If you are buying a new home, you will have the full amount to buy a home or you will need some loan. You spend all your savings and investments to buy a property. You know how difficult it is to find a title clear property these days. If the same property was under construction, it would be even more difficult. So we would like to give you a suggestion that the property you are buying is approved by a bank like SBI Home Loan, HDFC Home Loan.
More people ask us these questions again and again, so we would like to say that it is quite easy to get home loan eligibility, just you have to understand some things how all these factors work. In this special article, all these things have been explained.
How To Calculate Home Loan Eligibility
So what will be your eligibility, how will it determine the bank or any financial institution, we will try to give detailed information about it. The bank or any financial institution assures only a percentage of your income by doing a maximum EMI and the remaining percentage is for your ordinary expenses. It is also called as FOIR (Fixed Obligation To Income Ratio). It can be only 40 to 60% of your gross income or 50 to 70% of net income. 
Then your current ongoing EMI is subtracted from your maximum EMI then remaining amount is divided by Per Lakh EMI. If you multiply these numbers by 1 Lakh, then your Home Loan Eligibility will come.
| Loan Amount | ||
| Interest Rate(%) | ||
| Tenure (Years) |
| EMI |
How to calculate EMI?
- P For Loan Amount
- R For Rate Of Interest
- N For Tenure (Years)
How can I calculate home loan eligibility?
Home Loan Eligibility Formula
- I For Your Monthly Income
- FOIR
- Obligations Means
Example
Suppose your monthly income is 60000 (I)
We assume the maximum EMI here as 55% (FOIR)
You have a loan that has an EMI of Rs 5000 (Obligations)
Rate of Interest:- 8.15 % Tenure:- 30 Years Per Lakh EMI:-744
(60,000 × 55%) - 5000
= ---------------------------- × 1,00,000
744
Home Loan Eligibility = 37,63,440/-
There are many factors in home loans that directly or indirectly affect your eligibility.
There are many factors in home loans that directly or indirectly affect your eligibility.
The Factors Used In Calculating Your Loan Directly...
- Monthly income
- Tenure
- Rate of Interest
- Loan to cost Ratio
- Obligations:- The eligibility for your current home loan is highly dependent on the EMI of your current loan. EMI of current loan Subtract from your FOIR, so the less your loan, the better.
- FOIR (Fixed Obligation To Income Ratio):- The bank uses some fixed percentage of your income for your Emi and the remaining percentage is for your ordinary expenses. It is also called Fixed Obligation to Income Ratio. It uses up to 60% of your gross income or 70% of net income.
The Factors affecting home loan eligibility...
- CIBIL Score/Credit Score:- The CIBIL score matters a lot when taking a loan. Right now your interest rate is determined based on your CIBIL score, if you have ever taken a loan or you have just applied, this will be reflected in your CIBIL report. The CIBIL score indicates your ability to pay. If you have ever defaulted a loan or skip an EMI, then these things will also appear in CIBIL.
- Month End Balance/ Saving Habits:- After looking at the bank balance at the end of the month, the bank speculates about your spending habits. If your expenses exceed your expected EMI, how will you pay the EMI? This is a very big question in front of the bank.So your month end bank balance should be very good, or your savings habits should be good.
- Investment:- The value of your savings is also known by your investment, if necessary, you will break the investment and pay EMI, this is the thinking of the bank. Investment acts as a supporting document to increase your eligibility.
- Family Income (For Support):- Your family income reflects your financial stability, such as family income, may be pension or rent, this strengthens your case.
- Qualification
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