The most common question before taking a home loan: how much will the bank actually give me? The answer is not simply "some multiple of your salary." Banks use a specific formula involving your income, existing obligations, and a ratio called FOIR. Understanding this before you walk into a bank saves a lot of wasted effort and disappointment.
The FOIR — The Number Banks Actually Use
FOIR stands for Fixed Obligation to Income Ratio. It measures what percentage of your monthly take-home income is going toward fixed repayments — existing EMIs, credit card minimum dues, and the proposed new home loan EMI. Most banks cap this at 40–50% for salaried employees.
So the formula is: Maximum new EMI = (Take-home salary × FOIR limit) − Existing EMIs
For example: ₹80,000 take-home salary, existing car loan EMI of ₹12,000, bank's FOIR limit of 45%.
Maximum total obligations = ₹80,000 × 45% = ₹36,000. Existing EMI = ₹12,000. So maximum home loan EMI = ₹36,000 − ₹12,000 = ₹24,000.
At 8.5% for 20 years, a ₹24,000 EMI corresponds to a loan of approximately ₹27.6 lakh — not the ₹48 lakh the same person would qualify for without the car loan.
The Loan Amount by Salary — A Practical Reference
| Take-Home Salary | No Existing EMIs | ₹10,000 Existing EMI | ₹20,000 Existing EMI |
|---|---|---|---|
| ₹40,000 | ~₹18–20L | ~₹10–12L | Not eligible |
| ₹60,000 | ~₹28–32L | ~₹18–22L | ~₹9–12L |
| ₹80,000 | ~₹37–42L | ~₹27–32L | ~₹18–22L |
| ₹1,00,000 | ~₹47–55L | ~₹36–42L | ~₹24–30L |
| ₹1,50,000 | ~₹70–82L | ~₹58–70L | ~₹47–58L |
Assumptions: 8.5% rate, 20-year tenure, 45% FOIR. Actual amounts vary by lender, credit score, and employer category.
What Else Affects How Much You Can Borrow
Your age. Banks require the loan to be fully repaid before retirement — typically by age 60–65. A 45-year-old applying for a home loan may only be offered a 15-year tenure, which increases the EMI for the same loan amount and therefore reduces the eligible loan. A 30-year-old can get a 25–30 year tenure, reducing the EMI and increasing the eligible amount.
Your employer category. Banks maintain internal lists of preferred employers — large listed companies, PSUs, MNCs, government employees. If you work for one of these, you may qualify for higher FOIR limits (up to 55–60%) or slightly better rates. If you work for a small unlisted firm, the bank may be more conservative.
Your credit score. Below 700, some banks won't approve at all. Between 700–750, they may approve but at higher rates, which reduces the loan amount for the same EMI. Above 750, you get the standard calculations above.
The property itself. Banks typically lend up to 75–90% of the property's value (LTV ratio), with the remainder as your down payment. If your income qualifies you for ₹60 lakh but the property is valued at ₹50 lakh, your loan is capped at ₹40–45 lakh regardless.
How to Increase Your Eligible Loan Amount
Pay down existing EMIs before applying. If you have a personal loan with 12 months remaining, consider closing it before the home loan application. Removing ₹15,000 in monthly obligations can add ₹17–18 lakh to your eligible home loan.
Add a co-applicant. A joint loan with your spouse adds both incomes to the calculation. If your spouse earns ₹50,000 and you earn ₹80,000, the combined ₹1,30,000 take-home significantly increases the eligible amount.
Extend the tenure. A 25-year tenure has a lower EMI than a 20-year tenure for the same loan amount — which means the same salary can support a larger loan. The trade-off is significantly more total interest paid.
Choose the right lender. FOIR thresholds and eligible loan multiples vary meaningfully between lenders. It's worth getting an in-principle eligibility assessment from two or three banks before deciding where to apply formally.
Frequently Asked Questions
What is the home loan eligibility for a ₹1 lakh monthly salary?
At ₹1 lakh take-home salary with no existing EMIs, most banks will approve a home loan where the EMI is ₹40,000–50,000. At 8.5% for 20 years, this corresponds to a loan of approximately ₹45–55 lakh. With existing obligations of ₹15,000/month, the eligible loan drops to roughly ₹30–40 lakh.
Does gross salary or net salary matter for home loan eligibility?
Most banks use net take-home salary (after tax and deductions) for salaried employees when calculating FOIR. For self-employed applicants, they typically use net annual profit from ITR. Some banks use gross salary but apply a higher FOIR threshold.
Can I add my spouse's income to increase home loan eligibility?
Yes — a joint home loan with a co-applicant (typically spouse) adds both incomes together. This can significantly increase the eligible loan amount. Both applicants' credit scores and existing obligations are considered in the calculation.