At Aavas Financiers, we believe homeownership isn’t just a dream—it’s a goal within reach. The first step to turning that goal into reality? Understanding your home loan eligibility. We’re here to guide you with the right facts so you can make smart, confident financial decisions.
Here in this blog, we will help you calculate your home loan eligibility on the basis of your monthly income in simple and easy-to-understand language.
What is Home Loan Eligibility?
Home loan eligibility means the amount that a banking company can lend you to purchase or construct your home. This depends majorly on your earnings, age, credit report, employment history, repayment ability, and other financial commitments.
In other words, it tells you: “How much loan can you avail of against my income?”
Why is Calculating Housing Loan Eligibility Important?
Knowing your loan eligibility for a home loan before applying helps in:
- Planning your home purchase
- Selecting a loan amount that aligns with your financial profile
- Choosing a property that fits comfortably within your budget
- Streamlining the loan approval process with better preparedness
At Aavas Financiers, we recommend every customer calculate housing loan eligibility as a first step before starting their home buying process.
Key Factors That Affect Your Home Loan Eligibility.
Let’s look at some of the most important criteria lenders consider:
1. Monthly Income
Your income is one of the biggest determinants. The higher your monthly income, the more eligible you are for a higher loan amount. Generally, lenders assume that up to 40–50% of your net monthly income can go towards loan repayment.
2. Existing Financial Obligations
If you already have EMIs for other loans (personal loan, car loan, etc.), that amount is deducted from your eligible EMI capacity.
3. Age
Younger applicants have a longer repayment period and thus more eligibility. For instance, someone in their 30s may get a 20–25-year loan term, whereas someone nearing retirement might only get 5–10 years.
4. Credit Score
A good credit score (typically 750 and above) shows strong repayment history and enhances your chances of getting a home loan approved.
5. Job Stability & Employment Type
A steady income from a reputed employer, or regular income from self-employment, adds to your credibility as a borrower.
How to Calculate Home Loan Eligibility Based on Monthly Income
Here’s a step-by-step guide to calculate home loan eligibility based on income:
Step 1: Know Your Net Monthly Income
Let’s assume your take-home salary is ₹50,000 per month.
Step 2: Deduct Existing EMIs
Suppose you already pay ₹5,000 per month as a car loan EMI.
Your effective EMI-paying capacity = 50% of ₹50,000 = ₹25,000
Deduct existing EMI = ₹25,000 – ₹5,000 = ₹20,000
This ₹20,000 is the maximum amount you can pay as EMI for a housing loan.
Step 3: Estimate Loan Amount Based on EMI
Let’s assume a loan tenure of 20 years and an interest rate of 13% p.a.
Using a home loan calculator (available on the Aavas Financiers website), ₹20,000 EMI translates to a loan of approximately ₹20–21 lakhs.
So, based on your income and obligations, your housing loan eligibility is roughly ₹20 lakhs.
Tips to Improve Your Home Loan Eligibility
Here are some practical ways to increase your home loan eligibility:
✅ Add a Co-Applicant
Clubbing the income of your spouse or family member can significantly boost your eligibility.
✅ Clear Existing Debts
Paying off personal loans or credit card dues will increase your EMI-paying capacity.
✅ Choose a Longer Tenure
Opting for a longer tenure lowers your EMI burden and improves loan eligibility.
✅ Maintain a Good Credit Score
Timely repayments and low credit utilization can improve your score over time.
Aavas Financiers – Your Trusted Home Loan Partner
At Aavas Financiers, we understand that every customer has a unique financial background. That’s why we offer customized home loan solutions that suit your income and lifestyle.
Whether you’re a salaried professional, self-employed, or even have an informal income source, we’re here to help you calculate and maximize your home loan eligibility. With minimal documentation and personalized assistance, the journey to your dream home becomes simpler.
Conclusion
Knowing how to determine home loan eligibility on the basis of your monthly income is important prior to applying for a loan. It not only enables you to have the correct expectations but also gets you better prepared for the approval process.
Need to know your home loan eligibility? Click on the free eligibility calculator on our website or walk into your nearest Aavas Financiers branch for personalized assistance.
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