Banks calculate home loan eligibility using various methods. Our sales team and bankers on-site can help you calculate your loan eligibility. Here are some of the common methods banks use to calculate loan eligibility. Your eligibility will depend on your type of income (salary, business, cash, rental etc.), your age which determines the loan tenor, and your other liabilities.
Salary income – this is the simplest to calculate
Typically banks assume that approximately 60% (may vary from bank to bank) of your gross (pre-tax) monthly salary is what your EMI servicing capacity is.
For example, if you have a gross monthly salary of Rs. 1 lac, then Rs. 60,000 is considered your EMI capacity. Suppose you already have an auto loan with EMI of Rs. 10,000, that leaves Rs. 50,000 for your home loan. Depending on the maximum tenor and the interest rate, the loan amount is calculated.
HDFC has a useful online eligibility calculator. You can check your tentative eligibility there – https://www.hdfc.com/home-loan-eligibility-calculator
Self-employed and other income
For business owners the calculations are slightly more complex. Depending on the type of business banks may use gross margin (for manufacturing) or net profit (for services) or income estimation (for cash businesses) to arrive at your monthly income. Please contact our sales team or the bankers on our site for details.