Business
How Costly A House Should You Buy & How Much EMI Is Best? The 5-20-3-40 Formula Will Guide You
For most people, the dream of buying a house goes hand in hand with the fear of overwhelming debt. Home loans may have made ownership easier, but many buyers still struggle with questions of affordability: How expensive should the house be? How much down payment is enough? How big should the loan be? To answer this, financial experts point to a simple but effective calculation: the 5-20-3-40 formula. (News18 Hindi)
This four-part rule lays out the balance between income, down payment, loan amount, and monthly installments in clear terms. It begins with the 5 percent cushion, which suggests that a buyer should always keep at least five percent of the property’s value in cash. On a Rs 50 lakh house, that comes to Rs 2.5 lakh readily available to manage initial costs or emergencies. (News18 Hindi)
The second component is the 20 percent principle, which emphasises that a buyer should ideally cover one-fifth of the home’s cost upfront, keeping the loan capped at 80 percent of the property’s price. Financial planners say this step is crucial because it reduces the interest burden and shortens the repayment period. (News18 Hindi)
The third measure, known as the 3X rule, links the value of the house to the buyer’s income. The advice is straightforward: never buy a house priced at more than three times your annual earnings. So, someone making Rs 15 lakh a year would be safe purchasing a home worth Rs 45 lakh, but stretching beyond that amount risks straining long-term finances. (News18 Hindi)
Finally comes the 40 percent ceiling, which applies to EMIs. The formula warns against committing more than 40 percent of monthly income to loan repayment. For a buyer earning Rs 1 lakh a month, the EMI should not exceed Rs 40,000. Staying within this limit ensures there is still room to manage daily expenses, savings, and unexpected costs. (News18 Hindi)
Taken together, the formula provides a realistic picture of what a person can afford. Consider an example: a professional earning Rs 15 lakh annually wishes to buy a house worth Rs 45 lakh. According to the formula, they should have Rs 2.25 lakh in cash for the initial cushion, make a down payment of Rs 9 lakh, borrow no more than Rs 36 lakh, and limit their EMI to around Rs 30,000 a month. In this case, the purchase falls comfortably within all the recommended limits, leaving the buyer financially secure while pursuing home ownership. (News18 Hindi)
Experts stress, however, that while the 5-20-3-40 formula offers a valuable framework, it should not be treated as an unbreakable law. Each household has its own financial realities, whether that includes children’s education, health care needs, or investment goals. The formula is best used as a guide, a way to set boundaries that prevent overextension, while still allowing flexibility depending on individual circumstances. (News18 Hindi)
Business
India’s shrimp exports set to fall 15-18% amid Trump tariff hike; $5 billion trade at risk: Crisil – The Times of India
Indian shrimp exports are expected to decline by 15-18 per cent this fiscal year after a steep hike in US import tariffs, according to a Crisil Ratings report. The increase, which took effect on August 27, has raised the overall duty burden on Indian shrimp entering the US to 58.26 per cent. The ratings agency said the development will weigh on pricing power, even as exporters attempt to diversify their product portfolio and expand into other markets, as quoted by news agency ANI. Prior to the hike, Indian shipments were already subject to a 50 per cent reciprocal tariff, along with a 5.77 per cent countervailing duty and a 2.49 per cent anti-dumping duty. Exporters had front-loaded shipments in the first quarter of FY26 to beat the tariff deadline, but revenues — which have been flat for four years — are now projected to drop 18-20 per cent year-on-year. India’s shrimp exports were valued at around $5 billion in FY25, with the US accounting for nearly 48 per cent. Crisil also said that exporters’ operating profit margins will narrow by 150-200 basis points, as higher costs cannot be fully passed on to customers. Margins are likely to fall to 5.0-5.5 per cent this fiscal, a ten-year low, due to tariff pressures, lower capacity utilisation and reduced sales of premium shrimp varieties that typically go to the US. The report, based on an analysis of 63 rated exporters representing 55 per cent of industry revenues, warned that weaker earnings and slimmer margins will hurt debt protection metrics and credit profiles. The US has long been the most attractive market for Indian shrimp, offering stable demand and profitable margins. Exporters had continued supplying despite existing duties and even a 10 per cent reciprocal tariff imposed in April 2025, with American buyers absorbing part of the cost. However, the latest sharp increase places India at a marked disadvantage compared to rivals such as Ecuador, Vietnam, Indonesia and Thailand, which face lower US tariff barriers.
Business
‘Undefined mechanisms’: India halts US-mail including up to $100 parcels; postal service cites new tariff rules – The Times of India
India’s postal department has suspended all mail bookings to the United States, following new US governmental regulations that alter the protocol for incoming shipments.The official communication indicated that postal services, including letters, documents and gifts valued up to $100 destined for the US, will not be booked, as reported by Economic Times.“In view of the inability of carriers to transport US-bound mail, and undefined regulatory mechanisms, it has now been decided to completely suspend booking of all categories of mail, including letters/documents and gifts value upto 100 USD, destined to the USA,” the government announced in a notice.Officials, quoted by ET, confirmed ongoing monitoring of the situation and assured efforts towards swift service restoration.This came in place of an earlier governmental directive dated August 22, specifying that transmission of all US-bound mail items, barring documents/letters and gifts valued up to $100, would cease from August 25, 2025.The decision follows the US administration’s Executive Order No. 14324 issued on July 30, 2025, which removed duty-free allowance on imported goods worth up to $800- which were earlier exempted.Starting August 29, all US-bound goods incur customs duties under the International Emergency Economic Power Act (IEEPA) tariff structure, though gifts valued up to $100 remain duty-free. However, the uncertainty arising from the rule change, pushed India to stop deliveries of values up to $100 as well.The Department’s notice explained that US Customs and Border Protection requires comprehensive duty collection and data exchange mechanisms. Indian carriers servicing US routes have expressed their inability to transport postal items without these systems.Customers who have previously booked items that cannot be sent to the US are eligible for postage reimbursement.
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India’s shrimp exports set to fall 15-18% amid Trump tariff hike; $5 billion trade at risk: Crisil – The Times of India
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