The metric lenders actually use — FOIR
Fixed Obligation to Income Ratio (FOIR) is the share of your monthly income that can go toward all EMIs combined — your new home loan plus any existing car loan, personal loan, or credit card EMI. Most lenders cap FOIR somewhere between 40% and 50%, though it varies by lender and your income level (higher earners sometimes get a higher cap).
Your maximum new-loan EMI is: (monthly income × FOIR%) − existing EMI obligations. That maximum EMI, combined with your loan's interest rate and tenure, determines your maximum loan amount.
A worked example
On a ₹1,00,000 monthly income with no existing EMIs, a 50% FOIR cap, an 8.5% interest rate, and a 240-month (20-year) tenure: the maximum EMI is ₹50,000, which supports a maximum loan amount of about ₹57,61,542.
Add your planned down payment to that maximum loan amount to get your total affordable home price — for example, with a ₹10,00,000 down payment, you could afford a home costing up to about ₹67,61,542.
What actually moves this number
A longer tenure increases your maximum eligible loan amount (the same EMI cap spreads over more months, supporting more principal) but increases total interest paid over the life of the loan — the classic tenure trade-off.
Existing EMIs directly reduce your headroom rupee-for-rupee — paying off a car loan or personal loan before applying can meaningfully raise how much home loan you qualify for.
A lower interest rate raises your eligible loan amount for the same EMI, since more of each payment goes toward principal — shopping for the best rate (or negotiating one) pays off doubly: lower interest cost, and higher eligibility.
Eligibility isn't the same as "should"
Lenders calculate the maximum they'll approve — it isn't automatically the amount you should actually borrow. Building in a buffer below your maximum eligible EMI gives you room for income disruptions, rate increases (on floating-rate loans), and other life expenses, rather than stretching every month to the lender's ceiling.