Loan Affordability Calculator
There are two answers to how much you can borrow, and they are usually a long way apart. One is what a lender will sanction against your income. The other is what your household can service once rent and living costs are accounted for. This calculator shows you both, and names the gap between them.
Your monthly numbers
Living costs default to an estimate of Rs.28,000 based on your household size. Enter your own figure if you know it, since your real number matters more than our assumption.
The lender ceiling does not work for your household. At the maximum EMI a lender would approve, your monthly outgo exceeds your income by Rs.11,750 once rent and living costs are included. The approval would be real. The affordability would not be.
Where your salary goes, at each ceiling
KharchaUdhar Insider Tip
Most lenders do not count your rent as an obligation when they assess a salaried applicant. Your landlord does. This single omission is why the sanctioned amount so often feels comfortable on the approval letter and impossible by month four. If you pay rent, treat the lender's number as a ceiling you were permitted to reach, not a recommendation you should follow.
KharchaUdhar Insider Tip
If your file is borderline, applying for the safe amount rather than the maximum materially improves your odds. A smaller ask lowers the obligation ratio the underwriter computes, which is the single most common reason personal loan applications are declined. Borrowers routinely apply for the maximum, get rejected, and reapply somewhere else at the same amount, collecting a second hard enquiry for the same mistake. A smaller loan approved today beats a larger one declined three times.
Indicative only, calculated on the reducing balance method. The 55% obligation cap is a working assumption, and individual lenders apply their own thresholds, typically between 50% and 60% of net income depending on income band and profile. Actual sanction depends on your credit score, employer, income documentation and the lender's own policy.
Two ceilings, and why they differ
A lender sizes your loan by obligation ratio. It takes your net monthly income, adds up your existing formal EMIs plus the proposed new one, and checks the total against an internal cap, typically somewhere between 50% and 60% of income. If the total fits under the cap, the loan is sanctionable.
What that test leaves out is everything that is not a formal EMI. Rent is the big one, and for a salaried applicant most lenders simply do not count it. Nor do school fees, insurance premiums, medical costs, or the ordinary running cost of a household. None of those disappear because a credit policy ignores them.
The safe ceiling here works the other way round. It starts from what is actually left after your EMIs, your rent and your living costs, then allocates only part of that residual to a new EMI, leaving the rest as a buffer. The difference between the two figures is not a mistake in either method. It is the amount of risk a lender is willing to place on your household but does not have to carry itself.
How to use it
- Use take-home, not CTC. Enter what actually reaches your bank account each month after tax and deductions. CTC overstates capacity substantially and is the most common input error.
- Include every existing EMI. Car loans, consumer durable EMIs, and any credit card balance converted to EMI all count. Lenders will see them on your credit report whether or not you declare them.
- Enter your real living costs. The default is an estimate from your household size. Your actual number matters more than our assumption, so replace it if you know it.
- Compare the two ceilings. The gap between them is the amount a lender would let you borrow beyond what your household can comfortably service. Decide deliberately where in that gap you want to sit.
Common questions
Why is the lender ceiling higher than the safe ceiling?
Because lenders assess a narrower set of costs than your household actually pays. Most lenders cap total fixed obligations at roughly 50% to 60% of net income and count only formal EMIs. Rent, school fees, and household running costs generally do not enter the calculation for a salaried applicant. Your landlord and your family, however, do expect to be paid.
What obligation ratio do lenders actually use?
It varies by lender, income band, and profile, but the working range is broadly 50% to 60% of net monthly income including the proposed new EMI. Higher income applicants are often permitted a higher ratio on the reasoning that more absolute money remains after obligations. This calculator uses 55% as a working assumption.
Does a longer tenure mean I can borrow more?
Yes, and that is exactly why lenders offer it. A longer tenure lowers the EMI, which lets the same income support a larger principal. It also raises the total interest you pay, sometimes dramatically. Change the tenure in the calculator and watch both numbers move before deciding whether the larger loan is worth its cost.
Should I apply for the maximum a lender will give me?
Rarely. Applying for less improves your approval odds, because the obligation ratio the underwriter computes comes out lower, and a high obligation ratio is the most common single reason personal loan applications are declined. Borrowers routinely apply for the maximum, get declined, then reapply elsewhere at the same amount and collect a second hard enquiry for the same mistake.
How much should be left over after the EMI?
There is no regulatory answer, but a household with nothing left after fixed costs has no capacity to absorb a medical bill, a job gap, or a rate increase. This calculator leaves roughly 45% of your residual income unallocated for that reason. If your circumstances are unusually stable you can push higher, but the buffer is what prevents a manageable loan becoming a missed payment.