How Much Home Loan Can I Get on My Salary?
Updated: Apr 05, 2022
“How much home loan can I get on my salary?” – The first question that boggles the mind of every salaried employee planning to purchase a house. This article will inform you how to calculate home loan eligibility based on salary, the general salary slabs, their eligibility loan amounts, and finally what is the method to apply for a home loan.
Owning a home is perhaps one of life’s greatest achievements. For first time owners, it brings in a sense of belongingness and immense satisfaction.
For the average salaried, middle-class Indian, skyrocketing property prices is a major deterrent in realising this dream. That’s where the home loan steps in.
Home loans by Grihashakti provide a range of financing options to salaried individuals. With affordable rates of interest, flexible repayment tenures, salaried individuals can now easily get a home loan to fund their property purchase.
How to Calculate Home Loan Eligibility on Salary?
You may be wondering about the amount of home loan that you may qualify for on your monthly salary. That is a valid concern to have. The maximum amount of home loan that you get is a critical factor in determining the budget for the property you will purchase.
An amount that would result in an EMI that is around 65% of their monthly net income or the salary in hand, assuming they don’t have any existing monthly obligations and a tenure of 30 years, and that they meet the rest of the required eligibility criteria. The lender will take into consideration your net income which is the amount you get credited in your bank account after all deductions. Please note that this is the best case scenario, and that the actual loan amount you may be able to get on your salary will depend on several factors, including the lender’s policy at the time of loan application.
Let us understand the home loan eligibility for a salaried person with the help of an example.
Let’s say, you receive a net monthly salary of Rs. 1,00,000, have no existing obligations, and wish to purchase a home worth INR 2 crores at an interest rate of 8.99% and a tenure of 30 years. Simply calculate your maximum home loan amount by multiplying it 65 times. In this case, the upper limit of the home loan is Rs. 80 lakhs.
If you have more than one earning member in the family, you may combine both net incomes to qualify for a higher home loan amount.
Take a look at the table below that will give you a sense of the amount of home loan you can get on specific monthly salaries. Please note that this is only for your understanding, actual eligibility will take into account several factors. Please use our home loan eligibility calculator to get a clearer understanding of how much home loan you can get on your salary.
Following Table Illustrate Your Home Loan Eligibility Based on Salary
| Net Monthly Income in Rs. |
Loan Amount in Rs. |
| 20,000 |
10,36,246 |
| 25,000 |
13,73,026 |
| 30,000 |
17,09,806 |
| 35,000 |
20,46,586 |
| 40,000 |
23,83,366 |
| 50,000 |
30,56,926 |
Home Loan Eligibility Criteria Based On Salary
Most lenders will have their unique set of eligibility requirements that the applicant needs to meet in order to apply for a home loan. However, there are some parameters that are common to all lenders.
You need to first check the home loan eligibility on your salary before you make your application to the lender.
Here’s a quick reference list:
- Be an Indian resident.
- Be at least 21 years at the time of applying for the loan and not more than 60 years at the time of loan completion if salaried and 65 years if self-employed.
- If you are salaried, you must have a minimum work experience of 1 year, with at least 6 months in the current organisation.
- Minimum annual salary of INR 1,20,000 for salaried individuals
- Cash salary applicants may not be accepted.
The home loan criteria for a salaried person have a few additional requirements that need to be met.
- Be permanently employed in a multinational company, public listed company or government service.
- Be employed in organizations private limited companies, closely held or unlisted companies, partnerships or proprietorship organisations.
Additionally, make sure that you have a stable income, a good credit history and a credit score of at least 700.
Must Read : Minimum Cibil Score for Home Loan
Use Home Loan Eligibility Calculator For Salaried Person
If you wish to make doubly sure of how much home loan you can get on your salary, then the best way to ascertain that is to use the Home loan Eligibility Calculator available on the SMFG Grihashakti website. This free tool requires the prospective applicant to submit specific details such as monthly income and existing obligations.
Apply Now
Upon submitting the form, you instantly get an estimate of the amount of loan you can get.
Home loan Documents for Salaried Person
SMFG Grihashakti offers multiple home loan products that cater to the needs of the demanding Indian home buyer. The process of application is simple and straightforward.
Simply navigate to the website, fill up the pre-assessment form and simultaneously use the home loan eligibility calculator based on salary to check if you are a qualified applicant or not. If you meet the eligibility parameters, upload the softcopies of the following documents online.
General KYC Documents:
- Submit Proof of Identity – Any one - PAN Card, Voter’s Card, Driving Licence, Employee Card.
- Submit Proof of Residence – Any one - Aadhar Card, Latest Electricity Bill/Piped Gas Bill, Ration Card, Property Tax/Water Bill.
Income Paperwork for Salaried Individuals:
- Submit 6 Months Bank Statements with Salary Credit.
- Submit Last 3 months Pay Slips.
- Submit Last two years - Form 16.
Property-related Documentation:
- Submit Sales deed, stamped sales agreement of sale, or allotment letter.
- Submit NOC from the housing society or property developer.
- Submit Possession certificate and land tax receipt from the land/ land revenue / revenue department.
- Submit a detailed estimation of the construction cost.
- Submit a Bank account statement or payment receipt outline all information related to any payments made to the property developer or seller.
- Submit Occupancy certificate. (applicable for constructed apartments)
Factors Impacting Home Loan Eligibility for a Salaried Employee:
There are many other factors that impact home loan eligibility apart from the net take-home income. They are as follows:
- Age: Although you can avail of Home Loans between the age of 21 to 55 years, banks/financial institutes like to sanction loans to younger people because the loan tenor cannot extend beyond your working years, ensuring steady repayment ability throughout the loan tenure.
- Employer and Work Experience: Your credibility would automatically increase if you are working with a highly reputed employer who has a good turnover. Similarly, work experience tells a lot about your stability and acts as a positive pointer in the loan application.
- Credit Score: CIBIL score is one of the most crucial factors that a lender considers while sanctioning a home loan. Your credit or CIBIL score showcases your capability to repay any loan by tracking your past payment record. A credit or CIBIL score of 700+ is considered a good CIBIL score for home loans. It also helps you in bargaining for lower home loan interest rates.
- Existing Obligations (also known as Fixed Obligation to Income Ratio(FOIR)): Banks/financial institutes decide your home loan amount eligibility only after considering your existing responsibilities concerning EMIs and pending dues of other loans which you might have availed like a personal loan, car loan, credit cards, etc. They calculate FOIR as the percentage of a sum of all your existing monthly obligations to your net monthly income. Financial institutes use this method to assess the ability to pay EMIs regularly and comfortably.
- LTV (Loan to Value): LTV ratio is the percentage of the property value that a bank/ financial institution can fund up to a property buyer. Lenders determine the LTV ratio before sanctioning a home loan to ensure that they do not lend an amount higher than the property’s actual value. A higher LTV raises your perceived risk whereas a lower LTV ratio can get you better terms, including interest rates, on the home loan.
- Property’s Legal & Technical Approval: While granting a home loan, the health of the underlying property is crucial for the lender. Banks/financial institutes have two main criteria for evaluating the property you are about to purchase. The first one is to verify the legal chain of the property to establish a clear title & ownership and the second one is to determine the market value of the property.
- Down payment: Contributing funds to the property purchase improves your loan application. Making a larger down payment helps to decrease the total loan amount, lowering your EMI burden and presenting you as a financially responsible borrower.
- Loan Tenure: Choosing a longer loan term translates to smaller EMIs, but ultimately results in paying more interest. Conversely, a shorter tenure means heavier EMIs but reduces total interest and brings ownership closer. Balancing affordability with timely repayment is important.
- Existing loans and liabilities: If you have outstanding debts like car loans or personal loans, they can impact your debt-to-income ratio (DTI). A high DTI might suggest that you have limited capacity to repay your loans. To improve your loan prospects, it might be helpful to manage your existing debts or consolidate them.
- Co-applicant's income: A co-applicant with a stable income can boost your eligibility and prompt better loan terms, including increased loan amounts and flexible rates of interest, due to the perceived lower risk.
Features and Benefits of Home Loan for Salaried
Home loans offer a range of features and benefits that make the journey towards owning a home more accessible and manageable. Let's explore the key features and benefits that home loans provide to salaried individuals, outlining how these financial instruments serve as a bridge between dreams and the keys to one's own abode.
Tax Benefits
Salaried individuals can enjoy tax deductions on both the principal repaid and the interest paid on their home loans. This significantly reduces your taxable income, leading to potential tax savings each year. Borrowers can enjoy tax deductions on interest and principal repayments under sections 80C, 24(b), 80EE, and 80EEA of the Income Tax Act, 1961.
In Conclusion
Before you commence with your home search, knowing how much home loan you qualify for is extremely important. To know more about home loan options at Grihashakti, feel free to contact us to get more information.
Stringent Checks on Property Documents
Lenders thoroughly verify property documents before approving a home loan. This ensures you purchase a property with a clear title and legal ownership, minimising future disputes.
Lower Interest Rate
Salaried individuals can avail of home loans at lower rates of interest due to their stable income source and perceived lower risk. This translates to smaller EMIs and lower overall borrowing costs.
Long Tenure for Repayment
As a salaried individual, you have the option to take advantage of extended loan tenures that can typically stretch up to 30 years. This allows for comfortable monthly EMIs, making managing your loan alongside other expenses easier.
Option for a Balance Transfer
Option for a Balance Transfer
How to Apply for a Home Loan Online for Salaried?
Applying for a home loan online now is more convenient than ever! Proceed with your application by following these simple steps:
- Check Your Eligibility: Use the home loan eligibility calculator on the SMFG Grihashakti website to see if you qualify for your desired amount.
- Start Your Online Application: Once the calculator confirms eligibility, begin applying on the SMFG Grihashakti website.
- Provide Details and Upload Documents: Enter your details, including your name, age, PAN number, and marital status, and indicate if you have a co-applicant. Also, add the property details, such as its location, type, and address.
- Expect a Call: After submitting your application, an SMFG Grihashakti executive will reach out to you over the phone to guide you through the remaining process.
- Loan Disbursal: Once all your documents are verified and your application is approved, you will promptly receive the desired funds in your account within 72 hours*.
In Conclusion
Obtaining a home loan for salaried individuals is now more convenient due to technological advancements. The digitalization of the application process has made it easier for you to determine your eligibility, estimate your potential EMIs, and smoothly navigate the journey towards becoming a homeowner. Therefore, knowing how much home loan you qualify for is extremely important before you begin your home search. To know more about home loan options at Grihashakti, feel free to contact us for more information.
FAQs
How much can I borrow as a Home Loan depending on the LTV ratio?
The loan-to-value (LTV) ratio determines the maximum percentage of the property value you can borrow. In India, typical LTVs for salaried individuals range from 75% to 90%. For example, on a property worth INR 10 lakh with an 80% LTV, you could borrow up to INR 8 lakh.
How much can I borrow as a Home Loan if my salary is Rs.60,000?
The exact amount you can borrow depends on multiple factors, including your LTV, credit score, existing debts, and the lender's policy.
If I take a joint Home Loan, how much can I borrow on my Salary?
Combining your income with that of a co-applicant, like your spouse, can increase your borrowing capacity. Your individual salary will still be considered, but the combined income strengthens your application and potentially allows for a higher loan amount.
Is there a specific formula used to calculate the home loan eligibility based on my salary?
Lenders use internal assessment models, but a general rule of thumb for salaried individuals is that your maximum EMI should be at most 40-50 % of your net monthly income. However, a financial advisor can analyse your situation and estimate it more accurately.
Can I increase my home loan eligibility by showing additional sources of income, aside from my salary?
Providing documentation for additional income sources such as rental income, investments, or business income can strengthen your loan application and help you get a higher loan amount.
How often does my salary account for the home loan eligibility get reviewed?
Most lenders typically review your salary at the initial loan application stage unless your repayment behaviour raises concerns. However, some lenders may have periodic reviews, and maintaining a stable income throughout the loan tenure is always a good practice.
What happens if I lose my job or experience a decrease in salary during the loan tenure?
It can be difficult if you have lost your job, but there are ways to manage the situation. Contact your lender immediately and inquire about loan restructuring or temporary payment reductions. This will help you avoid missed payments and penalties.
Disclaimer: *Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG Grihashakti. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG Grihashakti’s policy at the time of loan application. If you wish to know more about our products and services, please contact us.
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