How To Calculate Home Loan Eligibility Before Opting For a Home Loan?

One of the most important parts of the overall home loan process is Home Loan Eligibility. A Home Loan from Banks, Housing Finance Companies (HFCs) and Non-Banking Finance Companies (NBFCs) can be availed by those individuals who do not have enough funds to purchase their homes. But Home Loan eligibility remains the most often asked question by individuals as this determines how much loan amount an individual can get from the lender. When an individual has an idea about the eligible home loan amount, he or she can arrange for the finances in a better way. 

The most crucial thing about Home Loan Eligibility is it changes from one lender to another and it is important to check the conditions set by the lender before deciding on the final one. In this article, we will be telling you about how you can know the home loan eligibility of any lender before going for the loan. This tool is known as the Home Loan Eligibility Calculator. Apart from this, we would also be telling you about the factors that affect your eligibility when you are opting for a home loan. So, keep reading to know more. 

Details needed to Use Home Loan Eligibility Calculator

Like any other tool, in order to use the Home Loan Eligibility Calculator, you will need a few details. These details are important to keep with you, as without them you will not be able to know how much loan amount you can get. These details are mentioned below. Check them out!

  • Gross Monthly Income
  • Tenure (in years)
  • Home Loan Interest Rates
  • Existing Obligations (other EMIs)

Among all the details, your gross monthly income is considered to be the most important as it affects your eligible home loan amount most. Let’s understand why? When you opt for a home loan, you will need to repay the loan amount within a fixed tenure via EMIs. You will be paying this EMI amount from your monthly income only. So, higher will be your monthly income, higher would be your loan amount because of your repayment capacity. 

Other than this, home loans are generally taken for a long period of time ranging from usually 15 to 20 years. After the tenure, you will need to put the home loan interest rates and existing obligations in the calculator. If you have been already paying any EMI of some other loan or credit card, then the lender might give you a smaller loan amount as your repayment capacity will be compromised in this case. So, it will be better to clear all your dues and loans before opting for a home loan so that you can get a higher loan amount. 

As soon as you will feed these details into the calculator, you will get the results instantly in the form of an eligible loan amount. Let’s understand this through an example. Suppose an applicant who is earning INR 70,000 per month wants to opt for a 20-year home loan. He has also been paying a personal loan EMI of INR 15,000 per month. So what would be the eligible home loan amount for him?

On putting these details into the Home Loan Eligibility Calculator, you would find that he could get around INR 25 lakh as the home loan amount at an interest rate of 6.95% per annum. You also need to remember that home loan interest rates depend on your CIBIL score. Individuals with higher scores can get the loan at much lower interest rates due to their repayment behavior and vice versa. Other than this, your property location will also play an important role in determining the home loan amount and interest rates.