Two numbers decide most of your home loan offer. One is how much EMI your income can carry. The other is how much the lender will lend against the property. Banks call these FOIR and LTV. This guide explains both in plain words, shows how they combine with a worked example, and lists ways to raise your eligibility.
What decides how much home loan I can get?
Lenders usually look at two limits and give you the lower of the two:
- Income limit. How large an EMI you can pay from your monthly income after your other EMIs. This is where FOIR comes in.
- Property limit. What share of the property's value the lender can finance. This is the LTV ratio, and RBI sets caps for banks.
Your EMI (equated monthly instalment) is the fixed monthly payment that repays the loan with interest. Lenders also look at your credit history and CIBIL score, your age and the tenure they will allow, your job or business stability, and the property's legal and technical checks. Each lender sets its own policy.
What is FOIR in a home loan?
FOIR stands for Fixed Obligation to Income Ratio. It is the share of your monthly income that can go towards all your loan EMIs, including the new home loan. Lenders may also count other fixed payments, such as dues on credit cards.
RBI does not fix a FOIR limit. Each lender sets its own, and it can differ by income level, job type and lender. Ask the lender what FOIR it will apply to you, and on which income figure. Some use net take-home pay, others use gross income.
How do banks calculate home loan eligibility from income?
The method is simple in two steps.
- Maximum new EMI = monthly income × FOIR − existing EMIs.
- Maximum loan = the loan that this EMI can repay at the lender's rate and tenure.
The second step reverses the standard EMI formula. If EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), then the loan amount is P = EMI × ((1 + r)^n − 1) ÷ (r × (1 + r)^n). Here r is the monthly rate (annual rate ÷ 12 ÷ 100) and n is the number of months.
What is LTV, and what are RBI's limits?
LTV (loan-to-value) is the loan as a percentage of the property's value. If a flat is worth ₹60,00,000 and the loan is ₹48,00,000, the LTV is 80%. The rest is your down payment, which you pay from your own money.
RBI's housing finance rules for banks (Master Circular of February 2022; check the latest directions) cap the LTV on individual home loans by loan size:
| Home loan amount | Maximum LTV for banks |
|---|---|
| Up to ₹30 lakh | 90% |
| Above ₹30 lakh, up to ₹75 lakh | 80% |
| Above ₹75 lakh | 75% |
Two points to note:
- Stamp duty and registration are usually not part of the value. RBI tells banks not to include stamp duty, registration and other documentation charges in the property cost for LTV. The exception is a house costing up to ₹10 lakh, where banks may add them. So plan to pay these from your own money.
- These are ceilings, not promises. A lender can lend less, and the value it uses may be lower than your purchase price. Housing finance companies follow separate RBI rules, so ask them for their LTV limit. As of October 2026, confirm the current limit with your lender.
Worked example: income limit vs property limit
Say your take-home pay is ₹1,00,000 a month. You already pay a car loan EMI of ₹15,000. You want a flat worth ₹60,00,000. Assume the lender applies a FOIR of 50% and offers 8.50% for 20 years. These are assumptions for illustration only.
- Maximum total EMIs: ₹1,00,000 × 50% = ₹50,000.
- Room for the home loan EMI: ₹50,000 − ₹15,000 = ₹35,000.
- Loan that ₹35,000 can repay at 8.50% over 240 months: about ₹40,33,079.
- Property limit: the loan is above ₹30 lakh, so the bank cap is 80% of ₹60,00,000 = ₹48,00,000.
Your eligibility is the lower figure, about ₹40.3 lakh. Here income is the binding limit, and you would need about ₹19.7 lakh as down payment, plus stamp duty and registration.
| Scenario | EMI room | Income limit | Property limit | Likely loan |
|---|---|---|---|---|
| With car loan, 20 years | ₹35,000 | ₹40,33,079 | ₹48,00,000 | About ₹40.3 lakh |
| With car loan, 25 years | ₹35,000 | ₹43,46,600 | ₹48,00,000 | About ₹43.5 lakh |
| Car loan closed, 20 years | ₹50,000 | ₹57,61,542 | ₹48,00,000 | ₹48 lakh (LTV cap) |
Closing a ₹15,000 EMI adds more eligibility than stretching the tenure by five years. In the last row, the property limit takes over. A longer tenure lowers the EMI, but raises the total interest you pay.
How does tenure affect my eligibility?
A longer tenure means a lower EMI for the same loan, so the same income supports a bigger loan. At 8.50%, each ₹1,00,000 of loan costs about ₹868 a month over 20 years and about ₹805 over 25 years. But lenders cap the tenure, and the cap may be linked to your age at the end of the loan or your retirement age. These limits are lender policy and vary, so ask.
How can I increase my home loan eligibility?
- Close or reduce small loans first. A personal loan, car loan or consumer EMI uses up FOIR room. Clearing one can raise eligibility more than any other step.
- Pay down credit card balances. Lenders may count card dues as an obligation.
- Add an earning co-applicant. A spouse or parent with income can raise the combined EMI room. Both become liable for the loan, and both credit reports are checked.
- Choose a longer tenure, if your age allows, and prepay later when you can.
- Get a lower rate. A lower rate means a lower EMI for the same loan, so more loan fits your income. Compare offers before you apply.
- Fix errors in your credit report. A wrong overdue or an account that is not yours can hurt your score and your rate.
- Show all regular income with proper documents, such as rent received or variable pay. Lenders decide what they will count.
Do it in 10 minutes, free
Use the eligibility calculator on LowerMyEMI to try your own income, EMIs, rate and tenure, and export the result to Excel or PDF. If you already have a home loan and want a lower rate, enter it once and we draft one email per lender for you to send from your own email.