Before you shortlist a flat, it helps to know how much a bank will actually lend you. Most buyers start from the property price and work backwards. Banks do the opposite: they start from your income and work out the largest EMI you can afford. That EMI, plus the interest rate and tenure, decides your loan.
Here is how that calculation works in 2026, and how to improve your number.
What changed in October 2026
On 7 October 2026, the RBI raised the repo rate by 25 basis points to 5.50%, its first hike since February 2023, and changed its stance to "calibrated tightening". Banks have started passing this on. SBI, for example, revised its rates from 15 October, and regular home loans there now range from 7.50% to 8.80% depending on the borrower's profile.
For a buyer, a higher rate means a higher EMI for the same loan, so your eligibility shrinks slightly. If your loan is linked to the repo rate (most floating home loans taken since 2019 are), your existing EMI or tenure will also change at your next reset.
How banks calculate eligibility
1. Your income
Banks use your net monthly income: take-home salary for salaried applicants, or average income from the last two to three years' ITRs for self-employed applicants. Bonuses and variable pay may be counted only partly.
2. FOIR: how much of your income can go to EMIs
FOIR (Fixed Obligation to Income Ratio) is the share of your monthly income a bank allows for all your EMIs combined, including the new home loan. Most banks work between 40% and 60%, with higher limits for higher incomes.
Maximum new EMI = (Net monthly income × FOIR) − existing EMIs
3. Interest rate and tenure
Once the bank knows your maximum EMI, the interest rate and tenure decide how large a loan that EMI can support. A longer tenure means a bigger loan for the same EMI, but much more total interest.
4. Age
Most banks want the loan repaid by around 60 to 70 years of age (sometimes 75 with conditions). A 45-year-old may be capped at a 20-year tenure even if they'd prefer 30.
5. Credit score
A CIBIL score of 750 or above gets you the best rates. Lower scores can mean a higher rate, a smaller loan, or a rejection.
A worked example
Take a salaried buyer with:
- Net monthly income: ₹1,00,000
- Existing car loan EMI: ₹10,000
- Bank's FOIR: 50%
Maximum new EMI = (₹1,00,000 × 50%) − ₹10,000 = ₹40,000 a month
Here's how much that ₹40,000 EMI can borrow:
| Interest rate | 20-year tenure | 30-year tenure |
|---|---|---|
| 7.50% | ₹49.7 lakh | ₹57.2 lakh |
| 8.00% | ₹47.8 lakh | ₹54.5 lakh |
| 8.50% | ₹46.1 lakh | ₹52.0 lakh |
| 9.00% | ₹44.5 lakh | ₹49.7 lakh |
Two things stand out. Every half-point of interest costs this buyer about ₹1.6 lakh to ₹2.7 lakh of eligibility. And stretching to 30 years adds roughly ₹5 to ₹7.5 lakh of eligibility, but adds substantially to total interest paid.
Check your own numbers with our free Home Loan Eligibility Calculator and Home Loan EMI Calculator.
The loan-to-value limit: what the bank won't fund
Even if your income supports a large loan, RBI rules cap how much of the property's value a bank can lend:
| Property value | Maximum loan (LTV) |
|---|---|
| Up to ₹30 lakh | 90% |
| ₹30 lakh to ₹75 lakh | 80% |
| Above ₹75 lakh | 75% |
So on a ₹75 lakh flat, the most a bank will lend is ₹60 lakh. The remaining ₹15 lakh is your down payment.
Banks also generally don't fund stamp duty, registration or GST for properties above ₹10 lakh. Those come from your own pocket, on top of the down payment. Our guide to the hidden costs of buying an apartment in Chennai shows how quickly they add up.
Six ways to improve your eligibility
- Add a co-applicant. A working spouse or parent's income is added to yours, often lifting eligibility significantly. Co-owners usually need to be co-applicants.
- Close small loans first. Paying off a personal loan or credit card EMI frees up FOIR. Clearing a ₹10,000 EMI raises this buyer's eligibility by about ₹11.5 lakh at 8.5% over 20 years.
- Check your credit report at least three months before applying, and fix errors.
- Choose a longer tenure for eligibility, then prepay when you can to cut interest.
- Declare all income. Rental income, regular freelance income and a spouse's income all count if they're documented.
- Compare lenders. FOIR limits, rates and how variable pay is counted all differ between banks and housing finance companies.
Documents you'll need
- PAN, Aadhaar and address proof
- Salaried: last 3 months' salary slips, 6 months' bank statements, Form 16
- Self-employed: last 2 to 3 years' ITRs with computation, audited financials, 12 months' bank statements, business proof
- Property documents: sale agreement, approved plan, title documents, and RERA registration for new projects