How banks decide your home loan eligibility
There is no single formula. Every lender runs their own scorecard, but the process almost always starts in the same place: how much EMI can this person safely carry?
The underwriter begins with income and FOIR, then layers on credit history, employment type, property and legal due diligence, and internal policy limits. This calculator isolates the FOIR math so you can understand the biggest variable before you gather documents or visit a branch.
What is FOIR and how to calculate it
FOIR (Fixed Obligations to Income Ratio) is the share of your gross monthly income that goes to fixed repayments. Most Indian lenders cap the total at 40 to 50 percent, including the new home loan EMI you want. Our tool works backwards from a 50% ceiling: it finds the EMI headroom left after your existing obligations, then converts that into the maximum principal a bank would sanction.
Eligible principal = inverse reducing-balance formula applied to that EMI
| Monthly income | 50% FOIR cap | Headroom after ₹25k existing EMIs |
|---|---|---|
| ₹80,000 | ₹40,000 | ₹15,000 |
| ₹1,50,000 | ₹75,000 | ₹50,000 |
| ₹2,50,000 | ₹1,25,000 | ₹90,000 (after ₹35k EMIs) |
Co-applicants: how to use them wisely
Adding an earning co-applicant raises the FOIR base (combined income) without a proportional increase in obligations, which typically lifts the eligible loan by a meaningful margin. Banks may also require a co-applicant on joint-family properties or when a single income falls short of their policy floor.
Women borrowers get concessional stamp duty rates in several states, including Maharashtra, Delhi, and Uttar Pradesh. If the property is being registered in a woman's name, plan this before registration day, not after.
How your CIBIL score affects the loan amount and rate
A credit score does not directly change the FOIR formula, but it affects everything around it: the rate you are offered, the FOIR ceiling the bank applies to your profile, and whether you are approved at all. The table below reflects common patterns across Indian lenders; each institution sets its own cut-offs.
| Score range | What to expect |
|---|---|
| 750 and above | Competitive rates, faster approval, full FOIR applied. |
| 700 to 749 | Approved with closer scrutiny; some banks add a rate premium or tighten FOIR. |
| Below 700 | Smaller sanction, guarantor requirement, or a waiting period to clean up negatives first. |
LTV limits: when property value caps your loan
Even if your income supports a large EMI, the bank will not lend beyond a fixed percentage of the property's value. This is the Loan-to-Value (LTV) ratio, and RBI guidelines currently allow most lenders to finance up to 75 to 90 percent depending on the loan amount. The calculator uses an illustrative 80 percent when you enter a property price.
| Property value (₹) | 80% LTV cap (₹) | Minimum down payment |
|---|---|---|
| 50,00,000 | 40,00,000 | 10,00,000 |
| 1,00,00,000 | 80,00,000 | 20,00,000 |
| 2,00,00,000 | 1,60,00,000 | 40,00,000 |
When to apply now and when to wait
If a promotion, bonus payout, or loan closure is three to six months away, timing your application around that milestone can materially change the sanction amount. Similarly, a written-off account sitting on your credit report is worth resolving before you apply, not after a rejection.
What documents banks ask for
The list varies by lender, but the core set is consistent. Have these ready before the soft-quote stage, not just the formal application, as some banks run a quick income check before sharing a provisional figure.
| Salaried applicants | Self-employed applicants |
|---|---|
| Last 3 salary slips, Form 16, bank statement showing salary credits | 2 to 3 years ITR with computation, audited P&L and balance sheet |
| Employer verification letter or HR confirmation | GST registration, 12-month current account statements, business continuity proof |
Before you apply: a practical checklist
- List every running EMI and credit card minimum. What you tell the bank must match what they pull from the bureau.
- Pull your credit reports from CIBIL and one other bureau your target bank uses. Fix any misreported account IDs.
- If adding a co-applicant, collect their income proof and KYC before the soft-quote window closes.
- Set aside at least six months of EMI in liquid savings after accounting for down payment, stamp duty, and GST on under-construction properties.
- Ask your lender for the LTV on your specific agreement value, not just the headline "up to 90%" figure they advertise.