Archive · 23 Sep 2026
Before Buying a Home, Calculate These Key Loan Numbers
Buying a home is not only about the biggest loan a bank will approve.
You also need to check what monthly payment your family can comfortably afford.
Experts suggest keeping the home-loan payment around 30-35% of take-home income.
All your EMIs together may be allowed to reach 50-60% by lenders, but that could leave less money for other needs.
Start by subtracting household expenses, existing loans and investments from your income.
Then use the remaining comfortable amount to estimate the loan and home price.
Keep some savings aside for emergencies instead of using everything for the down payment.
Remember to budget for taxes, registration, maintenance, insurance and furnishing costs too.
Experts suggest keeping the home-loan EMI near 30-35% of take-home income, though lenders may allow total EMIs of 50-60%.
Buyers should calculate a sustainable EMI after essential expenses, existing debt and ongoing investments, then work backward to determine the loan and property budget.
Longer loan tenures can lower monthly EMIs but increase the total interest paid over the loan's lifetime.
A down payment should not exhaust savings; buyers should retain six to 12 months of essential expenses and EMIs as an emergency reserve.
Affordability calculations should include stamp duty, registration, brokerage, maintenance, property tax, insurance, interiors and other ownership costs.
- Who
- Prospective homebuyers, with guidance from Sanjiv Bajaj of Bajaj Capital and Santosh Agarwal of Paisabazaar.
- What
- Guidance on calculating an affordable home-loan EMI, loan amount, down payment and total cost of home ownership.
- When
- Before finalising a property or taking a home loan.
- Where
- The guidance applies to prospective homebuyers; no specific location is stated.
- Why
- To ensure the purchase fits household cash flow without exhausting savings or compromising other financial goals.
Affordability-focused planning
Lender-based borrowing limits
How much to borrow
Affordability-focused planning
Buyers should base the loan on a sustainable EMI after essential expenses, existing debt and ongoing investments are accounted for.
Lender-based borrowing limits
Lenders generally assess whether total EMIs can fit within roughly 50-60% of monthly in-hand income, which may permit a larger loan than a household can comfortably manage.
Emergency savings
Affordability-focused planning
Buyers should preserve six to 12 months of essential expenses and EMIs, with self-employed borrowers potentially needing nine to 12 months.
Lender-based borrowing limits
Using more savings for the down payment can reduce the loan amount and interest burden, but the article warns that doing so may leave inadequate liquidity.
- Comfortable home-loan EMI
- About 30-35% of monthly take-home income is suggested as a benchmark.
- Example income
- For ₹1.5 lakh in monthly take-home income, the benchmark EMI is approximately ₹45,000-52,500.
- Lender total EMI ratio
- Lenders generally prefer total EMIs, including the proposed home loan, to remain within 50-60% of in-hand monthly income.
- Emergency reserve
- Retain at least six months of essential expenses and EMIs after the down payment.
- Self-employed reserve
- Self-employed buyers may need approximately nine to 12 months of reserves, depending on income variability.
- Additional purchase costs
- Stamp duty, registration, brokerage, paperwork, transfer costs, maintenance, property tax, insurance, interiors and furniture may add to the cost.
- Tenure trade-off
- A longer tenure can reduce the monthly EMI but increase total interest paid.