Banks will often approve you for a bigger loan than you'd actually be comfortable paying every month. Just because a lender says yes doesn't mean the EMI is a good idea for your life. Here's a simple way to work out your own comfortable number before you fall in love with a house you can't easily afford.
The 40% guideline
A common rule of thumb — not a law, just a widely-used guideline — is that all your EMIs put together (home loan, car loan, any other loan) shouldn't eat up more than about 40% of your monthly income. Go much higher than that, and a single bad month — a medical bill, a job change — can put real strain on your finances. This isn't a number your bank is required to follow either; some lenders will approve you for more. It's a guideline for what's comfortable, not a hard ceiling anyone enforces.
A worked example
Say your monthly income is ₹1.5L, and you're already paying ₹10K a month toward an existing loan. At the 40% guideline, here's how your income breaks down:
That leaves ₹50K a month of genuinely comfortable room for a new home loan EMI. At 8.5% interest over 20 years, that EMI budget supports a loan of roughly ₹57.62L — which, together with whatever down payment you can put in, is a reasonable estimate of the property price you can comfortably afford.
Two things this simple version leaves out
First, a longer loan tenure lowers your EMI and raises how much you can "afford" by this method — but it also means paying more total interest, so don't stretch the tenure purely to make a bigger number fit. Second, this only accounts for your EMI, not the other real costs of owning a home — property tax, maintenance, insurance — which reduce how much genuinely comfortable room you actually have. Treat this as a starting estimate, not the final word.