Calculate your Home Loan Eligibility All by Yourself

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When you try to avail a home loan, there are some eligibility parameters which you need to qualify on. Only when you meet the eligibility parameters would the lender sanction the home loan eligibility in your name. When it comes to eligibility parameters, most of you are unsure about the eligibility parameters and whether you qualify on them or not.

For home loan borrowers there are online home loan eligibility calculators which help you check your home loan eligibility all by yourself. But before discussing the eligibility calculator, let’s understand the basic eligibility requirements for availing a home loan –

• To apply for the loan, your age should be in the range of 18 years to 70 years

• You should be either a salaried employee or a self-employed individual

• Your net monthly income should be INR 25, 000 and above

• You should have a work experience of 3 years and above

• A business vintage is also required wherein your employment or business should be in existence for some specified years when applying for the loan

• The builder and the property for which the home loan is sought should be approved by the bank

• Your credit score should be 700 and above

These are the basic eligibility criteria required by lenders of home loans.

If you want to check your home loan eligibility, besides the above parameters, you should consider your monthly income. Your monthly income determines the amount of loan which you can avail. Besides your income, existing liabilities and your ongoing EMI payments towards existing loan also determine the home loan eligibility.

To calculate the loan amount which you can avail, lenders use the FOIR (Fixed Obligations to Income Ratio) method. This method considers your existing liabilities and determines the maximum EMI which can be paid with your monthly income. Lenders usually consider that your EMI should be up to 50% to 60% of your monthly income. If you have existing liabilities whose repayments are being done, the percentage reduces. For instance, if your monthly income is INR 50, 000 and you have no loans or credit due to your name, the ideal EMI would be calculated to be in the range of INR 25,000 to INR 30,000. If, however, you are repaying a loan and the EMI is INR 10,000, your net disposable income reduces to INR 40,000. In that case, the ideal EMI also reduces to INR 20,000 to INR 24,000.

Thus, lenders use a particular method to calculate your home loan eligibility. If you want to find the eligibility yourself, you can use online home loan interest rates. The calculators use your personal details to calculate the loan amount you can avail. These details include your employment type, work experience, monthly income, age and the location of the property to calculate the loan amount you can avail. You simply need to provide these details and the loan amount would be calculated. Easy, isn’t it?

So, use online home loan calculators to calculate your home loan eligibility yourself before you actually apply for the loan.

Tushar Sharma is a financial advisor with an experience of more than 6 years. He has worked with top-most financial firms and has been a visiting faculty at many reputed institutes in India.