What is the Home Affordability Calculator?
A lender will tell you the largest loan they are willing to approve. That figure answers their question about risk, not yours about comfort, and the two are rarely the same number.
This calculator works from the other direction. It starts with what you can sustainably pay each month, subtracts what you already owe, and shows the loan and property price that payment actually supports.
What each input means
- Monthly take-home
- Income after tax and deductions — the money that genuinely arrives.
- Existing monthly EMIs
- Every other loan payment you are already committed to. These reduce the room available for a new one.
- Down payment saved
- Cash available for the deposit. It adds directly to the property budget without adding to the loan.
- Annual interest rate
- The rate on the new loan. A one-point difference changes the supportable loan substantially.
- Loan tenure
- How long the loan runs. A longer term raises the budget and the total interest together.
- Max share of income for EMI
- The proportion of take-home pay you are prepared to commit. Lenders commonly work near 40 to 50 percent; a lower figure leaves you more room.
How this calculation works
The affordable payment is your take-home pay multiplied by the income share, minus existing obligations. That is the monthly amount available for a new loan.
From there the EMI formula runs backwards. Instead of asking what a given loan costs per month, it asks what loan a given monthly payment would clear over the tenure at that rate. Adding the down payment gives the property budget.
Two of the inputs deserve suspicion. Extending the tenure raises the budget while raising the total interest more, and raising the income share raises the budget while removing the slack that absorbs a rate rise or a lost month of income.
Formula: Loan = affordable EMI x ((1+r)^n - 1) / (r x (1+r)^n)
Getting the most out of the result
- Run it at a rate two points above what you are quoted. If that payment would break your budget, the loan is larger than it looks.
- The property budget is not the purchase budget. Registration, stamp duty, legal fees, brokerage and immediate repairs are real and are not in this figure.
- A lower income share is not caution for its own sake. It is what lets you keep saving and keep an emergency fund while paying a mortgage.
- Compare the total interest at twenty years against fifteen. The monthly difference is often smaller than expected and the lifetime difference much larger.
- Ongoing costs — maintenance, property tax, insurance — continue after the loan ends. Budget for them separately from the EMI.
Common mistakes to avoid
The most consequential mistake is treating a lender’s maximum as a target rather than a ceiling, since their assessment covers the risk of not being repaid and says nothing about whether the rest of your life still works. Forgetting transaction costs is the second, and they routinely add a meaningful percentage on top of the price. Stretching the tenure purely to reach a higher property price is the third, because it buys a bigger house with a much larger total interest bill. And budgeting to the last rupee of the income share leaves nothing for a rate rise, a repair, or a gap between jobs — the three things most likely to actually happen.
Frequently asked questions
How much of my income should go to a home loan?
Lenders commonly work to a total obligations figure near 40 to 50 percent of take-home pay, but that is their risk threshold rather than a comfort threshold. A lower share leaves room to keep saving and to absorb a rate rise, which is what makes a long loan survivable.
Why is the lender offering more than this shows?
Because they are answering a different question. Their assessment is about the probability of repayment, and it does not account for your other goals, your savings rate, or how much slack you want. A loan can be repayable and still be a poor decision.
Does a longer tenure mean I can afford more?
It raises the loan a given payment supports, so arithmetically yes. It also increases the total interest considerably, because a larger balance stays outstanding for longer. Compare the lifetime cost before treating the extra years as free budget.
Should I use my whole down payment?
Not usually. Emptying your savings into the deposit leaves nothing for transaction costs, immediate repairs or the emergency fund, and being asset-rich with no accessible cash is a genuinely uncomfortable position.
What costs are missing from this figure?
Registration and stamp duty, legal and brokerage fees, moving costs, and whatever the property needs before it is liveable. Then the recurring ones — maintenance, property tax and insurance — which continue for as long as you own it.
How do existing loans affect what I can borrow?
Directly. Every existing EMI is subtracted from the room available, so clearing a small loan before applying can raise the supportable amount by more than the balance of that loan might suggest.
Is it better to buy or keep renting?
It depends on how long you will stay, what the same money would earn invested, and the transaction costs on both sides. The rent versus buy calculator on this site sets those against each other rather than assuming buying is automatically better.