When you apply for a home loan, the lenders consider your income or salary one of the key factors determining your eligibility. Read on to know more about how much home loan you can get based on your salary.
Most home loan applicants in India have this doubt about the maximum amount they can get based on their monthly income/salary. The lenders consider the pay as one of the critical factors to determine your eligibility as it reflects your repayment capacity. Lenders generally have a simple formula to determine the maximum amount they can lend based on salary; they multiply salary with 60.
This means, irrespective of the salary you draw, the maximum amount you can get as a home loan is 60 times the salary. Here is a table that illustrates your home loan eligibility based on your salary.
|Monthly Income||Eligible Loan Amount|
|Rs. 25,000||Rs. 15,00,000|
|Rs. 30,000||Rs. 18,00,000|
|Rs. 40,000||Rs. 24,00,000|
|Rs. 50,000||Rs. 30,00,000|
|Rs. 60,000||Rs. 36,00,000|
Thus, it is obvious that the higher the income, the higher is your home loan eligibility. It is advisable to use the home loan eligibility calculator to check the amount you can get. The calculator allows you to know the exact amount you can avail based on different factors like income, loan duration, financial obligations (if any), and other income.
Now that you are aware of much loan you can get based on your salary let us understand how the income impacts your eligibility.
- Interest Rate
The interest rate offered by the home loan lenders is linked to the credit profile. For instance, if you have recently received an appraisal or are due to get a raise soon, you will have more disposable money. This reduces the risk of default, and the lenders may offer you a home loan at a lower interest. Typically, the lenders provide concessional interest rates for salaried employees as a fixed monthly income reduces the non-payment risk.
- Lower processing time
Generally, the time taken for processing the home loan for salaried employees is much less than the self-employed applicants. This is because the necessary details that the lenders require about income, employment history, etc. are readily available through bank account statements, salary slips, and Form 16. Additionally, if you have recently received an appraisal, then the lender will be assured of your repayment capacity and will process the loan faster.
- Loan tenor
While most lenders in India provide home loans for a maximum of 30 years, your monthly salary has an impact on the loan tenor, albeit indirectly. As you know, higher your income, higher is your home loan eligibility. The lenders generally calculate the EMI payment capacity based on the salary. So, if your salary is high, the lender may offer you a home loan for a longer duration. However, it must be noted that most lenders want the loan to be repaid before the retirement age.
Now that you are aware of the profound impact of salary on your home loan eligibility make sure that you apply for the right amount to repay the loan easily.