Home loan EMI: what you pay and how much you can borrow

An EMI is a fixed monthly payment that covers interest on what you still owe, plus a little of the loan itself. Early on, most of each EMI is interest. Later, most of it repays the loan.

Three things set it: the loan amount, the interest rate and the number of years. A longer tenure lowers the EMI but raises the total interest a lot. A higher rate raises both.

Our calculator assumes 7.75% for salaried borrowers and 8.75% for the self-employed. These are estimates: your rate depends on the lender and your credit score. Small changes matter. On ₹64 lakh over 20 years, 7.25% gives an EMI of about ₹50,600 and 8.5% about ₹55,500. Most home loans are floating and move with the RBI repo rate, so your EMI or tenure can change.

The RBI caps the loan as a share of the property's value. This is the loan-to-value (LTV) limit.

Stamp duty, registration and other documentation charges are not counted in the property's cost for LTV, except on homes costing up to ₹10 lakh. So you pay these yourself, on top of your down payment.

Banks look at your fixed obligation to income ratio (FOIR): all your EMIs, including the new one, as a share of monthly income. Lenders set their own limits, but 40–55% is the usual band, and keeping it at or under 50% helps you get a larger loan. Ask whether the lender counts gross or take-home pay.

• Existing EMIs, credit card dues and some other fixed payments count against you.
• Adding an earning co-applicant raises the income the bank counts.
• Age limits the tenure. One large bank asks salaried applicants to be under 60 and self-employed under 65.
• A credit score of about 700 or more is commonly expected.

A couple earn ₹1,50,000 a month between them and already pay a car EMI of ₹15,000. They want an ₹80 lakh flat.

• Income: at a 50% FOIR, total EMIs can reach ₹75,000. After the car EMI, that leaves ₹60,000 for the home loan. At 7.75% over 20 years, that supports about ₹73 lakh.
• Property: 80% of ₹80 lakh is ₹64 lakh. That loan is in the ₹30–75 lakh band, so 80% is allowed.
• The lower figure wins: the loan is ₹64 lakh. The EMI is about ₹52,500, and interest over 20 years is about ₹62 lakh.
• Own money: ₹16 lakh down payment, plus stamp duty and registration (about ₹5–7 lakh in most states), plus a processing fee.

• Processing fee: often up to about 0.5% of the loan, sometimes capped at a fixed amount, plus 18% GST. Our calculator uses 0.5% as an estimate.
• Legal and valuation charges, and the cost of registering the mortgage in some states, are extra.
• Prepayment: under RBI rules, banks and NBFCs can't charge a fee for prepaying a floating-rate loan taken by an individual for non-business use, for loans sanctioned or renewed from 1 January 2026. Other loans, such as fixed-rate ones, can carry a charge under the lender's own policy.
• Prepaying early in the loan saves the most interest. You can ask to cut the tenure or the EMI.
• Tax: under the old tax regime, home loan interest and principal can be deducted within limits. Rules differ for the new regime and for let-out homes, and they change. Check with your CA.

For a house on your own plot, the bank pays out in stages as work is checked, and you pay interest only on what has been released. It usually wants the sanctioned plan and an architect's or engineer's cost estimate first. Our house calculator gives a starting estimate.

• Get the bank's sanction before signing the contractor's payment schedule.
• Match the contractor's payment stages to the bank's release stages.
• Keep 10–15% of the build cost as your own buffer for delays and changes.

• Choosing the longest tenure only for the lowest EMI, without seeing the total interest.
• Forgetting that stamp duty and registration can't be funded by the loan on most homes.
• Taking an EMI that uses your whole limit. Rates can rise.
• Comparing banks on the headline rate only. Ask for the Key Facts Statement, which lists all charges.