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Home Loan Eligibility Calculator

  • 11-Mar-2022
Home Loan Eligibility Calculator- Financeseva

While planning to avail a home loan, every borrower needs to meet the eligibility criteria set by lenders. Home loan eligibility parameters shall vary from bank to bank. 

Failing to meet the eligibility criteria may lead to loan rejection and leave a negative mark on the individual's credit report. Therefore, make sure you fulfill the required eligibility criteria and make the loan process even smoother. 

What is Home Loan Eligibility Calculator? 

The home loan eligibility calculator will help you to estimate your chances of getting loan approval. Usually, Lender considers several factors to determine an individual's eligibility for a housing loan. Home loan eligibility depends on income, credit profile, loan tenure, age, existing EMIs obligations and more. It becomes hard to calculate all these criteria manually, but you can use a simplified home loan eligibility calculator to get accurate information. 

How does Home Loan Eligibility Calculator Works?

Knowing your eligibility for a home loan helps to find out where you stand, what requirements need to be fulfilled makes the loan process easy and convenient. The home loan eligibility calculator is specially designed for borrowers who want to get housing loans. 

All you need to do is enter the required details, once you feed the details the eligibility calculator fetches the database and compares it with different criteria set by lenders to provide the most accurate estimation on your eligible loan amount. 

Below are the steps to calculate eligibility: 

  • Enter Net Monthly Income
  • Enter the Loan Repayment Period
  • Enter the Interest rate that you pay on loan
  • Enter the other existing EMIs (if applicable)

How is Home Loan Eligibility Calculated? 

Let’s understand the calculation with a piece of a sample if Amit is a salaried person who earns Rs.50,000 per month with no loans at present. However, leave, travel, medical expenses and allowance are not taken into consideration by the lender while calculating salary. These expenses are avoided in calculation and the lender deducts them from the net income. Refer to the below table: 

Basic35,000Income Tax3,000
HRA900Provident Fund 2,200
Medical Expenses1,500  
Special Allowance3,000  
Total40,400Net Income35,200

This means Amit's net income now stands at Rs.35,200 –Rs.1,500, which is equivalent to Rs.33,700. Lenders offer loan amounts 60 times more than net income, which shall be calculated as Rs. 33,700 *60 = 022000. Usually, banks restrict EMIs to a maximum of 50% of net income. 

Factors That Affect Home Loan Eligibility 

Parameters                                                                                                                                                                                                  Requirements
AgeYour age must fall under the age group of 18 to 70 years. Some banks offer home loans above the age of 23 years.
Monthly IncomeYour monthly net income should be above Rs.25,000. Higher-income indicates a stronger capacity to repay loans and seems a less risky profile from the lender's point of view.
Credit/CIBIL ScoreApplicants should have a good financial track record and carry a credit score of 750 or above.
Employment StatusMinimum 3 years of job continuation and current 1 year with the same organization. In the case of self-employed, minimum 3 years of business existence.
Loan to Value (LTV)Generally, lenders fund 70% -90% of property value which means at least 15% of margin money to be paid by applicant.

How to Improve Home Loan Eligibility?

Maintain a Credit Score Above 750: A higher credit score of 750 or above not only enables you to get your loan approved but also helps in negotiating interest rates. Credit behaviors depend on paying existing EMIs on or before the due date and reducing credit utilization to 30% of the total can help in improving your credit score. In case, if you have a bad or no credit score- prefer to avail a credit score to enhance your credit. 

Add an Earning Co-Applicant: If your eligibility is affected on a low income or high debt to income your lender might reject your application due to lower repayment capacity. In such a scenario, you can add an earning co-applicant to the home loan application. Make sure only family members can be co-applicants who have a good credit history and stable income to improve your income eligibility. By doing so, you would be eligible for a higher loan amount. If possible, add a women member as an applicant and get a concessional interest rate on home loans. 

Clearing Existing Loans: Lenders evaluate repayment capacity by checking an individual's debt-to-income ratio. Existing loans lower your debt-to-income ratio that directly affects your new loan application, the best way to improve your eligibility can be done by paying off existing loans before approaching any lender. 

Check for Step-up Loan If applicable: Step-up loans are offered to young salaried and professionals. It allows to avail loan at lower EMIs at initial years and gradually increase when applicants see a hike in income. 

Make the best use of housing loan eligibility calculator and reach your goals towards the dream house. Check your eligibility with financeseva to get additional benefits. 

Also Read: Top 5 Ways to Increase Home Loan Eligibility

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