For many, securing a home loan is a crucial step toward homeownership. However, did you know that your eligibility for a home loan is significantly influenced by your monthly income? Lenders assess your income to determine key loan terms such as the loan amount and interest rate. Understanding how these factors work can help you estimate how much of a home loan you may qualify for.

In this article, we’ll break down how your monthly salary impacts home loan eligibility. We’ll also explore the various factors that affect home loan eligibility based on salary, outline the necessary documentation, and share tips to improve your chances of securing a loan.

How Much Home Loan Can I Get on My Salary?

Lenders typically offer loans based on a percentage of your income to ensure that your monthly repayment remains affordable. A general rule is that your total monthly EMI should not exceed 40-50% of your income. To get a precise estimate, you can use online home loan eligibility calculators based on salary and other factors or consult with a lender directly.
It's important to note that, in addition to your monthly salary, lenders also consider several other factors such as your age, credit score, and existing debts when calculating your loan eligibility.

How to Calculate Home Loan Eligibility Based on Monthly Salary?

Let’s take a look at the handy tool from SMFG Grihashakti to calculate home loan eligibility based on your salary and other factors, such as net monthly obligations.

For example: With a monthly income of INR 20,000, zero net monthly obligations, a property market value of INR 50,00,000, an interest rate of 10% per annum, and a tenure of 360 months, the maximum loan amount you may qualify for is INR 11,39,508. The corresponding estimated EMI is INR 10,000.

The following table shows the approximate loan amounts for varying monthly salaries, with the same values for other factors:

*Please note that these values are only estimates. The actual eligibility and loan amounts will depend on several factors including the lender’s policy at the time of loan application.

Eligibility Criteria for Home Loan Based on Your Monthly Salary

Lenders may have specific income requirements for home loan applicants, and these benchmarks can vary depending on the lender. Typically, borrowers from Tier 1 cities like Delhi and Mumbai are expected to have a higher income compared to those from other cities.

Lending institutions consider several other factors in addition to your monthly salary when determining home loan eligibility. Steady employment in a reputable organisation, a credit score of over 700, and a debt-to-income ratio below 30% – the percentage of your monthly income that goes toward paying debts – can strengthen your application.

Required Documents for Home Loan on Salary

Most lenders require the following common documents from salaried home loan applicants:

• Proof of Identity: Aadhaar card, PAN card, or passport
• Proof of Address: Aadhaar card, passport, or ration card
• Proof of Income: Salary slips for the past 2-3 months, bank statements for the past 6 months
• Property Documents: Sales deed, possession certificate, detailed estimation of the construction cost, and other relevant documents

Additional documents may be requested depending on your individual profile and lender policies at the time of loan applications.

What Factors Affect Home Loan Eligibility for a Salaried Employee

The following factors can affect home loan eligibility for a salaried person:

• Income: A higher income demonstrates better repayment capacity, which boosts eligibility for home loans.
• Credit Score: A credit score of over 700 shows responsible credit behaviour and can help you secure better loan terms, such as lower interest rates.
• Job Stability: A long tenure with your current employer and a consistent employment history positively impact home loan eligibility.
• Age: Younger applicants with a stable income tend to have higher eligibility as they have more earning years ahead.
• Existing Liabilities: Higher EMIs for existing loans can reduce the loan amount you may be eligible for.
• Location and Market Value of Property: Some lenders offer better terms for properties in high-demand areas or metro cities.

What to Do If Your Salary Is Not Eligible to Avail Home Loan?

If your salary doesn’t qualify for a home loan, consider the following options:

• Add a Co-Applicant: Adding a trusted family member with a strong credit score and stable income as a co-applicant can increase your eligibility.
• Opt for a Lower Loan Amount: Reducing the loan amount can improve your chances of approval.
• Improve Your Credit Score: Enhance your creditworthiness by paying off small debts, limiting credit usage, and making timely payments on existing bills.
• Choose Longer Tenures: A longer tenure can lower your monthly EMIs, easing the repayment burden. However, this may result in higher interest costs over the life of the loan.

Explore Home Loan Options Based on Your Income

Many lenders, including NBFCs and traditional financial institutions, offer flexible products tailored for salaried individuals. For low-income applicants, special schemes like subsidised rates or government-backed loans (e.g., PMAY) may be available, provided they meet specific income criteria.
Professionals in stable careers, such as government employees or individuals working with reputable companies, may qualify for lower interest rates and higher loan amounts due to their perceived financial stability. It’s essential to research and compare lenders to find a home loan that aligns with your income and repayment capacity.

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Conclusion

Understanding your home loan eligibility based on salary and other relevant factors provides a clear starting point in your home-buying journey. You can improve your chances of approval by checking the home loan eligibility criteria and exploring alternative options if your salary does not meet the threshold.

To get a better understanding of the loan amount you may qualify for, use SMFG Grihashakti’s home loan eligibility calculator based on salary, along with other factors such as the property market value and existing obligations. We provide home loans of up to INR 1 crore* at attractive interest rates and flexible tenures of up to 30 years* to help you secure the home of your dreams. Apply online today!