Home loan is an amount borrowed from a bank or financial institution at a certain interest rate in which they take the house as security. If the borrower fails to pay the dues, then the lender reserves the right to sells the property to recover the outstanding loan amount. One frequently wonders how much home loan can I get on my salary. The banks calculate a home loan eligibility amount based on your net salary. Generally, the loan amount approved is 50 to 60 times of the net salary.
Calculation of Home Loans
The bank calculate the loan eligibility based on net salary and credit score. The net salary is calculated by deducting medical allowance and LTA (leave travel allowance) from the total salary which comes after the P.F. and income tax deductions. When the bank evaluates your net salary, then it is multiplied by a pre-set multiplier to get the eligible loan amount.
Repayment Capacity
A bank checks the amount you pay towards monthly expenses and existing debts like loans and outstanding credit bills. Once everything is deducted then the portion of your in-hand income is computed. The final approved loan will be lesser if you have extra outstanding expenses; there are several checkpoints for this criterion, some of which are:
House rent, Living expenses, Outstanding Personal Loan/ Car Loan/ Gold Loan
Additionally, a good credit score makes you eligible for many credit facilities and offers; a score of 750 or above is placed under a good slab, which makes you eligible for the loan.
