What is the 20-30-40 Rule of Buying a House?

What is the "20 - 30% - 40%" Rule for Buying a House?

A simple affordability rule to plan tenure, EMI and down payment

20 years

Loan tenure (typical maximum used in this rule)

30% EMI

Monthly EMI should be within ~30% of your salary

40% Down Payment

Aim to put ~40% upfront to lower loan size

Quick guide: combine a longer tenure (up to 20 years) with the rule-of-thumb that your EMI shouldn't exceed 30% of monthly salary and that a larger down payment (~40%) reduces monthly burden and interest outgo. This is a conservative framework — actual affordability depends on interest rate, other liabilities, credit score and bank policies.

Monthly Salary	Max Home Budget (approx.)	City Examples	Approx. Size
₹50,000	₹18,00,000	Indore, Kolkata, Ahmedabad	~800 sq. ft.
₹1,00,000	₹36,00,000	Pune, Hyderabad, Kolkata	~1,000 sq. ft.
₹2,00,000	₹72,00,000	Outskirts of Bengaluru, Chennai	~1,250 sq. ft.
₹5,00,000	₹1,80,00,000	All Metro Cities	~2,000 sq. ft.

Note: these are illustrative, rounded numbers based on the 20 / 30% / 40% rule. Actual loan eligibility and affordable property size depend on interest rates, other liabilities (existing EMIs), credit score, bank-specific policies and city property prices.

Practical tip: run a loan EMI calculator with your expected rate and tenure, and compare EMI against your take-home pay (30% cap is a guideline, not a strict rule).

SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.

Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services