Home Loan Eligibility According to Different Incomes

Last Updated : Aug. 26, 2020, 8:10 p.m.

Home Loan is one of the popular loan options among the customers. Banks, Non-banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) provide Home Loans to customers so that they can purchase their dream home. But there is an important question that customers often ask – What will be my Home Loan Eligibility? Or What will be the Eligible Home Loan Amount that I can get? Before getting into the answer to these questions, you should know that your monthly income plays an important role in determining the Home Loan Eligibility for you.

Home Loans can be taken by both Salaried and Self-employed Individuals. When an individual applies for a home loan , lenders check his or her monthly income to have an estimate about the repayment capacity of an individual. An individual with a higher monthly income is more likely to have a higher repayment capacity. But that individual should not be paying existing EMIs for some other loan, otherwise, the Home Loan Eligibility may reduce.

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In this article, we will tell you how monthly income affects Home Loan Eligibility and what can be the maximum home loan amount for people with different incomes. So, without any further delay, keep reading.

What is the Home Loan Eligibility of People with Different Monthly Incomes?

As we said, the Monthly Income of an individual affects the Home Loan Eligibility. The reason being lenders want to make sure of your repayment capacity before offering the home loan amount. The Repayment capacity also depends on existing obligations. If an individual has already been paying Credit Card or Loan EMIs, the lender will offer a lower loan amount as it is obvious that the repayment capacity is compromised due to the existing obligations. On the other hand, individuals with high income and Nil to little obligations can pay a higher EMI amount.

To make you understand this further, we are taking examples of different monthly incomes of INR 30,000, INR 50,000, INR 75,000, and INR 1 lakh. According to these incomes, we will try to understand the Home Loan Eligibility of an individual. Also, we will be taking two cases. One, where an individual has no existing obligations and second, where an individual is paying a fixed EMI for the personal loan. First, we are taking the monthly income of INR 30,000.

Let’s say an individual with an income of INR 30,000 wants to opt for a 20-year Home Loan at an affordable interest rate of 7.80% per annum. First, we are assuming that he has zero obligations.

According to these details, he would be able to get a Home Loan Amount of INR 16,38,278 (approx.). ,

On assuming an existing obligation in the form of personal loan EMI of INR 7,000, he would be able to get a Home Loan of INR 7,88,800 (approx.).

So, you can clearly see that by having existing obligations, Home Loan Eligibility Amount reduces. In a similar way, we are showing Home Loan Eligibility according to the different incomes in the below table. Please have a look.

Home Loan Eligibility According to Different Monthly Incomes

Note: All these calculations about eligible home loan amounts are for illustration and self-help purposes. The final loan amount can change from one lender to another.

So, you can have an idea about the Eligible Home Loan Amount according to the different Monthly Incomes. You can see from the above table that high income with Nil existing obligations can get you a high loan amount whereas low income with existing obligations can reduce the eligible loan amount.

How to Use the Home Loan Eligibility Calculator?

All these calculations can be done by the Home Loan Eligibility Calculator. This is an amazing tool with which individuals can easily know the eligible home loan amount by feeding a few basic details. These details are Gross Monthly Income, Rate of Interest, Tenure(in years), and existing obligations (monthly EMIs). As soon as you put all these details into this tool, you will get the Eligible Home Loan Amount instantly. If you are looking to opt for a Home Loan, you should use this tool to have an early idea about the eligible home loan amount.

Other Factors that Affect Eligible Home Loan Amount

As we said initially, monthly income is one of those factors that determine your home loan eligibility. Some of the other important factors that affect your Home Loan Eligibility are your age, property location, Remaining Working Years, Past Repayment Behaviour, etc. Lenders consider all these factors and decide the final loan amount for any individual.

If you are eligible for less loan because of insufficient income, you can get it increased by adding an earning family member as a co-applicant. By doing this, your repayment capacity will increase because of the added monthly income of your co-applicant. So, if you want to opt for a higher loan amount but your income is insufficient to get it, it would be better to add an earning co-applicant.