Why does a longer tenure let me borrow so much more?

Because eligibility is set by the payment, and a longer term spreads the same payment over more months. It raises the loan and raises total interest considerably, so it buys the house rather than saving money.

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Loan Eligibility Calculator

How much a lender will advance, working backwards from the payment your income supports. The tenure does most of the work, and stretching it buys a larger loan at a large cost in interest.

Also called: home loan eligibility, how much can i borrow.

You could borrow

₹46,09,234

₹46,09,234 at 8.5% over 20 years, on an affordable payment of ₹40,000 a month. Your existing 10,000 of commitments already uses part of the 50% allowance.

Payment you can support

₹40,000

Total debt payment allowed

₹50,000

Interest over the term

₹49,90,766

Total repayment

₹96,00,000

If you borrowed over 10 years instead

₹32,26,179

How this is calculated

An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.

Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for India change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

Lenders cap total debt payments at a share of gross income, commonly around half. Subtract existing commitments from that allowance to get the payment available for a new loan, then invert the annuity formula to find the principal it supports. Extending the tenure raises the eligible amount sharply because it spreads the same payment over more periods, which is why the ten-year comparison is shown alongside.

the annuity formula rearranged for principal: the loan an affordable payment supports

E: Affordable payment (currency)
i: Monthly rate (decimal)
n: Months (months)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a lakh of income with existing commitments

Gross monthly income: ₹1,00,000
Existing loan payments a month: ₹10,000
Share of income lenders allow for all debt: 50%
Interest rate: 8.5%
Tenure: 20 years

You could borrow₹46,09,234

arithmetic identity on the allowance

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a shorter tenure lends far less

Gross monthly income: ₹1,00,000
Existing loan payments a month: ₹10,000
Share of income lenders allow for all debt: 50%
Interest rate: 8.5%
Tenure: 10 years

You could borrow₹32,26,179

boundary: the same payment supports a much smaller loan

Open this example

Method and limits

What it assumes

Gross income, before tax, which is the convention lenders use.
A fixed rate for the whole term.

What it deliberately does not model

Lenders also apply a loan-to-value cap on the property, which often binds before income does.
Credit history, age and employment type all move the actual offer.

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Frequently asked questions

Why does a longer tenure let me borrow so much more?: Because eligibility is set by the payment, and a longer term spreads the same payment over more months. It raises the loan and raises total interest considerably, so it buys the house rather than saving money.