How much home loan can you get on your salary? This question must be worrying you. Banks consider your take-home pay when calculating home loan eligibility. Banks promise to give you a maximum of 60 times net monthly salary.
Your gross monthly income could be high, but banks only consider in-hand salary. Banks also consider car loans, personal loans, credit card dues or any other loans you are repaying, before calculating home loan eligibility.
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This is your home loan eligibility based on salary
Disclaimer: This table is based on general calculations. Specific data has to be checked independently.
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How much home loan can you get?
You call the bank agent and tell him your net salary is Rs 40,000 a month. You want to know how much home loan you qualify for. When you tell him your net monthly pay is Rs 40,000, he gives a prompt reply. You are pre-approved for a home loan of Rs 24 Lakhs. You are excited and submit the salary slips and even pay the loan processing fees. But, do you get this amount as a home loan?
Yes, banks say you are eligible for a home loan amount of 60 times, net monthly pay. Unfortunately, this is just a marketing gimmick. The bank again checks your home loan eligibility and decides on a figure much lower than the 24 Lakhs (60 times net monthly pay).
Your salary is the same, you have a good credit score and you don’t have other loans to repay. What went wrong?
The trick lies in your salary slip.
Take a look at how banks calculate NET SALARY:
Banks do not consider LTA and Medical Allowance (Components marked in Yellow), when calculating in-hand salary. Even though your Net Monthly Salary is Rs 40,000, banks do not consider LTA and Medical Allowance. Banks believe you will spend these allowances on the specified purpose.
SEE ALSO: Tips to apply for a home loan after 45
Banks go through your credit information report (CIR) before sanctioning the loan. If you have credit card dues, personal loan and car loan EMIs to repay, all these will be considered when calculating home loan eligibility. If you have availed a home loan for an under construction property, this further reduces home loan eligibility.
This is because banks believe you will pay rent, till you occupy the new house. Rent payments are also factored when calculating home loan eligibility. If you purchase a ready to move apartment, home loan eligibility increases. Be Wise, Get Rich.
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