Is salary the most important home loan eligibility criterion? Let’s find out!
In India, house financing has made homeownership possible for several individuals. Today, more than ever, borrowing a home loan, is supported by attractive interest rates and affordable house loan EMI, especially for salaried individuals.
When buying a house, a key component in determining your home loan eligibility is your monthly salary as it reflects your ability to bear the cost of borrowing. Furthermore, your monthly salary also factors into other significant eligibility criteria such as home loan interest rates, credit score, loan-to-value ratio, and maximum home loan EMI amount.
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How Is Your Income Evaluated For a Home Loan?
An applicant’s income is a crucial home loan eligibility factor as it stands for their repayment capacity. Usually, when you apply for home loan, lenders will ask you to present documents of income proof such as six months’ salary slips, tax returns of the last three years, etc. Additionally, lenders require details such as a current address, date of birth, bank statements, PAN, and others to evaluate your housing loan eligibility.
When assessing your monthly salary, lenders will not consider monetary perks like medical or travel allowances as these constitute a particular expense. They will deduct said expenses from your in-hand salary to determine your net income and decide on the home loan amount as well as a suitable home loan rates. However, as a rule of thumb, most lenders offer a housing loan amount up to 60 times of an individual’s net income.
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Simply put, your salary determines your ability to service a loan and thus, a high income can fetch you a high home loan amount. Besides, several factors, such as home loan tenure, debt-to-income ratio, processing time, and home loan interest rates, among others, depend directly or indirectly on your salary. Additionally, your net monthly income will also determine your house loan EMI and home loan interest rates while taking these factors into account.
Use a Home Loan EMI Calculator
For a more accurate idea about your EMI obligations, using a home loan EMI calculator is a viable option – especially for first-time homebuyers. Avoid time wastage and erroneous estimation – common during manual calculations – by using a home loan EMI calculator online to figure out the EMIs on your stipulated home loan amount.
Additional Read – Understanding the Benefits of a Home Loan Calculator
Over to You
Undoubtedly, an applicant’s salary is a crucial home loan eligibility factor and demands attention but, for first-time borrowers, the entire housing loan process can become especially cumbersome. Therefore, before applying for a home loan, thorough research of the financial market is necessary. At Tata Capital, you can secure a home loan online at attractive interest rates with tenure of up to 30 years. We also provide a free and easy home loan EMI calculator online that can assist you in determining the EMIs for your desired housing loan amount. If you are looking for hassle-free housing finance at competitive interest rates, you can apply for easy home loan by logging on to our website today!