🏠 Planning to Buy a Home? Here’s How Much Salary You Need for a Home Loan

G GOWTHAM
Buying a home is a big financial decision. Your eligibility for a home loan depends largely on your income, loan amount, interest rate, and tenure. Banks calculate the maximum loan you can afford based on your salary and monthly expenses.

📌 How Banks Calculate home Loan Eligibility

Banks use a simple formula to determine how much you can borrow:

  • Maximum EMI: Usually, banks allow your monthly EMIs to be 40–50% of your monthly salary.
  • Loan tenure: Commonly ranges from 10 to 30 years. Longer tenure = lower EMI.
  • Interest rate: The prevailing home loan interest rate directly affects EMI.
  • Other financial commitments: EMIs for other loans (personal, car, credit card) reduce your eligibility.
Example:

  • Monthly salary: ₹60,000
  • Max EMI allowed (50%): ₹30,000
  • Interest rate: 8% per annum
  • Tenure: 20 years
Using these numbers, a bank may approve a loan of around ₹60–70 lakh, depending on other deductions.

🧮 Salary Needed for Different Loan Amounts

Loan Amount

Approx. Monthly EMI (20 yrs @ 8%)

Required Monthly Salary (EMI ≤ 50% of salary)

₹30 lakh

₹25,000

₹50,000

₹50 lakh

₹42,000

₹84,000

₹1 crore

₹84,000

₹1.68 lakh

₹1.5 crore

₹1.26 lakh

₹2.52 lakh

These are approximate figures and may vary based on bank policies and interest rates.

💡 Tips to Improve Loan Eligibility

Increase your salary: Higher income allows higher EMIs.

Reduce other loans: Fewer existing EMIs improve eligibility.

Longer loan tenure: Spreads EMIs over more months, lowering monthly burden.

Add a co-applicant: Including spouse or parent can increase total income considered.

Maintain a good credit score: Banks prefer borrowers with CIBIL score above 750.

🏦 Important Considerations

  • Down payment: You usually need 20% of the property cost upfront; the loan covers the remaining 80%.
  • Property location: Loan eligibility and interest rates can vary depending on city/region.
  • Insurance: Some banks require loan protection or home insurance.
  • Pre-EMI payments: For under-construction homes, banks may allow partial payments before full EMI starts.
✅ Key Takeaways

  • Your salary and financial commitments determine how much home loan you can get.
  • Banks generally allow 40–50% of salary as EMI, depending on other factors.
  • Planning your down payment, tenure, and co-applicant options helps maximize loan eligibility.
  • Always compare banks — interest rates and charges vary.
 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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