Buying a ₹1 crore house? Here’s the monthly salary you need to afford the home loan EMI comfortably

Buying a ₹1 crore house involves more than arranging the down payment and securing a home loan. Buyers also need to ensure that the monthly equated monthly instalment (EMI) does not eat into their household budget, emergency savings and long-term financial goals. While a lender may approve a substantial loan based on a borrower’s income and credit profile, that does not necessarily mean the borrower can comfortably afford the repayment.

For a buyer making a 20% down payment of ₹20 lakh, the remaining ₹80 lakh would need to be financed through a home loan. At an illustrative interest rate of 8% a year over 20 years, the EMI would be approximately ₹66,900 a month. To manage this repayment without putting other financial priorities under pressure, the buyer would ideally need a monthly take-home salary of around ₹2.2–2.3 lakh, assuming no significant existing debt, said Sanjiv Bajaj, joint chairman and managing director of Bajaj Capital.

“The first thing to look at is not just how much loan a bank is willing to offer, but how comfortably the buyer can repay it every month,” Bajaj said.

How much salary do you need to buy a ₹1 crore house?

The monthly income required to afford a ₹1 crore property depends on the loan amount, interest rate, repayment tenure and the buyer’s existing financial commitments. A longer tenure reduces the monthly EMI but increases the total interest paid over the life of the loan.

For an ₹80 lakh home loan at an illustrative interest rate of 8% a year, the EMI varies significantly depending on the repayment tenure.

Bajaj recommends keeping the home loan EMI within 25-30% of monthly take-home income. This leaves room for routine household expenses, savings and unexpected financial needs.

A shorter tenure helps borrowers repay the loan sooner and reduces the overall interest burden, but the higher EMI requires greater monthly income. A longer tenure offers more flexibility in the monthly budget, although the borrower pays interest over a longer period.

How much interest will you pay over the loan tenure?

For an ₹80 lakh loan at 8% over 20 years, total repayments would amount to approximately ₹1.61 crore, including around ₹81 lakh in interest, assuming the rate remains unchanged. Borrowers with floating-rate loans may see their EMIs or repayment tenure change as interest rates move.

The choice of tenure therefore involves a trade-off between monthly affordability and the total cost of borrowing. While extending the tenure can reduce the EMI, borrowers should assess whether the additional interest is justified by the flexibility it provides.

“The EMI starts becoming uncomfortable when it leaves very little room for everything else,” Bajaj said. If meeting the monthly payment requires suspending investments, relying on credit for unexpected expenses or drawing down savings, the property may be beyond the buyer’s comfortable budget.

What costs should homebuyers account for beyond the EMI?

The down payment and monthly EMI are only part of the cost of buying a home. Buyers must also budget for stamp duty, registration, interiors, furnishing and ongoing maintenance. These expenses can substantially increase the upfront amount required to purchase a property.

Using most of one’s savings to fund the purchase can leave a household financially vulnerable. Buyers should retain an emergency fund and ensure that they can continue meeting other financial commitments after paying the down payment and associated charges.

Another common mistake is treating a bank’s loan approval as confirmation that a property is affordable. Lenders assess repayment capacity based on their own eligibility criteria, but borrowers must also account for household expenses, family responsibilities, existing loans and future financial goals.

For instance, a ₹67,000 EMI may appear manageable for a buyer earning ₹2.2 lakh a month. However, the same repayment could become stressful if the buyer also has a car loan, personal loan or substantial family expenses.

How can buyers avoid stretching their finances?

Bajaj advises prospective buyers to work backwards from an EMI they can comfortably afford rather than start with the maximum property price a lender will finance.

Buyers should assess whether they can continue their monthly investments, meet household expenses and handle unexpected medical or family costs without dipping into their savings. They should also consider whether they could continue making payments if their income were disrupted or interest rates increased.

Repayment capacity can change over a 15-20-year loan tenure because of career breaks, changing family responsibilities or higher living costs. Buyers should therefore avoid basing their decisions solely on their current income and expenses.

Ultimately, the right home budget is not determined solely by the loan a bank is willing to offer. It should be based on the repayment a household can sustain while maintaining its standard of living, protecting its savings and continuing to work towards other financial goals.