For any salaried individual looking to buy a residential space, one of the most crucial questions is- “How much home loan can I get on my salary?” The loan amount for purchasing a home for salaried professionals depends on factors like age, income, credit history, etc.
It is no secret that a home loan EMI can cause a financial strain on your monthly expenses. Therefore, your EMIs should be 40-50% of your total take-home salary because anything more will likely require severe lifestyle alterations.
Therefore, if your salary is Rs. 40,000, your home loan EMI shouldn’t be more than Rs. 20,000.
Take a Look at This Example:
- If you are taking a home loan for 40,000 salary, you can get a maximum home loan amount of Rs. 23,04,196 say at an interest rate of 8.5% for a tenure of 20 years. The home loan EMI amount that you would have to pay in this scenario is not more than Rs. 20,000.
Nowadays, most financial lenders offer a maximum tenure of 30 years for a home loan. This means-
- If you choose a tenure of 30 years for a home loan for 40,000 salary, you can borrow a maximum loan amount of Rs. 26,01,075 say at an 8.5% interest rate. And, your home loan EMI will not be more than Rs. 20,000.
Base your choice to opt for a short or long home loan tenure on EMI affordability with the help of a home loan EMI calculator.
How to Increase Your Home Loan Eligibility?
Before applying for finance for purchasing a home for salaried professionals, potential borrowers can use the following ways to increase their home loan eligibility.
1. Clear your existing loans
If you have existing loans and other financial obligations, your lender is likely to lower your loan amount. This is because financial lenders assess home loan eligibility based on a debt-to-income ratio. You can improve your debt-to-income ratio by paying off all existing loans and credit debts before applying for a home loan.
2. Improve Your CIBIL Score
Financial lenders look at your credit score to determine home loan eligibility. A higher credit score indicates better repayment capacity and hence makes you a credit-worthy and risk-free borrower. Remember, it is ideal if your credit score is a minimum of 750 before applying for a home loan.
3. Add a co-applicant
You can enhance your home loan eligibility by adding an earning member of your family like your spouse who has a good credit score as a co-applicant. Doing this increases the maximum amount you can borrow. Some financial lenders also allow clubbing the income of your family members, which also increases eligibility.
Before you apply for housing finance, always remember to use a home loan EMI calculator. The home loan EMI calculator can help evaluate your monthly instalments with ease. It also lets you know the eligible home loan amount on a salary of Rs. 40,000.