Home Loan

How much home loan can I get on my salary?


How to get a home loan based on salary? Want to  Know more about home loans?  Your net salary is one of the things that determines if you can get a loan and how much you can borrow. Your salary is important because it helps lenders figure out how much you can pay back. Some important points are mentioned below.

How much you can borrow will depend on how much money you make. Lenders will look at your net pay, which is your salary after common deductions like tips, PF, ESI, etc. Your take-home pay will determine how much you can pay in EMIs and how much you can borrow as a whole.

For example, if your take-home pay is Rs. 25,000, you can borrow up to Rs. 18.64 lakh to buy a Rs. 40 lakh home (provided you have no existing financial obligations.) But if your take-home pay is Rs. 50,000, you can borrow Rs. 37.28 Lakh for the same property. Then, if your take-home pay is Rs. 75,000, you can increase your loan eligibility up to Rs. 55,93 Lakh.

Home loan:

A home loan applicant’s monthly salary is one of the most important factors in figuring out how much of a home loan they can get. Some lenders look at a housing loan applicant’s gross salary, while others may look at his net salary to figure out how much of a loan he can get. After deductions like Professional Tax, Tax Deduction at Source (TDS), Employee Provident Fund (EPF), etc. are taken out of an employee’s gross salary, what’s left is his net or in-hand salary.  Lenders use the EMI/NMI Ratio and the Multiplier Method, either on their own or together, to figure out how much of a home loan an applicant is eligible for.

  • Ratio EMI/NMI -The EMI/NMI ratio is the total amount of a loan applicant’s net monthly income (NMI) that goes toward paying their current EMIs and the proposed home loan’s EMIs. Most of the time, banks and NBFCs/HFCs give home loans to people whose total EMIs are between 50-60% of their monthly income. Since longer loan terms mean lower EMIs, people who want a home loan but are over this limit can extend their loan terms to lower their EMI/NMI ratio and make themselves more eligible for a housing loan.
  • Multiplier Method – Many banks, NBFCs, and HFCs use the multiplier method to decide how much a home loan applicant can borrow. Under this method, lenders figure out how much of a home loan to give someone based on a set number of times their monthly income. Home loans are usually available to salaried people for up to 72 times their gross monthly income or 6 times their gross annual income (based on IT returns). For instance, if an employee’s net monthly salary is Rs. 30,000, they can get a home loan for up to Rs. 21.6 lakhs. If more than one person in a household makes money, the lender can add up all of their net monthly incomes to figure out how much of a home loan they can get.

Other things that affect who can get a home loan

A salaried person’s ability to get a home loan may depend on a number of things besides how much money they make each month.

  • Your Age: Home loans are available to people who are between the ages of 21 and 55. This is because you have a long work life ahead of you and a lot of chances to pay off your home loan. Your loan term may also be longer than that of someone who is older and applying for a loan.
  • Your Employer and Your Work Experience – If you work for a well-known company, it may be easier for you to get a housing loan because the company gives you some security. Lenders can be sure that the house loan interest rate will be paid on time and in full. In these situations, you may also be able to borrow more money. In the same way, the length of time you’ve been working says a lot about how steady your career is, which is good for your loan application.
  • Your credit score – A good credit score is one of the most important requirements for getting a home loan. Even if you make a good salary, it might not be enough if you have a bad credit score, which shows how your credit has been in the past. For a home loan to be approved, your credit score should be at least 750. Also, if your credit score is high and you make at least the minimum salary for a home loan, you may get a house loan interest rate on your loan.
  • New Property Approval: When you apply for a home loan to buy a property, you have to show your lender that the property is legally yours and that you have the title to it. Also, lenders must know what the property is worth on the market.

How much can ONE borrow based on thier salary?

In general, a salaried person can borrow up to 60 times their net income. For example, if you make a salary of Rs. 40,000 per month, your home loan amount could be Rs. 24 Lakhs, based on your home loan salary eligibility criteria. You can use a calculator to figure out how much of a loan you can get. In the meantime, you can use the table below as a quick reference for the income levels at which you can get loans and how much you can borrow for each:

Monthly Net Income       amount borrowed

Rs. 20,000          –            Rs. 10,36,246

Rs. 25,000           –           Rs. 13,73,026

Rs. 30,000           –           Rs. 17,09,806

Rs. 35,000.          –          Rs. 20,46,586

Rs. 40,000.          –         Rs. 23,83,366

Rs. 50,000           –           Rs. 30,56,926

Summing up:

Most of the time, you can get a home loan for 60 times your salary. But most lenders don’t look at how much money you have in your bank account when deciding how much money to lend you. Home loan eligibility is a set of rules that a financial institution uses to decide if a customer is creditworthy enough to get and pay back a certain loan amount. Eligibility for a home loan depends on things like age, income, credit history, credit score, and other financial obligations, among other things.

Also visit, Piramal Finance has more in-depth educational articles.