Home loan nightmare: What to do when you lose your job and drowning in EMIs

Hi. I’m 32, unmarried, and bought a house about 8 months ago. I’m currently feeling overwhelmed by the EMI burden, especially after losing my job last month.

My financial situation:

Home loan EMI: Rs 90,000/month

Loan amount: Rs 1 crore for 29 years + Rs 10 lakh top-up for 15 years

EMI-to-income ratio (when employed): ~70%

Current income: None (laid off), relying on my savings

Savings runway: Approx. 12 months — but this was originally my wedding fund

Family support: My 59-year-old father is helping with household expenses, but we have no major savings, just Rs 30–40 lakh in health insurance coverage

My plan:

The plan is to return to full-time work by August, take up freelance gigs in the meantime, and resume full EMI payments once employed. But the emotional toll is heavy—tapping into wedding savings and facing financial uncertainty is mentally exhausting. I’m reaching out to others with home loans: how do you cope with such setbacks, and would you have done anything differently?

Advice by Animesh Hardia, Senior Vice President, Quantitative Research at 1 Finance

Losing your job with a hefty home loan EMI, especially when it eats up 70% of your income, can feel overwhelming, but you’re not alone. Many people, especially in India’s metros, are facing similar affordability pressures, with EMI-to-income ratios rising sharply in recent years. It is generally recommended to keep EMIs under 35% of your monthly income, so your earlier ratio was already quite stretched.

Here’s a practical framework to manage through this tough patch:

1. Communicate with your lender immediately

Don’t avoid calls or emails. Inform your bank about your job loss as they may offer a temporary EMI moratorium, restructuring (lower EMI, longer tenure), or partial payment options. Banks are usually open to helping genuine borrowers, especially if you have a good repayment history.

2. Tap emergency funds

You’ve built a 12-month savings runway, so use it judiciously. Prioritise EMIs to protect your credit score and avoid penalties. If needed, use fixed deposits or liquidate low-priority investments temporarily.

3. Explore alternate income and support

Freelancing, part-time gigs, or even temporary roles can help bridge the gap until you find a new job. Don’t hesitate to seek short-term support from family or friends if it helps you stay afloat.

4. Avoid common mistakes

Don’t ignore your lender or default without discussion as this can lead to your loan being classified as a non-performing asset, damaging your credit score and making future borrowing harder. Also, don’t wait for the “perfect” job; even a lateral move can keep your finances stable until better opportunities arise.

5. Reassess your financial plan for the future

Many borrowers regret taking large loans without a solid buffer. Going forward, try to keep EMIs below 35% of income, and always maintain an emergency fund covering at least 6-12 months of expenses. This experience, though tough, can be a valuable lesson in building financial resilience.

You’re not alone in this. Many have faced similar setbacks and managed to bounce back by staying proactive, communicating with lenders, and being flexible about work and finances. Use this period to reassess, rebuild, and set up stronger financial safeguards for the future.