Two caps decide your loan: FOIR and LTV
Indian lenders converge on the same two-cap framework regardless of bank. The first cap, FOIR, asks: how much of your monthly income can go to debt service. The second cap, LTV, asks: how much of the property value can be financed. Final sanction is the minimum of the two.
FOIR cap (income-based): max EMI = net monthly income × FOIR% - existing EMIs. The FOIR percentage is set by CIBIL band, scaled by income bracket. PSU banks (SBI, BoB, PNB) lean conservative at lower incomes; private banks (HDFC, ICICI, Axis) are usually 2-5 percentage points more generous in the middle income range.
LTV cap (property-based): per the RBI Master Circular on Housing Finance, banks may lend up to 90% under Rs 30 lakh, 80% from Rs 30-75 lakh, and 75% above Rs 75 lakh. Under-construction property gets a 5 percentage point reduction. These are ceilings; individual banks may lend less based on builder approval status, valuation report, and city.
The math then runs: convert max EMI into a loan amount using the EMI formula, compare with LTV cap, take the lower. The calculator at the bottom of this post does this in one click; the next sections walk through the inputs slowly so the output is not a black box.
| CIBIL band | FOIR cap | Rate adjustment | Verdict |
|---|---|---|---|
| 800-900 | 65% | Card rate -10 to -25 bps | Best terms; negotiate |
| 750-799 | 60% | Card rate | Standard approval |
| 700-749 | 55% | +10 to +25 bps | Approvable, pricier |
| 650-699 | 50% | +50 to +100 bps | Difficult; consider NBFC |
| 300-649 | 40% | +200-300 bps | Rebuild score first |
Worked examples: Rs 50K, Rs 1L, Rs 2L net monthly income
All three examples assume CIBIL 750, no existing EMIs, 20-year tenure, 8.5% rate, ready-to-move property. We compute the FOIR-based loan first, then check if the LTV cap binds.
Rs 50,000 net income, single applicant
FOIR cap at 60% gives max EMI = Rs 50,000 × 0.60 = Rs 30,000. Converting Rs 30,000 EMI to a 20-year, 8.5% loan: approximately Rs 34.6 lakh. For LTV cap not to bind, property value should be at most Rs 34.6 lakh / 0.90 = Rs 38.4 lakh (since under Rs 30 lakh loans get 90% LTV; here loan is above 30L so 80% LTV applies, meaning Rs 43.2 lakh property). The FOIR cap binds first - typical for low-income borrowers.
Rs 1,00,000 net income, single applicant
FOIR cap at 60% gives max EMI = Rs 60,000. That equals approximately Rs 69.2 lakh of loan over 20 years at 8.5%. Now the loan size pushes into the Rs 30-75 lakh band, so LTV is 80%. To not be LTV-capped, property value should be at least Rs 86.5 lakh. If the property is Rs 1.2 crore, LTV cap = 80% × 1.2 crore = Rs 96 lakh, FOIR cap = Rs 69.2 lakh, FOIR binds.
Rs 2,00,000 net income, single applicant
FOIR cap at 60% gives max EMI = Rs 1.20 lakh. That equals approximately Rs 1.39 crore of loan. Loan is now above Rs 75 lakh so LTV drops to 75%. To not be LTV-capped, property value must be at least Rs 1.85 crore. If the property is Rs 1.5 crore, LTV cap = 75% × 1.5 crore = Rs 1.13 crore, FOIR cap = Rs 1.39 crore - LTV binds. The borrower must reduce ambition or arrange a bigger down payment.
| Net income / month | Max EMI | Solo eligibility | With Rs 50K co-applicant |
|---|---|---|---|
| Rs 50,000 | Rs 30,000 | ~Rs 34.6 lakh | ~Rs 69.2 lakh |
| Rs 1,00,000 | Rs 60,000 | ~Rs 69.2 lakh | ~Rs 1.04 crore |
| Rs 2,00,000 | Rs 1,20,000 | ~Rs 1.39 crore | ~Rs 1.73 crore |
LTV cap by loan size and property type
The RBI Master Circular sets three LTV bands. They are loan-size bands, not property-value bands - if your eligible loan straddles a band, the lower band applies to the entire loan. Many buyers miss this and budget for the wrong down payment.
Under-construction property is treated as higher risk because the bank disburses against builder demand letters and the asset is incomplete until possession. Loans are tranched and the borrower pays only pre-EMI interest on the disbursed amount during construction. This depresses the LTV and adds 12-30 months of carrying cost.
The age and tenure constraint that catches older borrowers
Tenure cannot exceed retirement age minus current age. For salaried borrowers, retirement is 60. A 50-year-old salaried applicant is therefore capped at 10-year tenure, not 20 or 30. This compresses EMI to nearly double the 20-year figure, which often pushes the FOIR cap to bind much harder than expected.
Self-employed applicants stretch to 65, gaining 5 more years. Pensioners with a co-applicant may extend up to 70. But for most salaried borrowers above age 45, the tenure cap is the binding constraint, not income.
Practical fix: add a younger co-applicant (spouse or earning adult child) as joint borrower. The bank uses the elder applicant's retirement for repayment timeline, but if the younger applicant can service the loan past that date, tenure can extend to their retirement. Both applicants must be on the property title.
Tax savings stack: Section 24(b) + 80C + 80EEA
Under the old tax regime, three sections reduce the effective cost of a home loan. None applies in the new regime, so this matters most to borrowers staying on the old regime for FY 2025-26.
Section 24(b): interest deduction up to Rs 2 lakh/year for self-occupied property. For a Rs 50 lakh loan at 8.5%, year-1 interest is about Rs 4.2 lakh - well above the Rs 2 lakh cap. The deduction is fully usable for the first 12-15 years of a 20-year loan.
80C: principal repayment plus stamp duty/registration up to Rs 1.5 lakh combined. Year-1 principal is about Rs 1 lakh, rising to Rs 2 lakh by year 10. Stamp duty paid in the year of purchase is fully deductible under 80C in addition to principal, subject to the same Rs 1.5 lakh cap (the cap is shared with PF, ELSS, life insurance premium, ULIP and others).
80EEA: extra Rs 1.5 lakh interest for first-time buyers, if the loan was sanctioned between April 2019 and March 2022 and the property's stamp value is under Rs 45 lakh. Stacks on top of 24(b), giving a total interest deduction of Rs 3.5 lakh. The April 2022 sunset means new borrowers cannot use 80EEA, but those who locked in are still entitled.
At the 30% slab, fully using 24(b) plus 80C saves Rs 1.05 lakh/year in tax - equivalent to an effective rate reduction of roughly 2 percentage points for the first 8-10 years of the loan. See our India home loan tax stacking 2026 guide for the year-by-year deduction tracker.
| Section | Deduction | Tax saved |
|---|---|---|
| Section 24(b) - interest | Rs 2,00,000 (cap; actual interest is higher) | Rs 60,000 |
| 80C - principal + stamp duty | Rs 1,50,000 (cap; principal year-1 ~ Rs 1L) | Rs 45,000 |
| 80EEA - first-time buyer (if eligible) | Rs 1,50,000 | Rs 45,000 |
| Stacked total (eligible buyer) | Rs 5,00,000 | Rs 1,50,000 |
Run the math for your situation
Plug your income, existing EMIs, CIBIL and property value into the India Home Loan Eligibility Calculator. It applies the FOIR and LTV caps in real time and shows the tenure trade-off and CIBIL sensitivity tables.
How to calculate your home loan eligibility in India (6 steps)
- Get net monthly income: take the average of your latest 3 payslip net figures (gross minus tax minus PF minus PT). Banks ignore variable pay haircuts at this stage; expect a 20-40% adjustment in formal underwriting.
- Sum existing EMIs: every running EMI plus 5% of any credit card outstanding as a proxy for the bank's minimum-due assumption.
- Check your CIBIL: cibil.com gives one free check per year. The band you fall into (800+, 750-799, 700-749, etc.) sets your FOIR cap and rate adjustment.
- Apply the FOIR cap: max EMI = net income × FOIR% - existing EMIs. Convert to a loan amount using the EMI formula for your tenure.
- Apply the LTV cap: cap loan at 90% (under Rs 30L), 80% (Rs 30-75L) or 75% (above Rs 75L) of property value. Subtract 5 pp for under-construction.
- Take the minimum: final eligibility is the lower of FOIR-based and LTV-based. The constraint that binds is your priority for improvement: FOIR-bound borrowers close EMIs, LTV-bound borrowers raise down payment.