How loan eligibility is calculated
Lenders first decide the largest EMI you can afford, then work out the loan that EMI can repay over the chosen tenure at their interest rate.
where r is the monthly interest rate and n the number of monthly instalments.
Worked examples (FOIR 50%)
| Net monthly income | Existing EMIs | Rate, tenure | Max EMI | Loan you can get |
|---|---|---|---|---|
| ₹60,000 | ₹0 | 8.5%, 20 years | ₹30,000 | ₹34,56,925 |
| ₹1,00,000 | ₹0 | 8.5%, 20 years | ₹50,000 | ₹57,61,542 |
| ₹1,00,000 | ₹10,000 | 8.5%, 20 years | ₹40,000 | ₹46,09,234 |
| ₹1,00,000 | ₹0 | 9%, 20 years | ₹50,000 | ₹55,57,248 |
| ₹1,50,000 | ₹20,000 | 8.5%, 30 years | ₹55,000 | ₹71,52,950 |
An existing ₹10,000 EMI cuts eligibility by over ₹11 lakh, and a 0.5% higher rate by about ₹2 lakh. Clearing small loans before applying often makes a big difference.
What else lenders check
- Credit score: 750 or above gets the best rates and approval odds.
- Age: the loan usually has to end by retirement, which limits the tenure for older applicants.
- Job and income stability: salaried applicants with 2+ years' experience are preferred; self-employed applicants need 2–3 years of tax returns.
- Property value: the loan is capped at 75–90% of the property value, depending on the amount.
Borrow what you can repay
Eligibility is the most a bank will lend, not what you should borrow. Keep total EMIs comfortably below the limit to leave room for savings and emergencies. Check the exact EMI and interest with the EMI calculator, see your take-home pay with the salary calculator, and plan early repayment with the prepayment calculator.
Frequently asked questions
How do banks decide how much loan I can get?
Banks mainly look at your net monthly income and the share of it that can go to EMIs, called FOIR (fixed obligations to income ratio). Most allow 40–60% of net income for all EMIs together. They also consider your age, credit score, job stability and, for home loans, the property value.
What is FOIR?
FOIR is the percentage of your net monthly income that goes to fixed payments such as EMIs. If your take-home pay is ₹1,00,000 and the bank allows 50%, your EMIs, including the new loan, can total up to ₹50,000.
How can I increase my loan eligibility?
Add a co-applicant with income, close or pay down existing loans, choose a longer tenure, keep your credit score above 750, and declare all regular income such as rent or bonuses.
Does a longer tenure increase eligibility?
Yes. A longer tenure lowers the EMI for each rupee borrowed, so the same EMI supports a bigger loan. The trade-off is much higher total interest, and banks usually limit the tenure so the loan ends by age 60–70.
How much down payment do I need for a home loan?
Under RBI rules, banks can lend up to 90% of the property value for loans up to ₹30 lakh, 80% for ₹30–75 lakh and 75% above ₹75 lakh. The rest, plus registration and stamp duty, is your down payment.
Sources
Last updated 19 September 2026. Results are estimates for planning only and are not investment, tax or legal advice. See our disclaimer.