Edit this postWhat is the "20 - 30% - 40%" Rule for Buying a House?
A simple affordability rule to plan tenure, EMI and down payment
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).
Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services
