“How much of a home loan can I qualify for?” This is naturally the first thought that comes to mind if you are a salaried individual with aspirations of home ownership. Learn how much of your income is used to determine your eligibility for a home loan and how much money you can borrow based on your salary level. In this article, we will also explain about what other criteria go into eligibility calculations and how simple it is to apply for a home loan.
How much of a housing loan can I afford with my current salary?
As a general rule, people with salaried jobs can qualify for home loans up to 60 times the amount of net monthly income they bring in.
| Net monthly income | Loan amount |
| Rs 20,000 | Rs 10,36,246 |
| Rs 30,000 | Rs 17,09,806 |
| Rs 40,000 | Rs 23,83,366 |
| Rs 50,000 | Rs 30,56,926 |
Home loan tenures provided by top banks
- 30 years
- 25 years
- 20 years
- 15 years
- 7 years
- 5 years
Year-wise breakup of home loan for 20,000 salary with 7.50% interest rate
| EMI (in year) | Amount |
| Monthly EMI for a duration of 5 Years | Rs 22,042 |
| Monthly EMI for a duration of 10 Years | Rs 13,057 |
| Monthly EMI for a duration of 15 Years | Rs 10,197 |
| Monthly EMI for a duration of 20 Years | Rs 8,862 |
| Monthly EMI for a duration of 30 Years | Rs 7,691 |
Documents required for a home loan on 20,000 Salary
- Date of Birth proof
- Income proof
- PAN card
- Address proof (Aadhaar Card, Voter ID, Driving Licence, Electricity bill, Gas Bill, property tax receipt, etc.)
- Government-issued identification (Aadhaar Card, Voter ID, Driving Licence)
- Proof of signature (passport, PAN card, bank verification)
Other Factors Influencing Eligibility for a Home Loan
In addition to the net monthly income, several additional criteria influence the eligibility for a home loan. They are listed below:
Age
Home loans are accessible to applicants between the ages of 21 and 55, however financial institutions often prefer to approve loans for the younger demographic. The rationale behind this is that younger applicants have a longer working life and hence have a greater likelihood of repaying their house loans. In one’s 50s, it is possible to get a mortgage with a lesser loan amount and a shorter term.
Employer and work history
People who work for a reputable company are more likely to get a mortgage since they are seen as more financially stable. This instils trust in the prompt payment of EMIs. Similarly, if you work for a reputable institution, you may be eligible for a greater salary than someone who works for a less reputable firm, assuming all other circumstances are equal. Similarly, your job history conveys a great deal about your reliability and serves as a hint in your application.
Credit rating
Your prior loan repayment history, reflected by your credit score, is one of the most important variables in evaluating your eligibility. Even if you make a substantial income, a low credit score might hinder your prospects of obtaining a mortgage. In general, financial institutions want credit scores greater than 650. A credit score greater than 750 will also provide you with an advantage when negotiating for cheaper mortgage interest rates.
Existing obligations
Financial institutions determine a person’s eligibility for a house loan only after factoring in their current commitments concerning EMIs and outstanding balances on other loans, such as auto loans, consumer durable loans, personal loans, credit cards, etc. This is done to verify that the individual applying for a house loan is not overwhelmed with debt and can easily make EMI payments regularly. FOIR is the ratio of a person’s total monthly obligations to his or her net monthly income. Typically, the percentage must be below 50% for qualifying.
LTV (Loan to Value)
Even if you are eligible for a larger house loan based on your net monthly income, banking institutions will only support 75% to 90% of the entire cost of the property. This is done to guarantee that they have sufficient margin to liquidate the underlying asset and recoup their investment in the case of a default.
Legal and Technical Property Approval
When it comes to house loans, the condition of the underlying asset is of the highest significance. Financial Institutes evaluate the applicant’s prospective property acquisition based on two primary factors. The first is to evaluate the property’s legal chain to verify clear title and ownership, and the second is to assess the property’s market worth. These assessments are often conducted by independent attorneys and appraisers chosen by the lending institution.
How can I increase my chances of getting a home loan?
You can improve your chances of getting a home loan on a 20,000 salary by doing the following:
- Including a member of the household who is gainfully employed as a co-applicant.
- Using a predetermined strategy for making repayments.
- Ensuring that there is a consistent flow of income, as well as regular savings and investments.
- Providing specifics on the sources of your consistent supplementary income
- Keeping a note of the many aspects of your variable compensation.
- Taking action to resolve any issues with your credit score.
- Getting out from under recurring debt and paying off immediate obligations.
Applying for a home loan
Before beginning the hunt for your ideal home, you should have an estimate of the home loan amount for which you would qualify, depending on your income. It will assist you in making a fiscal selection about the property you desire to acquire. You can use the home loan eligibility calculator to determine the amount for which you qualify.
FAQs
What factors will affect my eligibility for a home loan on a 20,000 salary?
Your age, financial standing, credit history, credit score, and other financial obligations.
How can I compute the entire cost of interest on my home loan?
Using the Housing.com Home Loan EMI Calculator, you can compute the entire interest cost of your mortgage. You need to input your loan amount, interest rate, and loan term into the calculator to get the total interest cost and monthly payment.
How will my monthly payments be calculated?
Lenders compute EMIs by factoring the loan amount, loan term, and interest rate into account. If the interest rate increases or if you make a partial payment on your loan, the monthly payment may vary.
What is the home loan moratorium period?
A moratorium is a time during which debtors are exempt from loan repayment. This is the waiting time before the borrower begins making EMI payments.
What is prepayment on a home loan?
Home loan prepayment is a service that enables borrowers to return the loan amount in whole or in part before the end of the loan term. However, prepayment of a mortgage is subject to different requirements that borrowers must be aware of ahead.
Housing News Desk is the news desk of leading online real estate portal, Housing.com. Housing News Desk focuses on a variety of topics such as real estate laws, taxes, current news, property trends, home loans, rentals, décor, green homes, home improvement, etc. The main objective of the news desk, is to cover the real estate sector from the perspective of providing information that is useful to the end-user.
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