What is loan affordability?

Affordability is the loan amount you can comfortably service, calculated using the FOIR rule: (income − existing EMIs − essential expenses) × 50% gives the maximum new EMI. The principal you can afford is the present value of that EMI at the prevailing rate and tenure.

How is the maximum affordable EMI calculated?

Banks use Fixed Obligation to Income Ratio (FOIR) — typically 50% for salaried borrowers and 40% for self-employed. The calculator subtracts your existing EMIs and recurring expenses, then caps the new EMI at FOIR × net income.

Why does affordability differ from eligibility?

Eligibility is the bank's ceiling — what they will lend. Affordability is your comfort zone — what you can repay without financial strain. The calculator uses a 50% FOIR for safety; banks may stretch to 65% but that leaves you cash-strapped during emergencies.

Should I borrow the maximum I qualify for?

No. A safer rule of thumb is to keep total EMIs under 40% of net income — leaves room for medical emergencies, education spikes, and rate hikes on floating-rate loans. The calculator shows both the bank's ceiling and a comfortable target so you can choose.

Does the calculator factor in rate hikes?

Yes — there is a stress-test toggle that applies a +1.5% rate shock and shows the EMI impact. Floating-rate home loans can move 100-200 bps in a cycle, so this guards against payment shock if rates rise after sanction.

How do I increase my affordable loan amount?

Three levers: (1) close small unsecured loans (personal, credit-card balances), (2) add a co-applicant whose income gets clubbed, (3) extend tenure to lower the EMI. The calculator lets you toggle each lever and see the impact in real time.

Folio 12 · Home Affordability Calculator

Home Affordability Calculator

Reviewed by Jay Patel· Last reviewed: 25 Apr 2026stale

Jay Patel

Co-Founder & Chief Loan Advisor

Calculate the property value you can comfortably afford.

What makes this calculator different

FOIR + stress-test toggle (+1.5% rate shock) shows your EMI burden if rates rise after sanction — critical for floating home loans where a single RBI rate-hike cycle can lift the EMI by 8–12%.

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