/blog\/wp-json\/wp\/v2\/tags?post=13"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}