- Basic salary
- Medical allowance
- Leave travel allowance
- House rent allowance
- Other allowances, etc.
Now, a lender will not consider allowances like medical and leave travel when assessing your income. These allowances are provided only for the designated use; hence, financial institutions exclude them.
Assume your in-hand salary is Rs. 60,000, and after excluding medical allowance, LTA, etc., it goes down to Rs. 49,000. It is upon this amount; will your Home Loan amount be calculated. You can use our home loan calculator in case you want to estimate the monthly installment
How to calculate home loan eligibility based on salary
Considering you are a resident of Bangalore of 30-year-old with all financial obligations and current EMIs Nil, The Following table illustrating the home loan eligible based on salary:
Net monthly Salary
Home loan amount
The above values are calculated using Bajaj Finserv Home Loan Eligibility Calculator.
Eligibility criteria for home loan based on your salary
Home loan eligibility is primarily based on the borrower's income, credit score, job stability, age, and other financial liabilities. Lenders follow specific guidelines to determine the loan amount that a borrower can qualify for based on their income.
Generally, lenders consider the borrower's net monthly income while calculating their loan eligibility. The maximum loan amount that a borrower can get is determined by the lender's policy, which sets a maximum EMIs that the borrower can afford.
As a general rule, the EMI should not exceed 50% to 60% of the borrower's monthly income. For example, if someone has a monthly income of Rs. 50,000, the maximum EMI they can afford is around Rs. 25,000 to Rs. 30,000. Based on the prevailing interest rates and the loan tenure, the lender can calculate the maximum loan amount that the borrower is eligible for.
Apart from the borrower's income, lenders also consider their credit score while determining their home loan eligibility. A good credit score is essential to getting a high loan amount and a low-interest rate. Borrowers with a high credit score are considered to be more creditworthy and are more likely to get a higher loan amount.
Other factors that lenders consider while determining home loan eligibility include the borrower's age, job stability, existing loans and liabilities, and the property's value. Borrowers who are younger and have a stable job are considered to be more eligible for a higher loan amount. In conclusion, home loan eligibility in India is primarily based on the borrower's income, credit score, job stability, age, and other financial liabilities. Borrowers should carefully assess their eligibility and compare loan offers from various lenders before finalising their home loan to get the best deal.
It is important to note that the actual loan amount a person can get may vary based on several factors, and it is advisable to check with various lenders and compare the offers before finalising the loan. Additionally, borrowers should ensure that they can comfortably afford the EMI before taking on a home loan to avoid any financial strain in the future.
Nevertheless, apart from your income, factors like your current EMIs and fixed obligations also affect your repayment capacity. Hence, it is best to use a home loan eligibility calculator to check the home loan amount you are eligible for as this tool considers factors like your income, loan tenure, other monthly income, and current financial obligations while forecasting the eligible loan amount.
What factors affect home loan eligibility for a salaried employee
Several factors can affect the home loan eligibility of a salaried employee. Lenders typically consider the following aspects when determining whether to approve a home loan and how much to lend:
- Salary: The amount of your monthly or annual salary is a crucial factor. A higher income generally improves your loan eligibility.
- Stability of income: Lenders prefer borrowers with a stable and regular income. If you've been with the same employer for a longer period, it can positively impact your eligibility.
- Younger individuals may get an option to choose a longer repayment period.
3. Credit score:
- A good credit score reflects your creditworthiness. Lenders use this to assess the risk associated with lending to you. A higher credit score often leads to better loan terms.
4. Debt-to-Income Ratio (DTI):
- Lenders evaluate your ability to repay the loan by considering your existing debts. A lower debt-to-income ratio (monthly debt payments divided by monthly income) increases eligibility.
5. Down payment:
- The amount you can contribute as a down payment can affect the loan amount and terms. A higher down payment may lead to more favourable loan terms.
6. Property value:
- The value of the property you intend to purchase also influences loan eligibility. Lenders may finance a percentage of the property value, and the loan amount is often capped.
7. Loan tenure:
- The loan tenure, or the number of years you take to repay the loan, can impact eligibility. A longer tenure may result in a higher eligibility, but it also means paying more interest over the loan term.
8. Nature of employment:
- Some lenders may have specific criteria based on the nature of your employment (e.g., permanent, contract, or self-employed).
9. Existing loans and liabilities:
- Your existing loans and financial liabilities can affect your eligibility. Lenders may consider your overall financial obligations before approving a new loan.
10. Co-applicant's income:
- Including a co-applicant with a stable income can enhance eligibility and loan amount.
Frequently Asked Questions
As a salaried employee, you can get a loan of up to 15 crore* depending on your credit profile and eligibility criteria.
You can get a home loan of an estimated amount Rs. 58,38,919 if your salary is Rs. 70,000. However, the final loan amount also depends on various factors, including the lending policies of financial institutions and your financial profile. Generally, lenders consider your income, existing financial obligations, and creditworthiness to determine your loan eligibility.
The loan amount you can get on a salary of Rs. 1 lakh per month will depend on several factors, including the lending policies of financial institutions, your financial profile, and other variables. Lenders consider factors such as your income, existing financial obligations, creditworthiness, and loan tenure to determine your loan eligibility.
While specific loan eligibility calculations can vary among lenders, a common practice is to consider your monthly income and apply a loan-to-income ratio to determine the maximum loan amount you may be eligible for.
The minimum salary required to obtain a home loan varies among lenders and depends on factors such as the loan amount, creditworthiness, and local regulations. Lenders typically assess an applicant's debt-to-income ratio, credit score, and income stability.
The amount of home loan you can get on a monthly salary of Rs. 20,000 depends on various factors, including the lending institution's policies, your creditworthiness, and the prevailing interest rates. Lenders typically use a debt-to-income ratio to assess your eligibility, and this ratio is the percentage of your income that goes towards repaying debts.
The home loan amount you can get on a Rs. 60,000 salary depends on factors like the lending institution's policies, your creditworthiness, loan tenure, and interest rates. To get accurate information, consult with specific lenders who can assess your financial profile and provide details on the loan amount and terms you may qualify for.