How to calculate home loan eligibility

The basic steps on how to calculate home loan eligibility are,

1. The core concept behind eligibility is that banks do not allow your total EMIs to exceed a fixed portion of your monthly income, known as the FOIR (Fixed Obligation to Income Ratio), which is usually around 40% to 50%.

2. In direct terms, the basic formula to calculate home loan eligibility is: Eligibility = (Net Monthly Income × FOIR – Existing EMIs) ÷ EMI per lakh, where EMI per lakh depends on the interest rate and loan tenure.

3. To calculate it practically, first determine your net monthly income (salary after deductions), then calculate the maximum EMI you can afford, usually 50% of your income. From this, subtract any existing loan EMIs such as car loans or personal loans to find your available EMI capacity.

4. Next, check the “EMI per lakh” (for example, around Rs. 850 to Rs. 950 for a 20-year loan depending on interest rate), and divide your available EMI by this number to get the total loan amount you are eligible for.

5. For example, if your monthly income is Rs. 60,000, banks may allow Rs. 30,000 as EMI (50%). If you already pay Rs. 10,000 in other EMIs, your available EMI becomes Rs. 20,000. If EMI per lakh is Rs. 900, your eligibility will be approximately Rs. 22 to Rs. 23 lakh. This method is widely used across banks in India.

6. Apart from this calculation, lenders also consider other important factors such as your age (affects loan tenure), credit score (CIBIL), job stability, and property value (LTV ratio), which usually allows 75% to 90% of the property cost as loan.

7. A longer tenure increases eligibility because it reduces EMI, while higher income and fewer liabilities also improve your chances.

I hope this helps!

Get Fast Approval and Quick Disbursement of Home Loan Via NoBroker Home Loan Service

The basic steps on how to calculate home loan eligibility are,

1. The core concept behind eligibility is that banks do not allow your total EMIs to exceed a fixed portion of your monthly income, known as the FOIR (Fixed Obligation to Income Ratio), which is usually around 40% to 50%.

2. In direct terms, the basic formula to calculate home loan eligibility is: Eligibility = (Net Monthly Income × FOIR – Existing EMIs) ÷ EMI per lakh, where EMI per lakh depends on the interest rate and loan tenure.

3. To calculate it practically, first determine your net monthly income (salary after deductions), then calculate the maximum EMI you can afford, usually 50% of your income. From this, subtract any existing loan EMIs such as car loans or personal loans to find your available EMI capacity.

4. Next, check the “EMI per lakh” (for example, around Rs. 850 to Rs. 950 for a 20-year loan depending on interest rate), and divide your available EMI by this number to get the total loan amount you are eligible for.

5. For example, if your monthly income is Rs. 60,000, banks may allow Rs. 30,000 as EMI (50%). If you already pay Rs. 10,000 in other EMIs, your available EMI becomes Rs. 20,000. If EMI per lakh is Rs. 900, your eligibility will be approximately Rs. 22 to Rs. 23 lakh. This method is widely used across banks in India.

6. Apart from this calculation, lenders also consider other important factors such as your age (affects loan tenure), credit score (CIBIL), job stability, and property value (LTV ratio), which usually allows 75% to 90% of the property cost as loan.

7. A longer tenure increases eligibility because it reduces EMI, while higher income and fewer liabilities also improve your chances.

I hope this helps!

Get Fast Approval and Quick Disbursement of Home Loan Via NoBroker Home Loan Service

Hi there,

With the eligible criteria, you won't be able to get a home loan from any bank. There are certain rules and regulations for a bank to follow to offer loans to customers. On the other hand, a customer needs to fulfil certain requirements to get a home loan. To learn how to get a home loan read: