Empower Your Dreams: Determining How Much Home Loan You Can Get

The most common question that salaried and self-employed individuals planning to avail themselves of a home loan often ask is how much loan they’ll get. To answer this question, one must be well aware of the factors that affect home loan eligibility and the loan amount that a borrower can get. So, before we answer this important question, let us take a deep dive into the factors that affect home loan eligibility. 

Factors that Affect Home Loan Eligibility and Determine the Sanction Amount

1. Credit Score: An excellent credit score is reflective of high creditworthiness and the ability to repay one’s home loan EMIs comfortably. Thus, individuals with high credit scores, i.e. in the range of 750 to 900, get higher home loan sanctions than individuals with low credit scores. 
2. Age: Young borrowers are sanctioned higher home loan amounts than people nearing retirement as these people have more working years ahead of them and therefore, are more likely to repay their home loans without defaulting. 
3. Debt-to-Income Ratio: The debt-to-income ratio tells a lender the percentage of the loan applicant’s total income that they are dedicating towards the repayment of their loans. A very high debt-to-income ratio raises doubts about the loan applicant’s repayment capacity. To be eligible for the best loan terms and conditions, including the lowest housing loan interest rates and high loan sanctions, loan applicants must keep their debt-to-income ratio under 40%. 
4. Job and Income Stability: Individuals with a stable income and job are less likely to default on loan repayment than individuals who switch jobs often or have an unstable business. Individuals planning to apply for home loan must therefore not switch jobs frequently. 

These are the primary factors that help lenders decide the housing loan amount they can get. Young borrowers with a stable income, an excellent credit score and a low debt-to-income ratio qualify for the highest loan sanctions. 

A housing loan eligibility calculator can help you figure out the amount of loan you’re eligible for. So, let us understand a bit more about this powerful online tool. 

What is a Housing Loan Eligibility Calculator? 

A home loan eligibility calculator is an online tool that home loan applicants can use to calculate their eligibility for a loan or the loan amount they can get. Calculating home loan eligibility is important. Applying for a home loan amount that one is eligible for not only improves one’s chances of getting approved for a loan but also increases the loan applicant’s negotiating power, allowing them to easily negotiate for a higher loan sanction, lower home loan interest rate and other beneficial loan terms and conditions. On the other hand, applying for a loan amount much higher than what is eligible for can lead to home loan application rejection. Home loan application rejections should be avoided as they negatively impact one’s credit rating and chances of availing of a loan of any type in the future.

A home loan eligibility calculator lets borrowers calculate the home loan amount they are eligible to apply for based on inputs, such as city of residence, income, age, etc. Here’s how a home loan applicant can use this powerful online tool to calculate their eligibility.

Steps to Use a Home Loan Eligibility Calculator 

1. Enter your date of birth. 
2. Enter the city in which you live.
3. Next, enter your net monthly salary. You can either directly enter your salary in the box provided or you can adjust the toggle bar to enter your correct net monthly salary.
4. After this, select your desired loan tenor based on your repayment capacity and income. 
5. After this, enter details related to any other additional sources of income you may have. 
6. Lastly, enter details of any other EMIs you may have. 

Once you enter these details, the home loan eligibility calculator will display the home loan amount you are eligible for. Applying for this loan amount or something lower will increase your chances of loan approval. Home loan eligibility calculators are also free to use and thus, borrowers should make them a part of their home loan application process and home loan journey.

Another powerful online tool that must be a part of your home loan journey is the home loan EMI calculator. This calculator helps borrowers calculate their loan EMIs even before their repayment actually begins, thereby helping them validate the feasibility of their loan as well as plan their repayment strategy.