How to calculate loan based on income?

by Garima Sharma
Loan based on income

How much loan can I get from the bank, based on my income?

  • It is a popular question that is often asked by borrowers from lenders.
  • LA loan could be for a house, a car or any other expensive item that you are looking to get financing from the bank.
  • The thumb rule that most banks follow is : To multiply your net salary by 60 to reach at the maximum loan (especially home) amount that you can get.
  • In this article, we are trying to explain you the bank’s salary calculation with respect to your net salary and how much housing loan (or any kind of loan) they can give you on your current salary.
  • This is applicable to any public or private sector bank.

Calculate Home loan Eligibility – Salary Professional

  • Your net salary is taken into consideration, while calculating the eligibility for the total loan amount.
  • Normally, all banks provide home loans upto 60 times your monthly NET pay. This may vary from case to case and off-course your personal credit rating.
  • In 95% of the cases, banks follow the 60 times rule and rarely breach this limit, to limit their loan loss.

We will explain this with an Example scenario:

  • Your monthly (take home or net pay) salary is INR 50,000. You are on a look-out for a home loan of about 30 lakh INR. And the Real Estate property cost is 40 lakh INR.
  • Your gross monthly income could be more than INR 50,000 per month. But Banks takes only your in-hand salary in consideration.
  • You have not availed of any other loan, which could be a car or personal on your name. You do have one credit card with a credit limit of INR 10,000.
  • As per Bank rules you are eligible to get 60 times your monthly (take home or NET pay) as the on.

But things take a dramatic turn, after you have actually applied, submitted your salary slips and paid the loan processing fees. The bank will evaluate your loan eligibility once again and then inform you about the exact loan eligibility amount. And after that, the job’s done.

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