Loan Eligibility

Loans & Credit

Loan eligibility is the maximum loan amount a bank will sanction based on your income, CIBIL score, existing obligations, and the property value. It determines how much home you can afford to buy.

In detail

Key factors:n1. FOIR: banks lend so total EMIs stay within 40-55% of gross monthly incomen2. CIBIL score: 750+ for best rates, 700+ for approval, below 650 often rejectedn3. Income stability: salaried is preferred over self-employedn4. LTV: maximum 75-90% of property value depending on loan amountn5. Age: loan tenure cannot extend beyond 65-70 yearsnnFormula: Max eligible EMI = Gross monthly income x FOIR% - Existing EMIsnMax loan = Max EMI / Monthly EMI factor (from EMI tables)

Formula

Max eligible EMI = Gross income x FOIR (40-50%) - Existing obligationsnMax loan = Max eligible EMI / EMI per lakhnAt 8.5% for 20 years: EMI per lakh = Rs 868nRs 50,000 max EMI: max loan = Rs 50,000 / 868 x 1,00,000 = Rs 57.6L

Real-life example

🇮🇳 India example

Sunita earns Rs 1L/month. Existing car EMI Rs 8,000. Bank applies 50% FOIR. Max total EMI = Rs 50,000. Available for home loan EMI = Rs 42,000. At 8.5% for 20 years: eligible loan = Rs 48.4L.

Frequently asked questions

How to increase home loan eligibility? ▼

Add co-applicant (combined income considered). Close existing high-EMI loans before applying. Choose longer tenure (reduces required EMI per lakh). Improve CIBIL score (750+ gets better rates and approval). Wait for income increase / next appraisal.