A housing loan applicant’s eligibility for the entire loan amount is mostly determined by their monthly salary. When determining an applicant’s eligibility for a house loan, some lenders take into account their gross income, while others take into account their net salary. An employee’s net or in-hand compensation is determined by deducting several expenses from his gross salary, such as employee provident fund (EPF), professional tax, and tax deduction at source (TDS).
To determine the eligible amount for a house loan, lenders employ two methods: the Multiplier Method and the EMI/NMI Ratio, either separately or in combination.
EMI/NMI Ratio
The entire percentage of a loan applicant’s net monthly income (NMI) that is used to pay for both their current EMIs and the EMI of the projected home loan is known as the ratio (EMI/NMI). Home loans are typically approved by banks, NBFCs, and HFCs for borrowers whose total monthly payments fall between 50 and 60% of their income. Home loan applicants who surpass this cap may lengthen their loan term to lower their EMI/NMI ratio and increase their eligibility for loans because longer tenures result in lower EMIs.
Home customers should always attempt to choose the lender providing the lowest home loan interest rates in order to obtain a larger loan amount, since the interest rates set for them will also affect their monthly installment payments.
Table: Comparing Interest Rates on Home Loans
Bank/ NBFC | R.O.I (Reducing Per Annum) | Processing Fees | Loan Amount | CIBIL Score |
HDFC Bank Home Loans | 8.45% – 10% | 0.5% – 1% | 5.00 Lacs – No Limit | 650 |
Kotak Bank Home Loan | 8.75% – 10% | N/A | 20.00 Lacs – No Limit | 700 |
Bank of India Home Loan | 8.5% – 10.75% | 0.25% – Rs.10000% | 10.00 Lacs – No Limit | 675 |
Canara Bank Home Loan | 9.25% – 13.8% | N/A | 10.00 Lacs – No Limit | 675 |
Aavas Housing Home Loan | 9.9% – 18% | 1% – 1.5% | 25.00 Lacs – 5.00 cr | 650 |
Bajaj Housing Finance Home Loan | 8.45% – 10% | 0.2% – 0.5% | 5.00 Lacs – 75.00 cr | 650 |
PNB Housing Home Loan | 8.75% – 14% | 0.25% – Rs.10000% | 5.00 Lacs – 20.00 cr | 625 |
Shri Ram Housing Finance Home Loan | 11.5% – 13% | 1% – 1.25% | 10.00 Lacs – 1.00 cr | 650 |
We Rize Home Loan | 10% – 18% | 0.5% – 1% | 5.00 Lacs – 75.00 Lacs | 650 |
Mahindra Finance Home Loan | 9% – 15% | 1% – 3% | 3.00 Lacs – 75.00 Lacs | 650 |
Capri Global Bank Home Loan | 9.5% – 15% | 1.25% – 1.5% | 10.00 Lacs – 1.50 cr | 650 |
Tata Capital Home Loan | 8.6% – 11% | 0.2% – 0.5% | 30.00 Lacs – 7.00 cr | 750 |
Aditya Birla Home Loan | 8.9% – 11% | 0.5% – 1% | 25.00 Lacs – 25.00 cr | 675 |
Piramal Finance Home Loan | 10.5% – 14% | 1% – 1.5% | 30.00 Lacs – 5.00 cr | 650 |
Satin Housing Home Loan | 11% – 18% | 2.5% – 3% | 5.00 Lacs – 1.00 cr | 700 |
Indiabulls Finance Home loan | 9.4% – 10% | 0.5% – 1% | 20.00 Lacs – 5.00 cr | 675 |
Federal Bank Home Loan | 8.5% – 10% | 0.5% – Rs.13000% | 50.00 Lacs – 20.00 cr | 675 |
IDFC Bank Home Loan | 8.85% – 9.25% | 1% – 1.5% | 10.00 Lacs – 5.00 cr | 680 |
ICICI Bank Home Loan | 8.6% – 10% | 0.25% – 0.5% | 50.00 Lacs – No Limit | 700 |
Axis Bank (Asha Home Loan) | 9.9% – 14% | 0.5% – 1% | 5.00 Lacs – 1.00 cr | 700 |
Yes Bank Home Loan | 9.4% – 10.5% | 0.25% – 1% | 50.00 Lacs – 10.00 cr | 700 |
Yes Bank Home Loan (Small Segment) | 9.9% – 11% | 1% – 1.25% | 5.00 Lacs – 1.00 cr | 680 |
Standard Chartered Home Loan | 8.5% – 10% | 0.5% – 1% | 25.00 Lacs – 25.00 cr | 700 |
Jana Small Finance Bank | 10.5% – 13.5% | 1% – 1.5% | 5.00 Lacs – 3.00 cr | 650 |
DCB Bank Home Loan | 9.75% – 14% | 0.5% – 1% | 30.00 Lacs – 3.00 cr | 650 |
SBI Bank Home Loan | 8.5% – 10.4% | N/A | 10.00 Lacs – No Limit | 650 |
Bank of Maharashtra Home Loan | 8.5% – 9.65% | N/A | 10.00 Lacs – No Limit | 675 |
Indian Bank Home loans | 8.5% – 10.4% | N/A | 10.00 Lacs – No Limit | 675 |
Union Bank of India Home Loan | 8.5% – 10.8% | N/A | 10.00 Lacs – No Limit | 675 |
Central Bank of India Home Loan | 8.5% – 10.4% | N/A | 10.00 Lacs – No Limit | 700 |
Bajaj Finserv Home Loan | 8.5% – 10% | 0.2% – 0.5% | 20.00 Lacs – 15.00 cr | 700 |
L & T Finance Services Bank Home Loan | 8.5% – 9.5% | 0.25% – Rs.10000% | 30.00 Lacs – 3.00 cr | 650 |
Vistaar Finance Home Loan | 13% – 21% | 2% – 2.5% | 5.00 Lacs – 50.00 Lacs | 650 |
IIFL Bank Home Loan | 8.9% – 14% | 1% – 1.25% | 5.00 Lacs – 50.00 Lacs | 650 |
Aadhar Housing Finance Home Loan | 10.5% – 14.75% | 1% – 1.5% | 5.00 Lacs – 70.00 Lacs | 600 |
Axis Finance Home Loan | 9.5% – 11% | 0.5% – 1% | 30.00 Lacs – 10.00 cr | 650 |
Fullerton (Grahshakti Home loan upto 75 lac) | 10.5% – 16.5% | 1% – 1.5% | 10.00 Lacs – 75.00 Lacs | 650 |
Hero Housing Home Loan | 10% – 11% | 0.5% – 1% | 20.00 Lacs – 5.00 cr | 650 |
India Shelter Home Loan | 13% – 20% | 1% – 2% | 5.00 Lacs – 50.00 Lacs | 500 |
Shubham Housing Finance Home Loan | 10.5% – 14.75% | 1.5% – 2% | 5.00 Lacs – 50.00 Lacs | 450 |
DMI Housing Home Loan | 11.5% – 14% | 1% – 1.5% | 5.00 Lacs – 75.00 Lacs | 650 |
Vastu Housing Finance Home Loan | 10% – 15% | 1% – 2% | 5.00 Lacs – 3.00 cr | 650 |
The Multiplier Method
The multiplier approach is widely used by banks and NBFCs/HFCs to determine a housing loan applicant’s eligibility for a particular loan size. Using this approach, lenders multiply an applicant’s monthly earnings by a predetermined number to determine the amount of a house loan. According to IT returns, lenders often provide salaried people with home loans up to 72 times their gross monthly earnings or 6 times their gross annual salary. Someone with employment is eligible for a home loan for up to Rs. 21.6 lakhs, for instance, if their net monthly pay is Rs. 30,000.
Maximum Loan Amount Using the Multiplier Method for Varying Monthly Salary
Monthly Salary | Maximum Loan Amount |
Rs. 20,000 | Rs. 14,40,000 |
Rs. 30,000 | Rs. 21,60,000 |
Rs. 40,000 | Rs. 28,80,000 |
Rs. 50,000 | Rs. 36,00,000 |
Rs. 60,000 | Rs. 43,20,000 |
Rs. 70,000 | Rs. 50,40,000 |
Rs. 80,000 | Rs. 57,60,000 |
Rs. 90,000 | Rs. 64,80,000 |
Rs. 1 lakh | Rs. 72,00,000 |
Take Note: The current loan payback obligations are taken into account as zero in the computation above. Using the multiplier approach, the highest possible loan sum is 72 times the monthly salary.
Additional Factors Affecting the Amount of the Home Loan Eligibility
In addition to a loan applicant’s net monthly income, the following additional criteria affect their eligibility for a house loan:
Age: Lenders typically want home loan customers to pay off their debt by the time they become 70 years old. Home loan maximum terms typically range from 30 years, so borrowers in their older years may be eligible for shorter terms with higher interest rates. Such home loan applicants would be given smaller loan amounts if their inadequate salary made them less capable of repaying their debt.
Ratio of Loan to Value
The total amount of a property’s value that an individual can finance with a house loan is known as the loan-to-value, or LTV, ratio. The RBI’s regulation ceilings cannot be exceeded by certain LTV ratios.
The classification of house loan sums and the accompanying limits on LTV ratios is as follows:
Loan Amount | LTV Ratio |
Up to Rs 30 lakh | Up to 90% of the property’s value |
Above Rs 30 lakh to Rs 75 lakh | Up to 80% of the property’s value |
Above Rs 75 lakh | Up to 75% of the property’s value |
The credit risk analysis that each lender conducts is then used to determine the ultimate LTV ratio for a housing loan applicant. The individual’s credit score, earning profile, occupational profile, company profile, and other details related to his credit profile are some of the variables taken into consideration throughout the credit risk assessment method.
Tips: To Improve Your Eligibility for a Larger Home Loan, Include Co-Applicants
When defining the eligibility of a house loan co-applicant(s), lenders take into account their monthly income. Therefore, by including a family member as a co-applicant—preferably one with a steady job and high credit—loan applicants who don’t make enough money to buy the homes of their dreams might increase the amount of money they are eligible for. Be aware that certain lenders offer female co-applicants lower interest rates on house loans.
The amount of a home loan you are eligible for in India based on your monthly salary is determined by a number of criteria. Age, income, debts at the moment, credit score, and occupational history are some of these variables. Lenders will also take into account the kind of property you want to buy and where it is located.
It is essential to see a loan consultant to find out how much house loan you can receive in India based on your salary. After evaluating your circumstances, they will be ready to offer you an exact figure.
In general, you can get a larger home loan the higher your earnings are and the lower your debt levels. To find out how much of a house loan you can receive on an income of 75,000, continue reading.
How Much House Loan Can One Get, With a Salary of 75,000?
Your highest loan eligibility will be determined by taking into account your earnings and repayment capacity, assuming this is your first time taking out a home loan in India. EMIs should, generally, not be greater than 35–40% of your monthly salary.
You are able to apply for a home loan up to INR 55.93 lakh with a monthly salary of INR 75,000. This sum takes into account that banks normally lend up to 80% of the property’s worth. Therefore, you would have to provide 20% of the purchase price, or INR 10 lakhs, if you were looking at a house costing INR 50 lakhs.
The length of the home loan and the bank’s interest rate will determine your EMI. For instance, your monthly installment (EMI) for a loan with a 30-year term and an interest rate of 9% would be about INR 28,500. lengthen the duration of your loan to lower your monthly installment load. If market rates decline while your loan is being repaid, you may also want to consider a variable home loan interest rate rather than a fixed one.
How to Be Eligible for a Home Loan in India?
If you are employed, the majority of Indian banks would need the following in order for you to be eligible for a house loan:
- A minimum monthly income of Rs. 25,000–30,000.
- An excellent credit rating.
- Consistent work history spanning at least two to three years.
- Age range: 21 to 65.
- Indian Residency.
- Ability to repay as assessed by internal bank standards.
Down Payment for Home Loans in India
If this is your first time applying for a home loan in India, the following down payments will be necessary:
- 7.6% of the loan value for 10-year loans up to Rs. 30 lakhs
- In the case of loans ranging from Rs. 30 lakh to Rs. 75 lakh, 20% of the loan value
25% of the loan value is required for loans over Rs. 75 lakh. - Therefore, your down payment for a house loan of Rs. 50 lakhs would be Rs. 5 lakhs (10% of the loan value).
- Likewise, your down payment for a loan of Rs. 1 crore would be Rs. 25 lakhs, or 25% of the loan sum.
How to Select Indian Home Loan Lenders!
While selecting a lender, there are numerous aspects to take into account, some of the most crucial ones are as follows:
- Interest Rates: Among the most crucial aspects to consider when selecting a loan. Prior to choosing a lender, make sure you look into the interest rates offered by several of them.
- Loan Terms: The loan time span is an additional crucial consideration. Make sure the loan term you select meets both your needs in terms of finances and your comfort level.
- Costs: You could be surprised by the costs that certain lenders impose. Before committing to a loan with a lender, check the fine print and comprehend the costs.
- Customer service: Make sure you can get assistance when applying for a loan. Select a lender that offers high-quality customer service so that you may receive assistance when required.
Bottom Line
Knowing how much you are eligible for is crucial if you’re planning to get a house loan in India. Your income and other variables will determine this. Banks will often lend you up to 4 times your yearly earnings.
But remember, this is only a basic guide. Your unique situation will determine the precise amount you are eligible to borrow. The lender will take into account things like your work position and credit history.