Home loan EMI, eligibility and interest: how much property can you actually afford?
Lenders in India fund 75–90% of property value depending on ticket size (loan-to-value, or LTV), and cap total EMIs at roughly 40–55% of net monthly income (FOIR). Use Estatly.in's price and EMI calculator with locality ₹/sqft rates to see what a specific area implies for your monthly outflow.
The EMI formula
EMI = P × r × (1+r)^n / ((1+r)^n − 1), where P is principal, r is the monthly interest rate (annual ÷ 12 ÷ 100) and n is tenure in months. A ₹60 lakh loan at 8.5% for 20 years is about ₹52,000 a month; stretching to 30 years cuts the EMI to roughly ₹46,100 but nearly doubles total interest paid.
LTV, FOIR and the real down payment
Banks exclude stamp duty, registration and GST from the funded amount, so your cash requirement is the down payment plus those charges. On a ₹1 crore purchase with 80% LTV, expect roughly ₹20 lakh down payment plus ₹6–8 lakh of duties and charges.
- LTV: up to 90% below ₹30 lakh, 80% for ₹30–75 lakh, 75% above ₹75 lakh (indicative RBI norms)
- FOIR: all EMIs including car and personal loans count against your income
- CIBIL score above 750 usually unlocks the best advertised rate
Floating rates, resets and prepayment
Most retail home loans are now linked to an external benchmark, usually the repo rate (RLLR/EBLR), and reset quarterly. Floating-rate loans to individuals carry no prepayment penalty, so part-prepayment in the early years — when the interest share of each EMI is highest — is the cheapest way to cut total cost.
Tax deductions to factor in
Under the old tax regime, interest on a self-occupied home qualifies for deduction up to ₹2 lakh a year under Section 24(b) and principal repayment up to ₹1.5 lakh under Section 80C. The new regime removes most of these, so compute your effective cost under the regime you actually file.
Frequently asked questions
Should I choose a shorter or longer tenure?
Pick the shortest tenure whose EMI stays comfortably within your budget, then part-prepay whenever you have surplus. Long tenures buy affordability at a high interest cost.
Is a fixed-rate home loan better?
Fixed rates in India are usually priced 1–2% higher and often fixed for only a few years. Most borrowers stay on floating and manage risk with prepayment.