Home Loan Eligibility based on Salary

When purchasing your dream house, you are bound to ask, “How much home loan can I get?” In such situations, think about it this way:

• How much I get as home loan depends on my credit score
• How much I can get as home loan depends on my lender’s loan-to-value limit

These 2 factors both affect the loan amount you can obtain. However, your current salary also has a major role to play as it is your income that will help you pay your home loan EMIs. So, think on the lines of:

• How much can I borrow as a home loan if my salary is Rs.60,000?
• How much house loan can I get if I earn Rs.10,000 more?
• If I take a joint home loan, how much can I borrow?
• How much home loan can I borrow based on my other financial obligations?

Read on for more clarity on how your salary affects your home loan.

How Much Home Loan Can I Get on My Salary?

From the lender’s perspective, it is not just your salary that matters. In fact, you may earn a lot, but have equally-large financial obligations and current loans. So, lenders evaluate your debt-to-income ratio and offer home loans based on:

• Your net monthly income (from all sources)
• Your current financial obligations and EMIs
• Your surplus income

View this table for insight:

This table is indicative, and you can use the home loan eligibility calculator  to see how much home loan you can get for your salary.

How Much Down Payment for Home Loan is Must?

You can get a home loan of up to 80-90% of the property’s value and so, you must make a down payment of 10-20%. However, you should strive for a larger down payment, as this would reduce the principal and hence, the total interest payment you make.

How Much EMI for Home Loan?

Depending on the principal you borrow the interest rate offered and the tenor chosen, you can know your EMI. The home loan EMI calculator  helps you forecast your EMI accurately.

Often, you cannot compromise on the principal or bargain for a better interest rate, but you can settle for a shorter or longer tenor. Hence you should ask yourself, How much home loan can I borrow based on the tenor? Do this while always trying to pick the shortest tenor possible.

How Much Tax Benefit on Home Loan Can I Get?

You can claim annual tax deductions each year through several sections of the Income Tax Act.

• 80C: Principal repayment (including registration fee and stamp duty), up to Rs.1.5 lakh
• 24B: Interest repayment, up to Rs.2 lakh
• 80EEA: Additional interest, up to Rs.1.5 lakh
• 80EE: Additional interest, up to Rs.50,000 

Section 80EE is for first-time homeowners purchasing a property worth Rs.50 lakh or less and taking a home loan  of Rs.35 lakh or less. The loan must have been sanctioned in between 1 April 2016 and 31 March 2017.

Section 80EEA applies to first-time homeowners purchasing an affordable home with the stamp duty value for the property not exceeding Rs.45 lakh. The loan must be sanctioned in between 1 April 2019 and 31 March 2021.

Further, joint homeowners can both claim tax benefits on home loan, according to their EMI contributions. Since joint home loans also mean greater income, you can consider one to get a higher loan amount.

With these salary and tax planning details on hand, you can better answer the question, How much loan can I get for a home? Plan well and be a proud homeowner!