- Want to know how much home loan you can get from a bank or a housing finance company?
- Then read this post that tells you the factors based on which lenders decide the maximum home loan amount for you
Banks and Housing Finance Companies (HFCs) offer a maximum loan amount based on your income, the property you wish to buy and your existing obligations. For example, LIC Housing Finance offers as much as INR 15 Crore, depending on the eligibility of an applicant. However, many lenders don’t state the maximum home loan amount on their website. They would mention loans above INR 75 lakh but not the maximum limit. But you should be keen to know the loan amount you are eligible for? If that is the case, this post is for you! Read it and put yourself in the right position to buy a home when the time arrives.
Factors Based on Which Your Maximum Home Loan Amount Depends
The maximum loan disbursal will depend on factors such as healthy income, minimum existing obligations, high property value, etc. The lender will study all these factors thoroughly before deciding the home loan amount for you. Let’s understand all these factors below.
High Monthly Income
Your monthly income gives lenders a brief idea of your repayment potential. The greater you earn, the higher will be the repayment potential and vice versa. Assuming you don’t have any existing debt obligation, the lender can allow the proposed loan EMI to account for upto 50-60% of your net monthly income. But this ratio is subject to change from one individual to another based on their income.
How do lenders carry out the income appraisal process? Well, they do it based on the salary slip and bank statement you provide to them. Salary slips will indicate different constituents of your monthly income, such as basic salary, dearness allowance and even your provident fund contributions. As for self-employed, lenders check their profit & loss account statement, balance sheet, income tax return (ITR) to gauge their income. These documents also help lenders understand their flow of income.
If you consider the current situation where COVID-19 has led to salary cuts and job losses, lenders have adopted a rather tough stance on home loan eligibility. No loan for those having lost jobs or businesses is a foregone conclusion. Lenders calculate the loan eligibility for salaried based on the salary amount they are receiving and not their actual remuneration. Expectedly, lenders have reduced the loan eligibility for businesses having to contend with subdued business volumes owing to the COVID crisis.
On the other hand, bank statements show the transactions made by both salaried and self-employed for the specified period. Statements also give lenders an idea of the borrower you would become for them. Depending on how you fare on these counts, a lender will come up with a maximum loan amount offer for you.
Minimum Existing Obligations
Existing loan or credit card obligations, if any, can also impact your maximum home loan amount. You will most likely get a lower home loan amount in such a situation compared to when you don’t have any other obligation. However, if your existing obligations are not much, you could still get a higher loan amount. In case the existing obligations are on the higher side, the new loan servicing can get difficult. This might force the lender to sanction a lower loan amount. However, you can ask the lender to extend the tenure by some years so that you are eligible for the home loan amount required to buy a house. The extended tenure will bring down the Equated Monthly Installment (EMI) and ensure timely payment of both a home loan and other obligations. An extended tenure will increase interest outflow from your pocket. To bring it down, you can use your incremental income growth to prepay your home loan in parts regularly or go for a balance transfer at the right time.
High Property Value
It can make or break the situation for you. The lender might have agreed on the loan amount that you might have applied for after checking that you earn sufficiently to pay the proposed EMI on a home loan. But the eventual home loan disbursal depends on the property value ascertained by the technical team based on their findings. A technical team comprising qualified architects visits your property, checks its construction and sets a property value based on their overall findings. They mention all in the technical report they submit to the lender, which studies it carefully before setting the loan amount for you.
Loans upto INR 30 lakh, above INR 30-75 lakh and above INR 75 lakh are disbursed at upto 90%, 80% and 75% of the property cost, respectively. You will need to pay around 10%-25% to the seller from your end. This is where the importance of savings is felt more. Just in case your loan eligibility comes lower than your expectations owing to lower property value, having more savings can help you buy a home successfully. So, when you are going to buy a home, give yourself maximum time to accumulate savings.
When You Have a Lot of Years on Your Side
A person earning handsomely and is in the early 30s can get more home loan amount than someone in the mid-40s because the former will have more time to work and earn compared to the latter. As a home loan requires decent savings from your end too, you might take longer than usual to accumulate the same. And if you become 45 years old or so by then, the lender might disburse you less than expected given the limited period of employment you will have from there. In case you are salaried, you will most likely work for another 15 years. So, the maximum tenure can be 15 years in this case. This could increase the EMI beyond your ability to pay on time. In that case, you may have to buy a home at a lower price so that you could be eligible for a home loan.
These are the factors that dictate the maximum home loan amount for you. Lenders might reject your home loan in case the property is located in a very low profile area or approve but at a higher rate of interest.
Interest Rates Across Different Home Loan Amounts
The interest rate is an important aspect to consider when taking a home loan. Even if you have taken a home loan at around 0.50%-1% higher than the average interest rate, you could end up paying INR 1-2 lakh more. You should, therefore, compare the rates of different lenders and choose the one that suits your budget. Let’s take a look at the rates of top lenders below.
SBI Home Loan Interest Rate
The country’s largest lender State Bank of India (SBI) sets the interest rate based on the loan amount, gender and profession of an individual, etc. Check out the table below to know the rates applicable now.
|CIBIL Score||Interest Rates for Women (p.a.)||Interest Rates for Others (p.a.)|
|750 - 799||8.80%||8.85%|
|650 - 699||9.40%||9.45%|
|550 - 649||9.60%||9.65%|
At What Interest Rate Does HDFC Limited Disburse Home Loan to Salaried and Self-employed?
HDFC Limited is one of the premier housing finance companies in India offering impressive home loan amounts to both salaried and self-employed at attractive interest rates. The table below shows the interest rate it offers to borrowers.
For Salaried and Self-employed Professionals
|Loan Amount (In INR)||Interest Rate (In Per Annum)|
|Upto 30 Lakh||6.95% - 7.50%|
|Above 30 Lakh-75 Lakh||7.20% - 7.75%|
|Above 75 Lakh||7.30% - 7.85%|
For Self-employed Non Professionals
|Loan Amount (In INR)||Interest Rate (In Per Annum)|
|Upto 30 Lakh||7.10% - 7.65%|
|Above 30 Lakh-75 Lakh||7.35% - 7.90%|
|Above 75 Lakh||7.45% - 8.00%|
Note – Interest rate of 6.95% for those having a credit score of 780 and above.
How Much is the ICICI Home Loan Interest Rate?
ICICI Bank is also a lender you can think of applying at because of its expertise in serving a wide clientele base and attractive home loan interest rates. The rates differ based on the loan amount, CIBIL score and the profession of an individual. Let’s take a look at its rates.
|Loan Amount (In INR)||CIBIL Score >800||CIBIL Score >750-800||CIBIL Score of 710-749||NTC|
|Upto 35 Lakh||9.00%||9.00%||9.50%||9.25%|
|Above 35 Lakh-75 Lakh||9.00%||9.00%||9.60%||9.50%|
|Above 75 lakh||9.00%||9.00%||9.70%||9.60%|
|Loan Amount (In INR)||CIBIL Score >800||CIBIL Score>750-800||CIBIL Score of 710-749||NTC|
|Upto 35 Lakh||9.00%||9.10%||9.65%||9.40%|
|Above 35 Lakh-75 Lakh||9.00%||9.10%||9.75%||9.65%|
|Above 75 lakh||9.00%||9.10%||9.85%||9.75%|
LIC Housing Finance Home Loan Rate Hits an All-time Low of 8.50% – Shall You Apply for it?
The premier mortgage finance company LIC Housing Finance has reduced its home loan rates to as low as 8.50% per annum, which has hit an all-time low according to the company. LIC HFL sets the home loan interest rate according to the CIBIL score, loan amount, and the profession of the borrower. Let’s check out LIC HFL home loan rates below.
Interest Rates Based on Loan Quantum & CIBIL Score for Salaried & Professionals and Non-Salaried & Non Professionals
|Loan Quantum (In INR)||CIBIL Score||Salaried & Professionals||Non-Salaried & Non Professionals|
|Up to 2 Crore||>=700||6.66%||6.76%|
|Above 2 Crore to 3 Crore||>=700||7.10%||7.20%|
|Above 3 Crore to 15 Crore||>=700||7.20%||7.30%|
Interest Rates for Salaried & Professionals and Non-Salaried & Non Professionals Whose CIBIL Score is Zero and Less
|Loan Quantum (In INR)||Salaried & Professionals||Non-Salaried & Non Professionals|
|Upto 50 Lakh||7.40%||7.50%|