Applying for a home loan is one of the most significant financial commitments you will make. While banks advertise loan amounts up to ₹10 Crores, how do they calculate how much money you can actually borrow? ### 1. The FOIR Formula (Fixed Obligation to Income Ratio) Lenders evaluate your monthly repayment capacity using FOIR. In India, banks restrict total monthly debt payments (existing car loans, personal loans, credit card EMIs, plus the new home loan EMI) to between 40% and 65% of your net monthly take-home salary. ``` Allowable EMI = (Net Monthly Salary × FOIR %) - Existing EMIs ``` For example, if your monthly in-hand salary is ₹1,20,000 and the bank's FOIR benchmark is 55%: - Maximum Permissible EMI = ₹66,000 - If you currently pay ₹10,000 in car EMI, your Available Home Loan EMI is ₹56,000. - At an 8.50% interest rate for a 20-year tenure, ₹56,000 monthly EMI translates to an eligible loan amount of approximately **₹64.5 Lakhs**. ### 2. Loan-to-Value (LTV) Ratios Under RBI regulatory guidelines, banks cannot fund 100% of the property value: - **Loans up to ₹30 Lakhs:** LTV up to 90% (10% down payment) - **Loans between ₹30 Lakhs and ₹75 Lakhs:** LTV up to 80% (20% down payment) - **Loans above ₹75 Lakhs:** LTV up to 75% (25% down payment) ### 3. The Power of a 750+ CIBIL Score A credit score above 750 places you in the 'Super Prime' category, giving you: - Access to the lowest floor interest rate (repo + lowest bank spread) - Accelerated paperless loan sanction - Higher FOIR tolerance (up to 65%) - Waiver of administrative and inspection fees Use the MakaanLoan Eligibility Calculator to calculate your exact sanction readiness in seconds!