Home Loan
Property
DSA Partner
🏠 Home Loan Guide · 2026
Home Loans in 2026: Everything Indians Need to Know Before Applying
From understanding interest rates and eligibility to maximising tax benefits and negotiating the best deal — this is the most comprehensive home loan guide built specifically for Indian borrowers in 2026. Whether you’re a first-time buyer or refinancing an existing loan, these strategies will save you lakhs.
Why Most Indians Overpay on Home Loans
The average home loan borrower in India pays 30–40% more in total interest than necessary — not because of bad luck, but because of avoidable decisions: accepting the first rate offered, not negotiating a spread reduction, choosing a 20-year tenure when 15 years was financially achievable, and missing every legal tax deduction available. This guide exists to close that gap permanently.
A home loan is likely the single largest financial commitment of your life. At ₹60 lakh over 20 years at 8.75%, you’ll repay over ₹1.28 crore — more than double the principal. The difference between a good loan and a mediocre one is not a matter of luck. It is knowledge, preparation, and negotiation.
This guide covers everything: current interest rate benchmarks, eligibility mechanics, documentation, tax benefits, and the insider strategies that borrowers who work with experienced DSA partners use to save significant money over the life of the loan. Every section is actionable — keep a notepad ready.
Market Rates
Home Loan Interest Rates in 2026: What Banks Are Actually Offering
All major banks now offer home loans linked to the Repo Linked Lending Rate (RLLR) — meaning your interest rate moves directly with RBI’s repo rate. As of April 2026, the RBI repo rate stands at 6.25%, with the last cut in February 2026. Most banks price home loans at RLLR + a spread of 2.0%–2.65%, resulting in effective rates between 8.25% and 9.00% for salaried borrowers with strong profiles.
Current Rate Benchmarks by Lender Type (April 2026)
SBI
8.25% p.a.
RLLR-linked · Salaried
Lowest PSU Rate
HDFC Bank
8.40% p.a.
RLLR-linked · Salaried
Fast Approval
ICICI Bank
8.45% p.a.
RLLR-linked · Salaried
Digital Process
Kotak Mahindra
8.50% p.a.
RLLR-linked · Salaried
Negotiable
Axis Bank
8.55% p.a.
RLLR-linked · Salaried
Top Service
LIC Housing Finance
8.35% p.a.
PLR-linked · Salaried
Gov. Backed HFC
The Rate You See Is Not the Rate You’ll Get
Advertised rates are for borrowers with 750+ CIBIL scores, salaried income, properties in approved localities, and loan-to-value ratios below 75%. A 720 CIBIL score, self-employed income, or an LTV above 80% can add 0.25%–0.65% to your effective rate. Know your actual eligibility before comparing offers — compare apples to apples.
Fixed vs Floating Rate: Which to Choose in 2026
| Feature | Floating Rate (RLLR) | Fixed Rate |
|---|---|---|
| Current Rate (Salaried) | 8.25%–9.00% p.a. | 10.5%–12.0% p.a. |
| Rate Movement | Linked to RBI repo rate | Fixed for 2–5 years, then floating |
| When Rate Falls | You benefit immediately | Locked out of benefit |
| When Rate Rises | EMI or tenure rises | Protected for fixed period |
| Prepayment Penalty | NIL (RBI mandate) | 2%–4% of outstanding |
| Recommended For | Most borrowers in 2026 | Short-term loans (under 5 yr) |
⭐ Expert Insight
In a rate-easing cycle — which India entered in late 2025 — floating rate loans are almost always the better choice. With the RBI signalling further cuts in FY 2026-27, locking into a fixed rate now means paying a premium today for protection against a risk that may not materialise. The spread between fixed and floating rates in India (2%–3%) is typically too wide to justify fixed rate loans for tenures above 5 years.
— HLP Home Finance Research, April 2026
Qualification
Home Loan Eligibility: How Banks Actually Decide
Banks do not make home loan decisions arbitrarily. They run every applicant through a credit risk model that produces a score — and your approval, rate, and loan amount are all outputs of that model. Understanding the inputs gives you the ability to improve your position before applying.
Factor 01
CIBIL Score: The Single Most Important Number
A CIBIL score of 750+ unlocks the best rates. 700–749 is workable but may add 0.15%–0.35% to your rate. Below 700, approval becomes difficult and rates are sharply higher. The score reflects your repayment history across all credit products — credit cards, personal loans, vehicle loans. Pull your free CIBIL report before applying and dispute any errors (wrong loan entries, incorrectly reported defaults) — bureau corrections take 30–45 days.
750+ target
Factor 02
FOIR: Fixed Obligation to Income Ratio
Banks want your total EMI outflows (existing + proposed home loan EMI) to stay below 40%–50% of gross monthly income. This is the FOIR (Fixed Obligation to Income Ratio). If your take-home is ₹1 lakh and you already have ₹20,000 in EMIs, most banks will lend only enough to keep total EMIs at ₹40,000–₹50,000. Before applying, clear or close any personal loans or credit card EMIs — it directly increases your eligible loan amount.
Keep below 40%
Factor 03
Employment Stability and Income Type
Salaried employees of listed companies, PSUs, and MNCs are rated the most favourably. Self-employed professionals (doctors, CAs, architects) with 3+ years of ITR history come second. Business owners need 3 years of audited financials showing consistent profit. Job stability matters: applicants with less than 12 months in their current job often need a co-applicant or additional documentation. Continuity in the same sector (even with job changes) is viewed positively.
Stability counts
Factor 04
Age, Tenure & Loan-to-Value Ratio
Banks will lend until age 60–70 (varies by bank and employment type). A 45-year-old salaried applicant can typically get a maximum 15–20 year tenure. The LTV (loan-to-value) ratio is capped at 75%–90% depending on loan amount — you must fund the remaining 10%–25% as down payment from your own resources. Higher LTV (less down payment) typically means a slightly higher rate and more stringent approval criteria.
LTV up to 90%
Add a Co-Applicant to Increase Eligibility Significantly
Adding a co-applicant (spouse, parent, or sibling with income) increases the combined income base banks use to calculate eligible loan amount. A joint home loan between spouses can increase eligible loan amount by 50%–80% over a single application. Additionally, if both co-applicants are co-owners of the property, both can independently claim tax deductions under Section 24(b) and 80C — effectively doubling the family’s tax benefit. This is one of the most underused strategies in home loan planning.
Application Process
Documentation: What to Prepare Before You Approach a Bank
Incomplete documentation is the single most common reason for home loan approval delays in India. Prepare all documents in advance — ideally 2–3 weeks before you plan to apply — to ensure a smooth, fast process. The checklist below covers the standard requirements for salaried and self-employed applicants.
1
Identity & Address Proof (KYC)
Aadhaar card, PAN card (mandatory), Voter ID or Passport for additional ID proof. Utility bill, rent agreement, or bank statement for address proof if Aadhaar address differs from current residence. Ensure your Aadhaar is linked to your PAN and mobile number — banks verify this electronically and discrepancies cause delays.
2
Income Documents — Salaried
Last 3 months’ salary slips; last 2 years’ Form 16 or ITR (with computation of income); last 6 months’ salary account bank statements. If you have variable pay components (incentives, bonuses), banks typically average the last 3 years. Include any joining letter or current offer letter to confirm employment continuity. Promotions and increment letters are helpful for borderline cases.
3
Income Documents — Self-Employed
Last 3 years’ ITR with computation; last 3 years’ Profit & Loss account and Balance Sheet (CA-certified); last 12 months’ business and personal bank statements; GST registration and returns (last 1 year). Business vintage is critical: most banks require a minimum 3-year track record. CA-certified financials carry significantly more weight than self-prepared documents.
4
Property Documents
Sale agreement / Agreement to Sale; property title documents for the last 15–30 years (chain of title); approved building plan and commencement certificate; latest property tax receipt; encumbrance certificate (EC) from sub-registrar for at least 13 years; No Objection Certificate (NOC) from society/builder. For resale properties, the seller’s original sale deed is essential. Banks conduct an independent legal and technical valuation — your lawyer and the bank’s panel lawyer may both be needed.
5
Bank Statements & Existing Loan Documents
Last 12 months’ statements for all bank accounts. For existing loans: latest statement showing outstanding balance, sanction letter, repayment track record. A clean repayment history on all existing obligations — no bounced EMIs, no settlements — is as important as the documents themselves. Banks look for account conduct, not just numbers.
Pre-Approved Loans: Speed vs Optimal Rate
Your existing bank may offer you a pre-approved home loan based on your account history — typically with a 5-minute decision and minimal documentation. This convenience comes at a cost: pre-approved rates are often 0.25%–0.50% higher than what you could negotiate by approaching multiple lenders. Use the pre-approval as a benchmark and walk-in rate, not as the final offer. At ₹60 lakh over 20 years, 0.25% higher rate costs you approximately ₹2.2 lakh extra in interest.
Tax Planning
Home Loan Tax Benefits: Every Deduction You’re Entitled To
A home loan is one of the most tax-efficient financial instruments available to Indian taxpayers. Used correctly, it can reduce your annual tax outgo by ₹75,000–₹1,50,000+ per year, depending on your income bracket and loan structure. Most borrowers claim only one deduction; the full picture offers significantly more.
Section 24(b)
Interest Deduction — Up to ₹2 Lakh Per Year
The interest component of your home loan EMI is deductible up to ₹2 lakh per financial year for a self-occupied property. For a let-out property, there is no upper cap on interest deduction — but the net rental income after deduction can set off only ₹2 lakh in a year (excess carried forward). In the early years of a loan, when interest forms the bulk of EMI, this is your most valuable deduction. For a 30% taxpayer claiming ₹2 lakh, this saves ₹60,000+ annually in tax.
₹2,00,000 limit
Section 80C
Principal Repayment Deduction — Within ₹1.5 Lakh Cap
The principal portion of your home loan EMI qualifies for Section 80C deduction, within the overall ₹1.5 lakh annual cap that also includes EPF, PPF, ELSS, and life insurance. Since EPF contributions often use most of the 80C limit for salaried employees, the net additional benefit from principal repayment may be limited — but it counts toward the ceiling, and in the first 3–5 years when principal repayment is lower, the benefit is meaningful for those with lower EPF contributions. Stamp duty and registration charges also qualify for 80C in the year of payment.
₹1,50,000 cap
Section 80EEA
First-Time Buyer Bonus: Extra ₹1.5 Lakh
First-time homebuyers whose loan was sanctioned before 31 March 2022 (check the extended status for AY 2026-27) can claim an additional ₹1.5 lakh deduction on interest under Section 80EEA, over and above the ₹2 lakh under Section 24(b). Conditions: stamp duty value of property ≤ ₹45 lakh, loan sanctioned by a housing finance company or bank, and the applicant must not own any other residential property on the sanction date. At maximum utilisation, a first-time buyer could claim ₹3.5 lakh in interest deductions in a single year.
First-time buyers
Joint Loan Strategy
Double the Deductions as Co-Owners
When a home loan is taken jointly and both co-applicants are co-owners of the property, each co-owner can independently claim up to ₹2 lakh under Section 24(b) and up to ₹1.5 lakh under 80C — giving a combined family deduction of ₹7 lakh per year on a single property. For a couple earning ₹12 lakh and ₹10 lakh respectively, both in the 30% bracket, this joint deduction strategy can save ₹2+ lakh in combined annual tax. This single structure change is one of the most powerful tax planning moves available to Indian families.
₹7L combined max
Home Loan Tax Benefits Are Available ONLY Under the Old Tax Regime
As of FY 2023-24, the New Tax Regime is the default. Under the New Regime, Sections 24(b), 80C, and 80EEA deductions are not available for home loans. If you have a significant home loan, the Old Regime will almost always be more beneficial — but calculate both scenarios carefully each year. Specifically: if your total deductions (home loan interest + principal + 80D + HRA + NPS) exceed ₹3.75–4 lakh, the Old Regime typically wins. Inform your employer at the start of every financial year about your chosen regime so TDS is applied correctly.
Wealth Strategy
Repayment Strategies: How to Pay Less and Finish Faster
A home loan is not a fixed sentence. How you manage it after disbursal can save you tens of lakhs in interest and years off your tenure. The strategies below are mathematically proven — all of them are available to floating rate borrowers with no prepayment penalty under RBI regulations.
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1Prepay Aggressively in Years 1–7 (When Interest is Highest)Home loan amortisation front-loads interest: in Year 1 on a ₹60 lakh, 20-year, 8.75% loan, over 92% of your EMI is interest. By Year 8, it’s 75%. Every rupee prepaid in the first 7 years reduces principal and eliminates roughly 8–10x that amount in future interest. Even a single annual prepayment of ₹50,000–₹1 lakh in Year 1–3 can cut total interest by ₹4–8 lakh over the loan tenure. Prioritise prepayment over most other investments when the risk-adjusted return on debt reduction exceeds post-tax investment returns.
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2Choose Tenure Reduction Over EMI Reduction After PrepaymentWhen you make a lump-sum prepayment, your bank will give you a choice: reduce EMI or reduce tenure. Always choose tenure reduction. A lower EMI may feel good, but it extends the loan period and keeps the interest clock running. Tenure reduction cuts total interest paid dramatically. Most banks let you make this election online or via a simple email to your relationship manager — confirm the instruction was processed in writing.
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3Negotiate a Spread Reduction Every 3 YearsYour rate is RLLR + spread. The spread is negotiable — not as widely known as it should be. After 3 years of clean repayment and an improved CIBIL score, approach your bank’s relationship manager with competing offers from other lenders. Banks will often reduce the spread by 0.15%–0.40% to retain a good customer rather than lose the balance transfer. If they won’t, a balance transfer to a competitor with a lower spread is a legitimate option — the processing fee (0.25%–0.5%) is typically recovered within 18–24 months of the rate saving.
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4Use an Offset or Overdraft Home Loan for Liquidity + SavingsSome lenders (SBI MaxGain, HDFC FlexiPay, Axis Bank SuperSaver) offer overdraft-structure home loans where any surplus funds parked in a linked account reduce the effective outstanding principal — and therefore the interest charged. This lets you reduce interest cost without formally prepaying, while retaining the ability to withdraw funds if needed. Ideal for borrowers with irregular income (variable bonuses, freelance income) who want to optimise without locking money away. The effective interest saving is identical to prepayment, but with full liquidity.
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5Step-Up EMI Structure for Early Career BorrowersIf you’re in your late 20s or early 30s with a strong income trajectory, a step-up EMI structure starts with a lower EMI and increases it annually (typically by 5%–10% per year). This allows you to borrow more today (higher eligible loan amount) while matching EMI increases to expected income growth. Over a 20-year loan, the step-up structure can reduce total interest paid compared to a flat EMI at the same starting tenure, because income growth enables heavier principal reduction in the later years. Ask your bank or HFC explicitly for this structure during sanctioning.
⭐ Expert Insight
The single highest-return financial move for most Indian home loan borrowers is not stock picks or mutual fund selection — it is prepaying their home loan during the first five years. Guaranteed tax-free return equal to the loan interest rate, with zero volatility. Every rupee of prepayment in year 2 of an 8.75% loan is equivalent to earning 8.75% guaranteed, tax-free. No equity SIP consistently beats that on a risk-adjusted basis during that window.
— HLP Home Finance Research, April 2026
Myth Busting
Home Loan Mistakes That Cost Indians Lakhs
These are not hypothetical errors. They are patterns seen repeatedly across thousands of home loan applications — predictable, avoidable, and financially painful.
❌ Mistake
“I’ll just take the loan my existing bank offers.” Loyalty to your bank costs money. Your bank has no incentive to offer you the market’s best rate — they have your account data and know your alternatives are limited by inertia. Shopping across 3–5 lenders (including HFCs and PSU banks) before accepting any offer is the highest-ROI activity in the home-buying process.
✅ Better Approach
Get offers from at least 3 lenders before signing. Use competing offers as negotiation leverage with your preferred bank. On ₹60 lakh over 20 years, a 0.5% rate difference is ₹4+ lakh in total interest. The hour spent comparing offers is worth ₹4,000 per minute of your time.
❌ Mistake
“A longer tenure means smaller EMI, so it’s always better.” Lower EMI does not mean lower cost. A ₹60 lakh loan at 8.75% for 30 years costs ₹99 lakh in interest. The same loan for 15 years costs ₹46 lakh — saving ₹53 lakh. The EMI difference is ₹10,000–₹12,000/month. If that’s affordable, the 15-year loan is dramatically superior.
✅ Better Approach
Take the shortest tenure your income comfortably supports. If in doubt, start with a longer tenure and prepay aggressively — achieving the effect of a shorter tenure while retaining the safety valve of a lower committed EMI in case of income disruption. Never optimise for minimum EMI alone.
❌ Mistake
“I’ll skip the home loan insurance — the bank is just trying to earn commissions.” Partly true, but dangerous reasoning. If you have no term life insurance and die mid-loan, your family inherits both a property and an outstanding home loan they may not be able to service. A standalone term plan (not the bank’s bundled insurance which is expensive) is the correct protection — just don’t buy the bank’s product specifically.
✅ Better Approach
Buy a separate term life insurance policy for at least the outstanding loan amount, declining tenure, from a reputable insurer. This is far cheaper (and more flexible) than the bank’s mortgage protection insurance. Never sign up for the bank’s bundled insurance under pressure — you are legally entitled to use your own coverage.
❌ Mistake
“I’ll keep investing my surplus rather than prepaying — the returns are better.” This calculation ignores the guaranteed post-tax return of prepayment. An 8.75% home loan prepaid is an 8.75% guaranteed, zero-risk return. Most equity SIPs have higher expected returns but also real downside risk. For the first 7 years of a loan, the mathematical case for prepayment over equity investment is often underestimated.
✅ Better Approach
Run a parallel strategy: maintain your SIPs (for long-term compounding) AND use annual bonuses/windfalls for aggressive loan prepayment. In the first 7 years, allocate 60%+ of bonus to prepayment; after that, shift allocation back to investments as the interest-to-principal ratio normalises. Both goals can coexist — the sequencing is what matters.
Take Action
Your Home Loan Action Plan: From Application to Optimal Management
Whether you are 3 months away from applying or already servicing a loan, the steps below are the highest-leverage actions available to you. Each takes under an hour and can collectively save ₹5–20 lakh over your loan’s life.
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1Pull Your CIBIL Report and Fix Any ErrorsDownload your free annual credit report from CIBIL.com (one free report per year; paid reports available monthly). Look for: incorrectly reported defaults, loans that were closed but show as active, hard enquiries from lenders you never approached, and wrong personal information. Dispute every error — online dispute takes 30 days. A score increase from 720 to 760 can reduce your home loan rate by 0.25%, saving ₹1.8 lakh on a ₹60 lakh, 20-year loan.
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2Calculate Your Real Eligibility Before Approaching BanksUse the formula: (Monthly income × 0.40 − existing EMIs) × multiplier (approximately 80–85 for a 20-year loan at current rates). For example: ₹1.2 lakh income × 0.40 = ₹48,000 max EMI capacity. Minus existing car loan EMI of ₹12,000 = ₹36,000 available for home loan EMI. At 8.75% for 20 years, ₹36,000 EMI corresponds to approximately ₹40 lakh loan eligibility. Knowing this before you go house-hunting prevents the disappointment of falling in love with an unaffordable property.
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3Get Competing Offers From at Least 3 LendersApproach your existing bank, one PSU bank (SBI/Bank of Baroda), and one private bank or HFC concurrently. Use a DSA (Direct Selling Agent) partner for access to multiple bank relationships and negotiation support at no cost to you. Compare: effective interest rate, processing fee, prepayment terms, turnaround time for approval, and the bank’s reputation for customer service post-disbursal. Rate is important, but post-disbursal service quality matters over a 15–20 year relationship.
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4Verify Property Legality IndependentlyNever rely solely on the bank’s legal check to confirm property title. Engage your own lawyer — ideally one specialising in property law in the specific city — to review all title documents independently. Common issues: disputed title in earlier chain, illegal construction on the floor you’re buying, builder’s loans against the property (not disclosed), development authority approval missing. Legal fee for independent verification is ₹5,000–₹20,000. It is the best money spent in the home-buying process.
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5Decide Your Tenure and Prepayment Strategy Before DisbursalBefore signing the loan agreement, calculate: if you receive your annual bonus as a lump-sum prepayment every year, by how many years does the tenure reduce? Model two scenarios — one with no prepayments (base case) and one with aggressive early prepayments. This exercise typically reveals that your optimal tenure is 2–5 years shorter than your “comfortable” tenure, and motivates structured prepayment. Ask the bank’s relationship manager to run this calculation with you — most will do so with a basic amortisation spreadsheet.
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6Review the Loan Every 3 Years for Rate Negotiation or Balance TransferSet a calendar reminder for every 3 years from loan disbursal. At that point: check current market rates, review your CIBIL score (should be higher with clean repayment history), and approach your bank for a spread reduction. If your bank refuses and you can get 0.35%+ lower rate elsewhere, calculate the balance transfer cost-benefit. With no prepayment penalty on floating rate loans, the transfer process takes 4–6 weeks and typically pays back in 12–18 months.
Completing All 6 Steps Can Save ₹10–25 Lakh Over Your Loan’s Life
These are not abstract strategies — each has a concrete, calculable rupee value. Rate negotiation alone saves ₹2–4 lakh. Tenure optimisation saves ₹10–15 lakh. Correct tax deductions save ₹1–2 lakh per year. Taken together over a 15–20 year loan, diligent borrowers consistently pay 20–30% less in total than passive borrowers at the same interest rate. The home loan is where financial literacy compounds most visibly.
FAQ
Frequently Asked Questions on Home Loans in India
Answers to the questions we receive most often from first-time buyers, existing borrowers, and those considering balance transfers or prepayments.
How much home loan can I get on a ₹1 lakh salary?
On a gross salary of ₹1 lakh/month, most banks will approve a home loan of approximately ₹50–60 lakh — assuming no existing EMIs, a CIBIL score above 750, and a clean repayment history. The exact amount varies by bank, location of property, and LTV norms. Adding a co-applicant (spouse or earning family member) can raise this to ₹80–90 lakh combined. Note: the “eligible loan amount” is not the same as the “advisable loan amount” — keep your EMI below 35% of take-home income for financial resilience.
Is a balance transfer worth it? What are the hidden costs?
A balance transfer makes financial sense when: the rate saving is at least 0.35%+, the outstanding principal is above ₹20 lakh, and the remaining tenure is above 8 years. Hidden costs to factor in: processing fee of new bank (0.25%–0.5% of outstanding), legal and technical fee (₹5,000–₹15,000), NOC charges from existing bank (₹1,000–₹5,000), and time and documentation effort. Calculate break-even period — typically 12–24 months. If you plan to sell the property within 3–4 years, a balance transfer may not recover its costs.
What happens to my home loan if interest rates rise further?
On a floating rate loan, banks typically increase tenure (not EMI) when rates rise — unless you are already at the maximum permitted tenure. If tenure hits the cap, your EMI increases. You can request the bank to keep tenure fixed and increase EMI instead — this is actually the better option mathematically, as it forces faster principal reduction. Practical buffer: size your EMI so that a 1.5% rate increase still leaves you within the 40–45% FOIR ceiling. India’s rate cycle history suggests 1.5%–2% upswings are normal; build in that buffer when signing.
Can I claim tax benefits if the property is under construction?
The interest deduction under Section 24(b) for a property under construction is available, but only after possession. The pre-construction interest (paid during the construction period) can be claimed in 5 equal instalments starting from the year of possession, in addition to the regular annual interest deduction. Section 80C deduction for principal is only available from the year when construction is complete and possession is received. There is no deduction available under 80EEA unless it was claimed from the year of possession — consult a CA for structuring.
What is the difference between a home loan from a bank vs an HFC?
Banks are regulated by RBI; Housing Finance Companies (HFCs) are regulated by NHB (National Housing Bank). Key differences: HFCs often have more flexible income documentation requirements — especially for self-employed borrowers, NRI applicants, or those with mixed income sources. HFCs may have slightly higher rates (0.1%–0.25%) than top banks, but make up for it in approval rates and processing flexibility. Major HFCs include LIC Housing Finance, HDFC Ltd, PNB Housing, Indiabulls. For borrowers with straightforward profiles, banks are usually cheaper; for complex income structures, HFCs often deliver approvals that banks won’t.
Should I use my savings to make a higher down payment or keep them invested?
The decision hinges on the comparison between your home loan rate (guaranteed cost) and your investment return (uncertain benefit). If your investment portfolio consistently earns above the post-tax loan rate: invest more, pay minimum down payment. If your returns are volatile or below the loan rate: use savings for a higher down payment. A practical rule: always keep 6 months of expenses as liquid emergency fund and don’t touch it. Beyond that, if your loan rate is 8.75% and your equity portfolio has returned 12%+ CAGR over 7+ years with high consistency, invest more. If uncertain, the down payment is the safer choice — reduced loan means reduced risk.
How does a home loan affect my other loan eligibility?
A home loan EMI directly reduces your available FOIR headroom for other loans. If your home loan EMI consumes 35% of your gross income, you have limited capacity for a car loan, personal loan, or business loan — banks will cap total EMI obligations at 40%–50%. Strategically: avoid taking other loans in the 6–12 months before applying for a home loan (multiple loan enquiries also dent your CIBIL score). After taking the home loan, space other credit applications 6+ months apart. Paying off any high-EMI obligations (personal loan, consumer durables EMI) before the home loan application meaningfully increases your eligible home loan amount.
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