How to Calculate Home Loan Eligibility?

Before you apply for housing loan, it is important you are aware of the Home Loan eligibility criteria set by your lender. Knowing the criteria in advance and ensuring you meet the most critical ones are critical to enhancing your chances of approval.

Here, a few things are important — knowing how to check Home Loan eligibility based on whether you are salaried or self-employed, gauging your eligibility based on your credit score, and learning how to calculate Home Loan eligibility based upon your income and financial obligations.

Here is a brief explanation on how to check loan eligibility.

It is helpful for applicants to know how to calculate loan eligibility based on income and obligations. One of the primary factors that affects your eligibility is your FOIR, i.e., Fixed Obligation to Income Ratio. This ratio represents how much of your income goes towards serving existing obligations, such as other loans, thereby indicating how much of your income is free to service your Home Loan EMIs.

With the following example, you will understand how Home Loan eligibility is calculated manually.

Suppose you're earning Rs.80,000 per month and have no financial liabilities. Assuming that you wish to apply for a Home Loan at an interest rate of 8.50%* p.a. with a repayment tenor of 30 years, your FOIR will be:

FOIR = Home loan eligibility = Your monthly savings / (EMI per lakh x 1 lakh)

EMI per Lakh for a loan tenure of 30 years at 8.50%* p.a. interest rate is Rs.751.

Home loan eligibility = (50% of 80,000 – 0) / (751 x 1,00,000) = Rs.53,259,658

So, with a monthly income of Rs.80,000 and a loan tenure of 30 years at an interest rate of 8.50%* p.a., you would be eligible for a maximum loan amount of Rs.53,259,658.

Apart from this, lenders also assess eligibility based on your age and city of residence. For instance, a borrower in his early 30s stands to be offered a longer tenor or better terms, because they are likely to be in the workforce longer.

While the factors listed above provide an understanding of what affects Home Loan eligibility in general, you can also check your Home Loan eligibility with the help of our Home Loan Eligibility Calculator.

All you need to do is:

• Select your city from the list
• Select your date of birth from the drop-down menu
• Fill in your monthly salary/income in the field (or use the slider)
• Fill in your current EMIs and monthly obligations and expenses in the field (or use the slider)
• View the Home Loan amount you are eligible for

Also Read: Learn How to Increase Home Loan Eligibility

*Terms and conditions apply.

Your ability to qualify for a Home Loan depends on various factors, including income stability, credit score, age, and FOIR. Let us understand these in detail.

• Stable Income: Lenders evaluate the stability of your income to ensure that you can meet the loan repayment requirements. They consider income from sources such as salary or rental income.
• Age: The age of the applicant plays a significant role in determining the suitable term for a Home Loan. Younger applicants may get the benefit of a longer repayment tenor.
• Credit Score: A credit score is an indicator of the borrower's creditworthiness based on their credit history. Your credit history reflects your repayment behaviour, outstanding debts, and credit utilisation. Lenders typically offer favourable terms on home loans to applicants with a credit score above 750.
• FOIR: The Fixed Obligation to Income Ratio (FOIR) is used to evaluate an individual's repayment capacity. FOIR is calculated by comparing one's monthly income to fixed monthly expenses such as rent and EMIs.