A self-owned house is a mark of respect in society and gives homeowners a sense of security. The increasing property prices have made it difficult for individuals, especially salaried ones, to purchase a house early in their careers.
Taking out a Home Loan can make the dream of buying a house achievable for salaried employees with an average salary at younger ages. One may wonder, ‘how much Home Loan can I get on a 40,000 salary?’
Here is the complete guide to getting a Housing Loan for salaried individuals.
Factors Lenders Use to Determine Home Loan Eligibility of a Borrower
Banks use the following two factors to determine Home Loan eligibility:
- An individual’s willingness to pay: Before extending a loan offer, lenders check the borrower’s willingness to repay the loan. For this, they check the credit score of the individual. A person’s credit history shows past credit behaviour, type of credit taken, duration of earlier loans, etc. A high credit score shows that a person is willing to repay the loan in a disciplined manner and has the financial capability to borrow a loan. Lenders prefer such individuals to extend a House Loan offer.
- An individual’s repayment capacity: Banks consider the gross salary of an individual to decide their loan repayment capacity. With leading banks in the country, a salaried employee living in Delhi, Mumbai, Bangalore, Pune, or Chennai, can apply for a Home Loan for a gross monthly income of at least Rs. 20,000 per month. The minimum gross salary requirement for other cities across India is Rs. 15,000.
Here is the answer to the question, ‘how much Home Loan can I get on a 40000 salary?’
A Home Loan eligibility calculator can tell how much one is eligible for, considering their salary, loan tenure and existing EMI (equated monthly instalment).
For example, suppose a person has a monthly salary of Rs. 40,000 and no other running EMI presently. In this case, for a loan duration of 20 years and an interest rate of 9% per annum, the individual can get a Home Loan of Rs. 26,67,467.
You can do this calculation conveniently using the Home Loan eligibility calculator. The online calculator is present on the websites of leading banks.
Moreover, you can change the calculator variables and find your Home Loan eligibility for different combinations of loan tenure, interest rate, existing EMI commitment, and salary.
Other Factors that Affect Home Loan Eligibility
Along with the monthly income, other factors determine the Home Loan eligibility of a salaried individual. These factors include:
- Loan applicant’s age: A salaried individual between the ages of 18 and 60 can apply for a Home Loan with most top banks in the country. The Home Loan applicant’s age affects the EMI payable for a Home Loan. A younger loan applicant has more working years to him and can repay the loan more comfortably than someone nearing retirement.
- Occupation: An individual working for a public sector company or a reputed private company is more likely to get a Housing Loan than others. A stable job increases the lender’s confidence in the loan applicant.
- Credit score: A loan applicant having a good salary may only be eligible for a Home Loan if their credit score is good. A credit score of 750+ is usually considered reasonable by lenders to extend a loan offer to salaried individuals.
- Existing debts: Banks providing Home Loans consider all other loans to which a salaried person is committed. One may have to pay other EMIs, such as EMIs for auto loans, personal loans, credit card bill dues, etc. Banks take into account all such financial commitments of the borrower.
- Property’s value: Usually, banks extend up to 80% of the purchased property’s present market value as a Housing Loan. Therefore, a property with a higher market value fetches a higher loan amount.
One can use the Home Loan eligibility calculator to calculate the amount of Home Loan. Applying for a reasonable loan amount can save a person from a rejection of his Home Loan application.