Indian banks calculate "eligibility" by working out the largest EMI you can theoretically pay without defaulting. They run the FOIR (Fixed Obligation to Income Ratio) at 50-55% of net monthly income. That's the number on the sanction letter.
That number is not for you. It's for the bank.
What it leaves you is a 1-bad-month-away-from-stress life. ₹1L take-home, ₹55K EMI committed → ₹45K covers rent (if you're still renting somewhere), food, fuel, utilities, school fees, SIPs, term insurance, health insurance, and the cushion for the day your geyser dies and the AC compressor gives up the same week. There is no cushion. You're not living, you're servicing.
Use 40% instead. ₹1L take-home → ₹40K total EMI ceiling. Subtract any existing EMIs (car loan, personal loan, BNPL). What's left is the room for a home loan. At today's ~8.5% over 20 years, every ₹1 Lakh of loan costs about ₹868/month — so ₹40K of EMI room maps to roughly ₹46 Lakh of loan principal.
Earn well above ₹1.5L/month with low fixed costs and no kids? Fine, push to 45%. But the default should be 40%, not 55%.
The reason Indian middle class household savings collapsed from 23% of GDP (2012) to under 18% (2024) isn't lifestyle inflation. It's people taking the bank's "eligibility" number as their "affordability" number. Two different things. Same word.
Updated May 26, 2026. Loan estimate at 8.5% p.a. × 20 years; excludes processing fees, GST and stamp duty. Affordability ≠ bank eligibility — banks may approve more.