How Is Home Loan Eligibility Calculated
Banks and NBFCs calculate the home loan eligibility by considering various factors such as age, income, loan tenure, existing debt obligations etc. Then, the home loan eligibility is calculated using an online calculator. The calculator functions on a mathematical algorithm to give accurate results regarding the eligible loan amount.
Factors That Affect Your Home Loan Eligibility
Your age: Your age is one of the main factors determining your home loan eligibility, and it may affect your monthly payment and interest rate for the given loan amount. If you are young, you may opt for a long loan tenure and get a loan with a lower EMI and low home loan interest rate.
Your income: Your monthly income will influence how much of an EMI you can afford. So, high-income individuals may be eligible for a higher loan amount.
Your existing loan obligations: In addition to your income, existing financial obligations such as credit card debt or other loans may also have an impact on your eligibility. These are considered regular monthly outflows and reduce the EMI portion you can set aside for house loan repayment.
Your credit report: The credit report gives a birds eye view of your financial state. It assists the lender in determining your ability to repay the loan. It is a significant factor for loan approval or rejection.
Regulatory requirements: The National Housing Bank has also set limits on the maximum loan amount as a proportion of the homes purchase price. This permissible limit fluctuates slightly and depends on the cost of the residence. Lower-priced homes may have a higher maximum limit and vice versa.
How To Enhance Home Loan Eligibility
The eligibility for home loans can be enhanced by
- Adding an earning family member as co-applicant.
- Availing a structured repayment plan.
- Ensuring a steady income flow, regular savings and investments.
- Furnishing details of your regular additional income sources.
- Keeping a record of your variable salary components.
- Taking actions to rectify errors in your credit score.
- Repaying ongoing loans and short terms debts
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Increase Your Credit Score
Conventional loans often come with riskbased pricing, which means if your credit score is lower than 740, youll pay a higher interest rate on your loan.
Mortgage insurance costs also increase as your credit score decreases. These rising costs chip away at your housing price range.
Take steps to raise your score. It could mean you can lower your interest rate and therefore your monthly mortgage payments. And it could mean you qualify for a larger loan amount.
Youll also have a better chance of qualifying for a loan program with a higher debttoincome ratio if your score is higher.
Whats Your Home Buying Budget
If you make $70K a year, or a salary within that price range, you might be wondering how much house you can afford.
But determining affordability isnt as simple as stating a number.
Salary does play a big role in purchasing power, but its only part of the equation.
You can maximize your home buying power if you know all the different factors lenders look at on your mortgage application, and what they want to see.
Factors That Affect Home Loan Eligibility
Your eligibility for a home loan is dependent on factors as mentioned below:
- Age : Age is an essential factor that may affect your chances of home loan approval. Some banks may approve you a loan easily if you are young. On the other hand, there is a possibility of home loan rejection or lower eligibility if you are near your retirement age.
- Income & Profession : Having a job with a stable income flow is crucial to getting a home loan. If your job is unsecured or has inconsistent income sources, banks may question your capability to repay the loan.
- A credit score determines the borrower’s creditworthiness and may actively affect the home loan eligibility.
- Age of the Property & LTV : Lenders assess the property’s value before providing a home loan. If the property is too old, has legal or technical issues, or the loan to value ratio of the property is not significant, it would not be easy to get a home loan.
- Existing Debt Obligations : Missing your EMI regularly or defaulting on EMI may further impact your eligibility for a home loan. It is thus crucial to clear all your existing dues on time.
How Many Times Your Salary Can You Borrow For A Mortgage In 2021
How much youll need to earn for a particular size mortgage varies from lender to lender, and theyll often be more concerned about how much you can afford to pay back rather than a straight income calculation. That said, 4.5x your income is generally the maximum amount youll be able to borrow, so here we go through a few scenarios to help you get an idea of the amount you could be offered.
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How Much Can I Borrow On A Mortgage
Before you start looking for your dream home, you need to know how much you’re able to borrow in order to fund it. Generally, how much you can borrow will depend on four things. The amount you want to borrow in relation to the property’s value , your , your income and your outgoings.
You should be able to comfortably afford the mortgage when you take it out so that unforeseen events don’t put your home in jeopardy later on. Remember, although the lender or mortgage broker is responsible for checking whether you can afford a particular mortgage, making sure you can easily manage the repayments you’re taking on will give you valuable peace of mind before you apply.
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How Much Loan Can I Get On My Salary 15000
HDB Financial Services offers personal loans of up to Rs.20 lakh to individuals who earn a minimum income of Rs. 15,000.
Can we get 100 home loan? No, you cant get a 100% home loan from any lender, be it the bank, housing finance company . Usually, loan amounts upto INR 30 lakh, above INR 30 lakh-75 lakh and above INR 75 lakh are disbursed at upto 90%, 80% and 75% of the property cost, respectively.
Get A Clear Understanding Of Your Finances And See Where You Stand
When it comes to starting your home purchase journey, you are bound to be anxious about questions such as How much can I afford? unless you are very rich.
A few other related questions that you may have are:
– How much down-payment do I need?
– Given my current income, how high can my home loan EMI be?
– What is the maximum cost of the house I can buy?
To put it very simply, you want to assess your home affordability. To remain objective, lets see how the math of such a decision should work.
EMIs you can afford
The unwritten rule of the lenders comes to your aid here. Banks and financial institutions ensure that loan EMIs dont exceed 40-45 per cent of your net salary.
How is this information useful?
Lets say your monthly take-home is Rs 1 lakh. So, banks will lend only if your EMIs amount to not more than Rs 40,000-45,000.
And what home loan can you get for a Rs 40,000 EMI?
Depending on different loan tenures , here are the home loan amounts you can avail:
– 30-year loan: Rs 52-53 lakh
– 25-year loan: Rs 49-50 lakh
– 20-year loan: Rs 46-47 lakh
– 15-year loan: Rs 40-41 lakh
And if you have another loan , then your home loan EMI affordability in the eyes of the bank will be Rs 30,000. Why? Because the 40 per cent limit is on the sum of all EMIs.
So they get a shot at buying a larger and costlier house.
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Negotiate With The Seller
There is no reason you cant ask for seller contributions instead of negotiating for a lower purchase price. Depending on the type of mortgage you choose, the seller can contribute 3 to 6 percent of the home price in closing costs.
This can make all the difference when you want to buy a new home and stop renting.Seller contributions can cover closing costs, buy your interest rate down to a more affordable level, or make a onetime payment to cover your mortgage insurance.
How Can I Improve My Eligibility For A Personal Loan
It is always a good idea to work on your eligibility a couple of months before applying for a loan. Here are a couple of measures to improve your eligibility for a loan:
- Pay off your existing debts that include credit cards and loans.
- Avoid applying for more than one loan at a time.
- Work on building a high credit score.
- Ensure you have the required documentation – such as PAN, Aadhaar, valid address proofs, salary slips, bank statements, etc.
It is important to evaluate your requirements carefully before applying for a loan taking into consideration your requirements. Make yourself aware of the rules and regulations and make sure to honour the payments since this goes a long way in ensuring sound financial health.
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How To Apply For A Home Loan Online With Navi
Step 1: Applicants need to download the Navi app and register using their mobile number to proceed.
Step 2: Enter the property details such as the location of the property, its type, and address.
Step 3: Provide PAN, age, name, marital status, and whether there is a co-applicant or not. After completing the steps mentioned above, individuals will get instant approval for the loan amount they are eligible to avail of.
Apart from the benefit of instant approval, Navi also provides a high-value loan amount at low-interest rates starting from 6.95% p.a.
Fixed Obligation Income Ratio
This method is calculated based on the maximum instalments you can honour with your net income post expenses like rent, EMIs, etc. In most cases, lenders consider approximately 50-75% of the net income as instalments. In case your expenses exceed this percentage, banks either increase the tenure of the loan or reduce the amount sanctioned.
Let us consider a personal loan for a 30,000 salary. If you have a monthly EMI of 8,000, you can usually get a personal loan of up to 5.5 lakh. On the other hand, if the monthly EMI that you pay is lower, at say 3,000, you would be eligible for a much higher personal loan of up to 7.7 lakh assuming you have a healthy credit rating and are looking for a tenure of 60 months.
Take a look at some of these possibilities.
Rs. 12.48 lakhs
Rs. 12.00 lakhs
For exact figures, you can use the personal loan eligibility calculator. Do note however, that the calculator assumes that you already satisfy various other personal loan eligibility criteria in terms of credit score, employment history, bank statements and documentation. Your actual eligibility is a culmination of various factors. However, assuming that you satisfy these criteria, the personal loan eligibility calculator will help you get a good estimate of what you can expect before you apply.
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How Home Loan Eligibility Is Calculated
Chandra Patra is an employee of a leading company in India. His salary break up is mentioned below:
Let us consider that Chandra has no loans or liabilities at present and his net available income is Rs.1,03,400. However, you one must always remember that Leave Travel Allowance is not taken into consideration by the bank while calculating the salary. The medical allowance is also excluded from the calculation. This is because, these expenses are not derived by an individual with his/her salary. In this case, Chandra will only get these amounts as reimbursements, in case he spends on medical needs or travel requirements.
Thus, the bank or the lender will deduct that LTA and medical expenses from the net income. Chandras net income now stands at Rs.1,03,400 Rs., which is equal to Rs.92,400. Thus, the loan eligibility for Chandra Patra stands at Rs.92,400 x 60 = Rs.55,44,000. In case of a home loan, EMI is restricted to a maximum of 40% to 50% of the net income by most banks. This suggests that you are eligible for a home loan where the equated monthly instalment is not more than 50% of your monthly income.
Pay Down Some Of Your Existing Debt
The minimum payment on your credit accounts determines your debttoincome ratio. By paying down your credit card debt or eliminating a car payment, you can qualify for a bigger home loan.
For example, in the scenario above, reducing your monthly obligations by $200 could increase your maximum price from $234,000 to $270,600.
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What Is A Home Loan Eligibility Calculator
Home Loan Eligibility Calculator is an online tool that gives you an estimate of the funds you can get against the mortgage of your house. You can easily calculate the affordable EMI based on multiple eligibility factors. A home loan eligibility depends on factors, including your age, net monthly income, organisation, employment history, LTV and CIBIL score, etc.
Home Loan Eligibility Criteria
Home loan eligibility is dependent on many factors such as your salary, current age, credit score, location, total work experience and other monthly financial obligations. Bajaj Finserv brings easy-to-meet eligibility criteria, making the Home Loan more accessible. Below is a chart with details.
Eligibility criteria for home loan
Age limit of salaried individuals
23 to 62
Age limit of self-employed individuals
25 to 70
Required CIBIL score for home loan
Work experience of salaried applicants
Minimum 3 Years
Indian, residing within the country
Strong applicants can avail Rs. 5 Crore, or higher, based on their eligibility, as a home loan. Know the complete Housing Loan eligibility criteria and documents required for home loan before applying.
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How To Increase Home Loan Eligibility
Listed below are some of the ways to increase home loan eligibility and improve the chances of availing of a housing loan at favourable terms and interest rate.
- Improve CIBIL score: Lending institutions tend to provide home loans at attractive interest rates to individuals who possess an ideal CIBIL score above 750. Timely payment of bills, EMIs, credit card dues and not applying for multiple credit products simultaneously are some ways to improve CIBIL score
- Clear existing loans: Lenders also assess loan repayment capacity by gauging an individuals debt-to-income ratio. Hence, clearing existing loans before applying for a new one can increase home loan eligibility
- Opt for a joint home loan: The home loan eligibility improves if one applies for this credit product jointly with an earning co-applicant or spouse
How To Use Myloancare Home Loan Eligibility Calculator
You can check your home loan eligibility at MyLoanCare with the following steps:-
- Fill in the required details like name, mobile number, income etc in form.
- Complete OTP authentication by entering OTP , which you have received on the entered mobile number.
- After OTP verification, enter additional details about your profession, the reason for taking a home loan, and your current work experience.
- Verify all the details and click Get Offers.
- You can now view the multiple banks for which you are eligible based on the details filled in by you.
- You can choose the bank after a complete comparison, or a MyLoancare advisor will contact you in a while to assist you with the process.
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How Much Tax Benefit On Home Loan Can I Get
You can claim annual tax deductions each year through several sections of the Income Tax Act.
- 80C: Principal repayment , up to Rs.1.5 lakh
- 24B: Interest repayment, up to Rs.2 lakh
- 80EEA: Additional interest, up to Rs.1.5 lakh
- 80EE: Additional interest, up to Rs.50,000
Section 80EE is for first-time homeowners purchasing a property worth Rs.50 lakh or less and taking a home loan of Rs.35 lakh or less. The loan must have been sanctioned in between 1 April 2016 and 31 March 2017.
Section 80EEA applies to first-time homeowners purchasing an affordable home with the stamp duty value for the property not exceeding Rs.45 lakh. The loan must be sanctioned in between 1 April 2019 and 31 March 2021.
Further, joint homeowners can both claim tax benefits on home loan, according to their EMI contributions. Since joint home loans also mean greater income, you can consider one to get a higher loan amount.
With these salary and tax planning details on hand, you can better answer the question, How much loan can I get for a home? Plan well and be a proud homeowner!