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Take a home loan alone, or jointly?

Borrowing with a partner or family member adds their income, so lenders may lend more. Where tax rules give each borrower their own deduction limit, two co-owners can claim more between them than one person alone.

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₹
Take-home or gross, whichever your lender uses.
₹
The partner or family member who would borrow with you.
₹
Used for the yearly interest and the tax comparison.
% a year
0% to 20%.
years
1 to 30 years.
₹
The most interest each borrower may deduct from taxable income in a year under your tax rules. Enter 0 if none applies.
%
The rate at which each borrower's income is taxed at the margin. 0% to 60%.
More assumptions 5
₹
Other loan payments you already make each month.
₹
Other loan payments the co-borrower already makes.
%
Lenders often cap all EMIs at 40% to 60% of income. 1% to 100%.
₹
Some tax rules also allow repaid principal, often within a limit shared with other savings. Enter 0 if it is already used up or does not apply.
%
How the loan and the home are split. 0% to 100%.
Extra tax saved jointly over 20 years
₹7,26,315
7.26 lakh

Under these assumptions, you could borrow about ₹57,61,542 alone or ₹1,03,70,776 together. The loan is above your limit alone but within the joint limit. With the deduction limits you entered, borrowing jointly saves about ₹7,26,315 more in tax over 20 years.

Alone and together
Borrowing limit alone₹57,61,542
Borrowing limit together₹1,03,70,776
EMI on the loan considered₹52,069
Tax saved alone₹10,75,872
Tax saved together₹18,02,187
Extra tax saved jointly₹7,26,315
Illustrative estimate. Borrowing limits follow the income share you enter; real lenders use their own rules. Tax figures use only the deduction limits and rate you enter: tax rules change and differ by country, so check the current rules for your situation. Not tax advice.

Tax saved by year

037,50075,0001.13 lakh1.5 lakh1471013161920
Tax saved aloneTax saved together
YearInterestPrincipalTax saved aloneTax saved together
1₹5,05,419₹1,19,414₹60,000₹1,20,000
2₹4,94,864₹1,29,969₹60,000₹1,20,000
3₹4,83,376₹1,41,457₹60,000₹1,20,000
4₹4,70,872₹1,53,960₹60,000₹1,20,000
5₹4,57,264₹1,67,569₹60,000₹1,20,000
6₹4,42,452₹1,82,381₹60,000₹1,20,000
7₹4,26,331₹1,98,501₹60,000₹1,20,000
8₹4,08,786₹2,16,047₹60,000₹1,20,000
9₹3,89,689₹2,35,144₹60,000₹1,16,907
10₹3,68,904₹2,55,928₹60,000₹1,10,671
11₹3,46,283₹2,78,550₹60,000₹1,03,885
12₹3,21,661₹3,03,171₹60,000₹96,498
13₹2,94,864₹3,29,969₹60,000₹88,459
14₹2,65,697₹3,59,135₹60,000₹79,709
15₹2,33,953₹3,90,880₹60,000₹70,186
16₹1,99,403₹4,25,430₹59,821₹59,821
17₹1,61,799₹4,63,034₹48,540₹48,540
18₹1,20,871₹5,03,962₹36,261₹36,261
19₹76,325₹5,48,508₹22,898₹22,898
20₹27,842₹5,96,991₹8,353₹8,353

Calculators behind this question

Beyond the numbers

The maths shows one side. These are the things only you can weigh.

  • Tied togetherA joint loan links your finances for years. Talk through what happens if one of you loses income or wants to sell.
  • If the relationship changesSeparating with a joint loan can be hard: the lender must agree before one person leaves the loan.
  • Shared prideMany couples and families value owning a home together and building it as a team.
  • Borrow what you need, not the mostA higher limit is a ceiling, not a target. A smaller EMI leaves room for life.

How it's calculated

EMI room = income × share for EMIs − existing EMIs Borrowing limit = EMI room × (1 − (1 + r)^−n) ÷ r Tax saved = tax rate × (min(interest, limit) + min(principal, limit)), per person

The borrowing limit is the loan whose EMI just fits the room left in the income. For tax, each year's interest and principal are split by the ownership share, and each person claims up to their own limit.

Assumptions

  • Lenders use different income rules, so the limits are a guide, not an offer.
  • Both borrowers pay tax at the same rate and are eligible for the deductions you enter.
  • Deduction limits stay the same for the whole loan; real rules change.
  • The EMI is paid in the ownership shares.

Worked example

Incomes of 1,20,000 and 80,000 rupees a month, an existing EMI of 10,000 rupees and 50% of income allowed for EMIs, at 8.5% for 20 years: alone you could borrow about 57,61,542 rupees, together about 1,03,70,776. On a 60 lakh rupee loan with a 2,00,000 rupee interest limit each and 30% tax, borrowing jointly saves about 7,26,315 rupees more over the loan. Elsewhere, incomes of 6,000 and 4,000 dollars at 40% and 6.5% for 25 years raise the limit from about 281,395 to 518,359 dollars.

Questions

Does a joint loan always mean joint ownership?

Not always. Some lenders and tax rules need the co-borrower to be a co-owner to claim deductions. Check what applies to you.

What happens if one borrower stops paying?

Each joint borrower is usually responsible for the whole loan, not only their share.

Why can two of us borrow less than double?

Existing EMIs and the share of income lenders allow both cut the room. Lenders may also weigh each income differently.

Where do the deduction limits come from?

From your tax rules, which change. Enter the current limits for your situation, or 0 if none apply.

Sources

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