Home Loan EMI: How expensive a house should you buy as per your income?

Buying a house is a big deal for the middle class because it is not easy to pay a huge amount for a house with a normal income. This is the reason why people often complete this task by taking a home loan. Many times, in order to buy a good house, people buy an expensive house. For this, either they spend all their savings or take so many loans that it is not easy to pay the EMI for a long time.

In such a situation, later when difficulties increase, then there is regret. Know here about a formula through which you can easily find out how much expensive a house you should buy as per your salary, how much down payment you should give, and how much loan you should take. If you adopt this formula, your housing requirement will be easily fulfilled and you will not have any regrets about your decision.

This special formula will work
A special formula should be used to buy a house. This formula is 3/20/30/40. In this formula, 3 means that whatever house you are going to buy, its cost should not be more than three times your total annual income. Meaning, if your annual package is Rs 10 lakh, then you should buy a house or flat up to Rs 30 lakh. If the package is Rs 15 lakh then it can be up to Rs 45 lakh.

In the formula, 20 means the tenure of the loan. Home loans are often taken for long periods only. But you take it for a period of 20 years. If you take less than this, the EMI burden will increase and if you take more, the EMI burden will reduce, but you will have to pay a lot of money to the bank as interest. Therefore, you can fix the tenure of the loan up to a maximum of 20 years. In this, you can easily pay the EMI.

30 means your EMI. Whatever you earn, your EMI should not be more than 30 percent. Suppose you earn Rs 70 thousand every month, then your EMI should not be more than Rs 21 thousand. If it is less than this then it is better for you.

40 means your down payment. Whenever you buy a flat, you have to make a down payment. However, you can give a 10 or 20 percent down payment for the house and arrange the remaining amount through a home loan. But this will increase your home loan amount and the EMI burden will also increase. Therefore, try to make up to 40 percent down payment. Suppose your annual income is Rs 10 lakh and you buy a flat worth Rs 30 lakh, then you should make a down payment of around Rs 12 lakh. In such a situation, you will have to take a loan of only Rs 18 lakh. In this situation, the EMI that will be made will not be so much that you cannot pay it easily.

Know how much the EMI will be
Suppose you take a home loan of Rs 18 lakh from SBI for 20 years, then according to the SBI Home Loan Calculator, at the interest rate of 9.55 percent, you will have to pay Rs 16,837 as EMI per month. This is an amount which you can repay very easily. Even if the interest rate increases with time and it affects your EMI, you will not have any problem.

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