An individual needs to understand the specifics of home loan eligibility before you apply for a home loan. Understanding the various parameters will help you manage your present finances. At the same time, it gives us a good understanding of the EMIs (equated monthly instalments) so that one can control the cash flows without missing the payment dues on time after the home loan is available.
Once you input the above variables into the calculator, you will understand the amount you are eligible for the home loan.
Please note that all the above parameters can change after the Bank screens the documents required for a home loan.
Four core factors affect Home Loan Affordability and are listed below.
Income: This is the most crucial factor as, after Home Loan, one needs constant cash flows to pay the monthly instalments. So monthly stable income is an essential factor.
Age: Tenure of Home Loan will be decided by the age. That means the younger you are, the tenure of your home loan can be higher since you have more earning potential left.
Existing EMIs: If you already have existing loans, then the amount sanctioned for Home Loan will be lesser as you already have another loan. If you wish to increase the Home Loan amount, then you should consider closing the existing loans.
Credit Score: Before approving a home loan, your credit history will be looked at by the Bank. Your credit history will be reflected in your CIBIL Score. So, the higher the CIBIL Score, the better it is as it reflects a good credit history. Credit history is generally affected by your previous loan payments and the number of loans rejected in the past.
One can improve the variables considered to calculate home loan affordability, like Income and Credit Score.
Income: By adding a co-applicant in the process, the combined income of the applicant and co-applicant will be considered for the home loan affordability calculation.
Credit Score: Closing the existing loans and making timely payments on existing loans improve the credit history, improving the overall credit score.
Home Loan Affordability is calculated by taking into consideration the applicant’s Age, Gross Income, Tenure, Interest Rate and Other EMIs.
Banks will consider approximately 55-60% of your monthly disposable income to be available for repayment of the home loan.
For more information on Home Loan EMIs visit Home Loan EMI FAQs.
You can borrow upto 80% for original loan between Rs. 20-75 Lacs, and 75% for original loan above Rs. 75 Lacs of the cost of the property.
If you are an individual - your parents, children (above 18 years), or spouse can be your co-applicants. The co-applicant need not be the co-owner of the property, but a co-owner of a property has to be a co-applicant.
Home Loan Affordability calculator takes into account five parameters, and all parameters are listed below: