Think a Rs 1 lakh salary means a Rs 60 lakh home loan? CA explains what banks actually check

Buying a home is one of the biggest financial decisions many people make. For prospective borrowers, knowing how much a bank may lend can be just as important as choosing the right property. But a salary figure alone does not determine home-loan eligibility. CA Nitin Kaushik recently explained why popular salary-based calculations can be misleading and highlighted the factors banks actually consider. From existing EMIs and credit scores to loan tenure and property value, several checks can influence the final loan amount a borrower may qualify for.

Rs 50,000 salary does not automatically mean a Rs 30 lakh loan

CA Nitin Kaushik took to X to explain how home-loan eligibility works, pointing to a commonly used shortcut that links monthly income to a potential loan amount. According to Kaushik, borrowers may come across calculators suggesting that someone earning Rs 50,000 a month could qualify for a home loan of around Rs 30 lakh. Similarly, a person earning Rs 1 lakh may see an estimate of around Rs 60 lakh. However, Kaushik stressed that banks do not simply multiply a person's salary to determine the loan amount.

Instead, lenders assess how much EMI the borrower can realistically afford.

What is FOIR and why does it matter?

One of the key calculations involved is FOIR, or Fixed Obligations to Income Ratio. In simple terms, Kaushik explained the calculation as: EMI capacity = income-based EMI limit − existing EMIs. For example, if a borrower's income supports an EMI of Rs 30,000 but they already pay Rs 8,000 towards another loan, the entire Rs 30,000 is not treated as available for a new home loan. Existing debt reduces the borrower's home-loan eligibility.

This is why two people earning the same Rs 50,000 salary can qualify for very different loan amounts. One borrower may have a Rs 50,000 salary, no existing EMI and a strong credit score. Another may earn the same Rs 50,000 but already have Rs 10,000 in existing EMIs and a lower credit score. Their eligibility will not necessarily be the same.

The 48 to 60 times income rule is only an illustration

Kaushik noted that a commonly used industry shortcut is around 48 to 60 times monthly net income. This can produce estimates such as Rs 50,000 salary leading to roughly Rs 30 lakh in home-loan eligibility and Rs 1 lakh salary leading to roughly Rs 60 lakh. However, these figures should be treated as illustrations rather than guarantees.

FOIR can vary depending on the lender and income level. Kaushik also pointed out that higher-income borrowers may sometimes qualify at a higher FOIR than lower-income borrowers. So, simply multiplying your monthly salary by a particular number does not provide a guaranteed loan amount.

Your property value can also limit the loan

There is another factor that salary-based calculators can overlook: the property itself. Banks also apply Loan-to-Value, or LTV, limits. According to Kaushik, housing loans can broadly be financed up to 90% for loans up to Rs 30 lakh, 80% for loans between Rs 30 lakh and Rs 75 lakh, and 75% for loans above Rs 75 lakh. This means your income could make you eligible for a larger loan, but the property's value can still place a limit on how much the bank will finance.

Credit score, age and existing loans can change eligibility

Kaushik highlighted several other factors that can affect a borrower's home-loan eligibility. These include CIBIL score, age and remaining working years, existing loans and credit-card obligations, loan tenure, co-applicant income and employment stability. This means that even borrowers with similar salaries can receive different loan offers depending on their overall financial profile.

Loan tenure also matters because it influences the EMI burden and therefore the lender's assessment of repayment capacity.

Self-employed borrowers face another important consideration

For self-employed borrowers, lenders also examine the income reported in ITRs over multiple years, according to Kaushik. This creates an important connection between declared income and borrowing capacity. Showing a lower income to reduce tax liability can also result in a lower home-loan amount because the lender may use the reported income when assessing eligibility.

Five things to check before assuming your loan amount

Before assuming that a Rs 1 lakh monthly salary automatically qualifies you for a Rs 60 lakh home loan, Kaushik advised borrowers to look at five key factors:

- Income

- Existing EMIs

- Credit score

- Loan tenure

- Property value

Kaushik's broader point is that the final loan amount is generally constrained by the lender's income and FOIR assessment as well as the property's LTV limit. As he put it, your salary starts the calculation, but it does not finish it.