What is a Home Affordability Calculator?
A Home Affordability Calculator helps you determine how much house you can afford based on your income, existing debts, down payment, and current interest rates. It factors in all key elements that banks consider when approving home loans.
Our calculator uses industry-standard debt-to-income ratios and includes additional costs like property tax and insurance to give you a realistic picture of what you can comfortably afford.
Key Factors That Determine Affordability
- Annual Income: Banks typically allow EMI up to 50-60% of net monthly income
- Existing Debts: Car loans, credit cards, and other EMIs reduce your eligible loan amount
- Down Payment: Higher down payment means lower loan amount and EMI
- Interest Rate: Even 0.5% difference significantly impacts affordability
- Loan Tenure: Longer tenure reduces EMI but increases total interest paid
Home Loan Eligibility Criteria
- FOIR (Fixed Obligations to Income Ratio): All EMIs should not exceed 50-60% of income
- LTV (Loan to Value): Banks fund 75-90% of property value
- Credit Score: 750+ score gets best rates, minimum 650 for approval
- Age Factor: Loan tenure + current age should not exceed 60-65 years
Affordability Calculation Formula
Maximum EMI = (Monthly Income - Existing EMIs) x 50%
Max Loan = EMI x [{(1+r)^n - 1} / {r(1+r)^n}]
- r = Monthly interest rate (Annual rate / 12 / 100)
- n = Loan tenure in months
Example Calculation
Scenario: Rs 12 lakh annual income, Rs 10,000 existing EMI, 20% down payment, 8.5% interest, 20 years
- Monthly Income: Rs 1,00,000
- Max EMI Available: Rs 50,000 - Rs 10,000 = Rs 40,000
- Maximum Loan: Rs 46 lakh (approx)
- With 20% Down Payment: Affordable Home = Rs 57.5 lakh
Tips to Increase Affordability
- Clear Existing Debts: Paying off car loan or credit cards increases eligible EMI
- Add Co-applicant: Spouse income can be combined for higher eligibility
- Increase Down Payment: 30% down payment reduces EMI burden significantly
- Choose Longer Tenure: 25-30 years tenure lowers EMI (but higher total interest)
- Improve Credit Score: Better score = lower interest rate = higher affordability
Frequently Asked Questions
How much home loan can I get on Rs 50,000 salary?
With Rs 50,000 monthly salary and no existing debts, you can afford an EMI of Rs 25,000-30,000. This translates to approximately Rs 25-30 lakh loan for 20 years at 8.5% interest. With a 20% down payment, you can afford a home worth Rs 31-37 lakh.
What is the 28/36 rule for home buying?
The 28/36 rule suggests that housing costs (EMI + property tax + insurance) should not exceed 28% of gross income, and total debt payments should not exceed 36%. In India, banks are more flexible with up to 50% for housing costs alone.
How much down payment is required for a home loan?
RBI mandates minimum 10-25% down payment depending on loan amount. For loans up to Rs 30 lakh, banks can fund 90%. For Rs 30-75 lakh, it is 80%, and for above Rs 75 lakh, banks fund 75% maximum.
Does rental income count for home loan eligibility?
Yes, rental income from existing property can be considered (usually 70-80% of actual rent). This can significantly boost your eligibility if you own rental property. You will need rent agreement and bank statements as proof.
Can I get a home loan if I already have a car loan?
Yes, but your existing car EMI will be deducted from your eligible EMI capacity. For example, if your max EMI capacity is Rs 40,000 and car EMI is Rs 10,000, you can only allocate Rs 30,000 for home loan EMI.
Should I max out my home loan eligibility?
No, it is advisable to borrow 70-80% of your maximum eligibility. This leaves buffer for emergencies, unexpected expenses, and lifestyle changes. Over-leveraging can cause financial stress if income drops.