Home Loan

How to Calculate your Home Loan Eligibility?

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In recent times, the introduction of digital tools has helped to streamline an individual’s credit application process to quite an extent. From calculating one’s EMIs to learning about the amount he/she is eligible to avail, individuals can make use of online calculators to facilitate an easy loan application process at the very outset.

In this regard, a home loan eligibility calculator is one of the most conducive calculators vastly used by individuals to gauge the housing credit amount they are eligible to borrow before applying for a home loan.

Home loan eligibility calculator

An individual’s eligibility decides his/her creditworthiness to avail a home loan and repay it within a stipulated tenor. The housing loan eligibility calculator determines an applicant’s eligibility based on his/her age, monthly income, rate of interest and other existing debts.

After calculating their eligibility, individuals can also make use of a home loan EMI calculator to understand the monthly liability they will need to bear against the sanctioned home loan.

Calculating home loan eligibility online

Prospective borrowers can follow the steps below to calculate their home loan eligibility –

  • In the home loan online calculator, enter the date of birth and city
  • Input the loan tenor
  • Enter the monthly salary and any other income
  • Input other EMIs, if any,

A home loan eligibility calculator will compute the amount that you can borrow.

Factors affecting home loan eligibility

It is essential to pre-check the home loan eligibility criteria to make the entire home loan process easier and quicker.

  • Applicant’s age-

The age of an applicant decides what the tenor of a loan will be. As home loans are secured long-term loans stretching up to 30 years, many lenders take the age of retirement as the maximum limit. Longer tenor equals lower EMI and vice-versa.

  • Credit Score or CIBIL score –

It is one of the most crucial factors in determining whether a borrower is eligible for a home loan or not. A credit score above 750 is ideal for home loan approval, considering other criteria are fulfilled. Credit score below 750 is deemed poor and may even lead to rejection of a home loan.

It not only decides the approval or rejection of a home loan application but a good credit score also determines the EMIs.

  • Debt-to-income ratio –

The home loan eligibility depends on an individual’s present financial liabilities with respect to his/her salary. The percentage of current financial liabilities should never exceed 50% of that his/her income. A higher-debt-to-income-ratio denotes that a significant portion of the salary will be used to meet the existing loans that increase the chance to default repayments. In such a scenario, lenders may reject the home loan application.

  • Employment nature and stability –

Many lenders specify the employment tenor for salaried individuals to at least 2 years of the total working experience to be eligible for a home loan process. Likewise, for self-employed individuals, the business should at least be 3 years old.

  • Property details –

The chosen property’s age and location is another criterion for the approval or rejection of a home loan. The loan can be cancelled if a property is not under the lender’s defined geographical limits.

  • Loan to value and property value –

According to the RBI’s guidelines, the LTV ratio for a home loan cannot be more than 90% of the property value. This implies that a borrower will have to make a certain amount of down payment to purchase the home.

In this regard, individuals can also make use of a housing loan EMI calculator to compute how much their monthly instalments will be to settle the amount they avail under this advance.

Home loan borrowers can also look for pre-approved offers provided by reputed non-banking housing finance companies to expedite the home loan application process. Such offers are available on several financial products such as home loans, loans against property and more. One can check their pre-approved offer by inputting their name and contact information.

Almost every lender or non-banking financial institution offers its own home loan eligibility calculator. Home loan applicants must compare multiple lenders before making any final decision.

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