Home Loans & Finance
Home Loan Eligibility: What the Bank Is Actually Looking At
Four numbers decide what you can borrow. Three of them you can improve before you apply — and most people apply first and find out afterwards.
The short answer
Four things decide your loan size:
1. FOIR — what proportion of your income already goes on EMIs. Usually capped around 40–55%.
2. LTV — the lender can only advance 75–90% of the property's value. Never 100%.
3. Your CIBIL score — which sets your rate, not just your approval.
4. Your age — the loan must finish before you retire.
FOIR — the ratio that caps your loan
Fixed Obligation to Income Ratio. What proportion of your monthly income already goes on debt.
How it's computed
FOIR = (All your monthly EMIs + the new EMI) ÷ Net monthly income
- Net monthly income
- ₹1,50,000
- Existing EMIs (car, personal loan, credit card minimums)
- ₹20,000
- Lender's FOIR cap (say)
- 50%
- Total EMI you may carry
- ₹75,000
- Room for a home loan EMI
- ₹55,000
That ₹20,000 car EMI has reduced your home loan capacity by roughly ₹25 lakh.
The credit card you never clear in full counts too — lenders take the minimum due as an obligation.
Close small loans before you apply. Not after. Every ₹10,000 of monthly EMI you clear buys you roughly ₹12 lakh of home loan capacity.
That is a very high return on paying off a car loan a year early.
LTV — and the cash nobody budgets for
| Loan amount | Maximum LTV | You must fund at least |
|---|---|---|
| Up to ₹30 lakh | 90% | 10% |
| ₹30 lakh – ₹75 lakh | 80% | 20% |
| Above ₹75 lakh | 75% | 25% |
And note what the LTV is calculated on: the property value as the LENDER assesses it, which may be lower than what you agreed to pay. If the bank values your Rs 1 crore flat at Rs 90 lakh, your 75% LTV is 75% of Rs 90 lakh — and the shortfall is yours to find.
On an ₹80 lakh flat, at 80% LTV, you need ₹16 lakh of down payment.
But the loan does not cover:
• Stamp duty and registration — around ₹5 lakh
• The corpus fund — often ₹1 lakh or more
• Advance maintenance — 12–24 months of it
• Car parking, club membership, and whatever else is 'extra'
• The processing fee on the loan itself
You need closer to ₹22–24 lakh, not ₹16 lakh. People discover this late, and it is one of the commonest ways a purchase falls apart at the last moment.
Your credit score
It does two things, and the second matters more than people realise.
- Approval. Below about 700, it gets hard. Below 650, harder still.
- Your SPREAD. A 780 score buys a materially better rate than a 700. And the spread is fixed at sanction, for the life of the loan.
Over twenty years, a fraction of a percentage point is worth lakhs. Check your score, fix errors, and wait if you need to — before you apply.
Age and tenure
The loan must generally finish by around 60–65, or by your retirement age.
- You're 30 → 30 years of tenure available → lower EMI → larger loan.
- You're 50 → maybe 10–15 years → higher EMI → smaller loan.
A longer tenure means a lower EMI and a bigger loan — but far more total interest. Take the tenure you need for approval, then prepay aggressively — which, on a floating-rate loan, is free.
How to borrow more
| Do this | Why it works |
|---|---|
| Close your existing EMIs | Directly raises your FOIR headroom. The single most effective lever. |
| Add a co-applicant | Their income is added. A working spouse can transform the number — and the tax deductions double. |
| Extend the tenure | Lower EMI, bigger loan. But far more interest. Use it to get approved, then prepay. |
| Improve your CIBIL score | Better rate, better approval odds. Takes months, so start early. |
| Declare all income | Rental income, bonuses, variable pay. Some lenders count them; ask. |
| Bigger down payment | Lower LTV, lower risk, sometimes a better rate. |
The property has to qualify too — and this catches people
The lender is not only assessing you. It is assessing the security.
They will refuse, or lend less, where:
• The property is a B khata (Bengaluru) — most mainstream banks will not lend at all
• There is no occupancy certificate
• The title is unclear, or the chain has a gap
• The project is not RERA registered, where it should be
• The building is old, or the remaining lease is short
• The land was never converted from agricultural use
• Their technical valuation comes in below your price — and then the shortfall is yours to fund
Get the property checked before you get yourself pre-approved. A perfectly eligible borrower can still be refused because of the flat — and by then they have usually paid a token.
Home loan rates and the RBI's repo rate move. A page that says 'the rate is X%' is wrong within months, and quietly misleads everyone who reads it afterwards.
So we explain how the mechanism works — which does not change — and leave the number to you.
For the current repo rate, check the RBI's own website. For current home loan rates, check three or four lenders directly. Both take five minutes, and both are more reliable than anything a content site tells you.
Frequently asked questions
How is home loan eligibility calculated in India?
Four things. FOIR — what proportion of your income already goes on EMIs, usually capped around 40-55%. LTV — the lender may advance only 75-90% of the property's value. Your CIBIL score, which sets both your approval and your interest rate. And your age, since the loan must finish before you retire.
How much down payment do I need for a home loan?
At least 10-25% depending on the loan size — but budget 25-30% of the property price in cash. The loan does not cover stamp duty and registration (around Rs 5 lakh on an Rs 80 lakh flat), the corpus fund, advance maintenance, parking, or the processing fee. People budget for the down payment and discover the rest late.
How can I increase my home loan eligibility?
Close existing EMIs — that is the single most effective lever, since every Rs 10,000 of monthly EMI you clear buys roughly Rs 12 lakh of home loan capacity. Add a working co-applicant. Extend the tenure (then prepay, which is free on a floating loan). Improve your CIBIL score. Declare all your income.
Can the bank refuse a loan because of the property?
Yes, and this catches people. The lender is assessing the security as well as you. They will refuse or lend less on a B khata property (most mainstream banks won't lend at all), where there is no occupancy certificate, where the title is unclear, where the project isn't RERA registered, or where their own valuation comes in below your price. Get the property checked before you pay a token.
Does my existing car loan affect my home loan?
Substantially. A Rs 20,000 car EMI reduces your home loan capacity by roughly Rs 25 lakh. Credit cards count too — lenders treat the minimum due as an obligation. Closing small loans before you apply is one of the highest-return things you can do.