Indian banks and non-banking financial institutes have simplified the home loan process for borrowers. Now, applying for a home loan is completely digital. However, borrowers still need to fulfill the eligibility criteria and satisfy lenders’ queries for loan disbursement.
So, if you’re someone in Rs. 40, 000 salary bracket, here’s how much loan you can get.
Impact of salary on home loan eligibility
A home loan usually involves a huge amount. When banks or other financial companies sanction this loan, they are at risk. That’s the reason they determine your loan eligibility before sanctioning your home loan application. Besides income, they take into consideration your credit score, other financial liabilities, and debts, if any.
Depending on your monthly income, they can decide how much money you can borrow. Here’s how they determine the loan amount based on your salary.
Suppose, you earn Rs. 40, 000 every month and want to apply for a home loan. So, how much home loan can you get on 40,000 salary?
Well, to calculate the exact amount, the lender uses the EMI/NMI method. EMI stands for equated monthly installment while NMI means net monthly income. If the ratio of your EMI/NMI falls at 60%, you’re eligible for a home loan. A lower ratio means that your loan amount will be higher and interest rate will be affordable.
The lending companies uses various methods to calculate the home loan amount. The one method is multiplying your NMI by a factor falling in between 60 and 72. Another method is multiplying the annual income by a factor of 5 and 6. Here’s a simple example to decode it better.
Rs. 40, 000 x 60 = 24, 00,000
Rs. 40, 000 x 72 = 28, 80, 000
So, you see with Rs 40, 000 salary, you can avail of Rs. 24 lac or Rs. 28.8 lac home loan. If you want to increase the amount, try applying for a join home loan with a family member.
How to improve your home loan eligibility:
Follow these tips to increase your chances of home eligibility and approval.
Research and look around to explore different lenders and banking institutes. Compare their loan amount and interest rates and settle with the one who offers competitive rate of interest.
Choose a location to buy a 3 BHK flat in Lucknow, which is pre-approved by the bank. This will help you lower your rate of interest. Also, the process will be easier to follow.
If you have additional funds, you can use them for a down payment. This way, your loan amount will be minimal, and your interest rate will be lower. The less you borrow, the lower the rates you’ll have to pay. Besides, you can also plan for a loan repayment to lower your principal and interest rate further. You can go through our home loan vs. cash payment guideline to understand it better.
Conclusion
Most banks and lending companies consider your monthly salary an essential factor in determining the eligibility and home loan amount to be disbursed. Always choose a nationalized and reputed bank to borrow money from and keep the interest rates within your affordability. Look for projects like Jashn Elevate Club Towers to improve your return on investment opportunity in coming future.
