The first number most buyers see is the maximum loan a bank is willing to sanction. It is a useful ceiling, but it is not a target. The right number is the EMI you can pay every month for twenty years without giving up the rest of your life.
A rule of thumb
Many advisors suggest keeping all your EMIs together, including car and personal loans, within about 40% of your take-home pay. Families with one income, school fees or ageing parents to support should aim lower.
Three levers you control
- Down payment: every extra lakh you put in is a lakh you do not pay interest on.
- Tenure: a longer tenure lowers the EMI but raises the total interest paid, often substantially.
- Rate: compare lenders, and ask whether your rate is linked to an external benchmark so cuts reach you.
Budget for the rest
Stamp duty, registration, society charges, furnishing and moving costs usually come out of savings, not the loan. Keep at least six months of EMIs aside as an emergency buffer after you have paid all of it.
