Home Loan Eligibility — How Much Can You Borrow in 2026?

The bank will not sanction the housing loan simply based on the monthly salary. Rather, what the bank does is that it determines whether or not the loan can be paid off comfortably over the selected period without overburdening your monthly budget. This is referred to as credit assessment and it helps the banks minimize the risks of loan default.

The banks would rather prefer that the total monthly EMI liabilities be kept within 40-50% of the monthly salary. For instance, if your monthly salary is ₹1,00,000, the bank may take into consideration an EMI of ₹40,000-₹50,000 considering your other financial responsibilities. The loan sanction is dependent on a number of factors combined.

Monthly Income and Income Stability

Your income is a basic parameter that determines how much you can borrow from a lender. Salary-based borrowers can be analyzed according to their fixed monthly salary, whereas self-employed borrowers can be considered according to their business income and IT Returns. However, some creditors might also consider the borrower’s income from rent or any other form of incentive if it is adequately justified.

Example:

Monthly Salary: ₹90,000

EMI Cap (50%): ₹45,000

Existing EMIs: ₹0

Here, the borrower has better EMI paying capacity than a person having the same monthly salary with numerous EMIs payable every month.

Existing EMIs and Financial Commitments

Your debt to income (DTI) ratio is calculated by banks using your debt and your income. Your likelihood of getting a larger loan depends on how low your liabilities are.

Example:

Income per month: ₹1,20,000

EMI for car loan: ₹12,000

EMI for personal loan: ₹18,000

Total of existing EMIs: ₹30,000

Even though the income is high, the repayment capability is low since a part of your income is already utilized to pay back existing loans.

Credit Score and Repayment History

Credit score is the score that indicates your ability to handle previous credits and loans. Having a good credit score increases your chances of getting approval as well as lowers your chances of getting a high-interest rate.

The basic scale is as follows:

Above 750: Excellent chances for getting approvals and interest rates.

700-749: Good eligibility and standard lending rates.

650-699: Further investigation needed.

Below 650: Chances of approval become slim and you could have higher interest rates.

With just a 0.5% decrease in interest rate, you would save hundreds of thousands during 20-25 years of the loan tenure.

Age and Loan Tenure

The age factor also plays a role in determining the loan period that is offered to you. The younger you are, the more likely it is that you will have a longer loan period, which means that your EMI amount will be smaller and you will be able to borrow a larger amount of money.

For example, a person who applies for a loan at the age of 28 may have a loan period of 25-30 years, whereas a person aged 50 years would have a shorter loan period according to the retirement age policy of the bank. It should be noted that banks consider a variety of factors, such as income, liabilities, credit score, age, and job stability, while deciding how much you can borrow.

Each and every bank has their own policies for disbursing loans; however, the basic criteria for being eligible for availing a home loan do not change that much. In addition to having an income, the bank checks your work stability, age, past records of repayment, and whether the property is legitimate.

The following points constitute the basic criteria:

1. Age: Normally between 21 to 65 years (depends on bank).
2. Employment: Employees, self-employed professionals, and businessmen can apply.
3. Experience: At least 2–3 years of experience in the job/business.
4. Income: Depends on bank, city, and loan amount.
5. Credit Score: Having a credit score of 750 or higher will increase the chances of acceptance.
6. Legality of Property: The property must be legally accepted by the lender.

These criteria, if fulfilled, do not ensure that you will get a loan, but they increase the chances of getting one with favourable terms.

Let us know how banks calculate the loan eligibility by taking an example of practical life.

Example: Salaried Person from Hyderabad

Let us take an example of someone buying an apartment in Kokapet.

Monthly Income: ₹90,000

Presently Paying EMI: ₹15,000

Credit Score: 780

Age: 30 years

Loan Period: 25 years

As per above-mentioned information, many banks can allow your total EMI as 45%-50% of your salary. As you have already taken an EMI of ₹15,000, then your balance EMI can be utilized to pay off your home loan amount. So your loan eligibility may come somewhere in the range of ₹50 lakh to 60 lakh.

How Existing EMIs Affect Eligibility

Let us take into account the same borrower but with more liabilities.

Monthly Salary: ₹90,000

EMI Liability: ₹30,000

Credit Score: 780

Though the salary and credit score are still the same, the repayment capacity decreases. This may lead to an eligibility for a much smaller home loan amount.

It is the reason why many financial experts advise repaying high-interest personal loans or EMIs before applying for a home loan.

Remember: Eligibility Is Only an Estimate

The exact final loan amount will depend on several factors like lender’s internal policies, interest rates, property valuation, and down payment. The calculation of your eligibility will help you estimate your total loan amount; however, the final loan approval will be made after careful evaluation of all factors by the lender.

In case your estimation is below the expected amount, you should not be worried since there are a number of practical ways that you can enhance your ability to borrow funds. The banks evaluate your entire financial status; thus, any enhancement will help increase your loan amount.

Add a Co-applicant

The inclusion of your spouse or any other working family member in the list of co-applicants will help boost the income level of your family. This is because when applying for loans, the repayment ability of all co-applicants is taken into account. It could help you in getting a better deal on your loan.

Reduce Existing EMIs

Loans like personal loan, car loan, or educational loan decrease your capacity to repay since they increase your debt-to-income (DTI) ratio. You should make efforts to pay off any small loans or lower your loan balance prior to applying for a home loan.

Example: Assuming that your monthly income is ₹1,00,000 and that you have ₹20,000 worth of EMIs to pay from other loans, repaying the EMI of ₹10,000 from your personal loan will greatly enhance your repayment capacity.

Maintain a Healthy Credit Score

One’s credit score is one of the first parameters considered by the lenders while evaluating a loan application. Having a CIBIL score of more than 750 is known to improve one’s chances of getting approved as well as obtaining a favorable interest rate on the loan amount.

Steps to keep a good credit score:

• EMI and credit card payments should be made promptly.
• Credit utilization should not be more than 30 percent.
• Loans and credit card applications should not be applied for frequently.
• Credit report should be checked regularly for any discrepancy.

Just a marginal 0.5-1 percent difference in the interest rate owing to the credit score could help you save some lakhs in 20-25 years for a housing loan.

Increase Your Down Payment

With an increased down payment, the amount to be borrowed becomes smaller, which means that there is less risk for the bank or other lender. Banks generally fund 75%-90% of the property’s value and the rest is the buyer’s contribution.

Thus, when you make your down payment larger, say, from 15% to 25%, you save money on EMI and reduce the amount of interest paid during the entire loan period.

Choose a Longer Loan Tenure

Taking up a higher tenure of repayment will stretch the loan out over a greater period of time, resulting in lower monthly EMI and an increase in your borrowing ability.

For instance, if you take a housing loan of Rs 60 lakh to be repaid over a period of 30 years, then your monthly EMI would be lesser than the same loan amount to be repaid over 20 years.

An extended repayment tenure will reduce the EMI and make it easier for you to borrow. On the other hand, you will have to pay a higher interest amount throughout the term of the loan. This is another important consideration. There are many things applicants forget while focusing only on the salary to apply for a loan.

The following mistakes should be avoided while making the application process smooth and successful.

• Skipping on EMI payments: This is one of the mistakes made by many people that result in damaging your repayment and credit scores.
• Applying with multiple financial institutions at one time: Multiple enquiries in a small duration can harm your credit scores temporarily.
• Credit card utilization: Utilization of the credit card limit of over 70 to 80 percent indicates financial instability.
• Changing jobs frequently: Financial institutions tend to prefer the borrowers having stable employment.
• Incompleteness of required documents: Lack of proof of income, bank statements, or identity proofs can harm the application process.
• Selecting the property with legal issues: Banks might not agree to lend money if there is any issue in the documentation or legal aspects.

Many people feel that if the bank sanctions a particular loan amount, then one must go for the maximum possible. But, there is a difference between loan eligibility and loan affordability.

Loan eligibility is the maximum amount the lender is ready to give you depending upon your salary, credit score, age, and liabilities. Loan affordability is the amount that you can easily repay every month without disturbing your comfort zone or goals.

Example:

Eligible loan amount: Rs. 80 lakhs

Comfortable loan amount: Rs. 65 lakhs

While the lender is ready to provide Rs. 80 lakhs as loan amount, opting for Rs. 65 lakhs will help in reducing your EMI and also leave some buffer for other future requirements. An easy formula used by many financial planners is keeping the home loan EMI within 35-40% of your take-home monthly salary.

Just a bit of planning can boost your chances of approval and simplify the loan process.

Make sure to do the following before sending out your loan application:

• Check your credit score and fix any discrepancies.
• Estimate your monthly EMI and plan a budget.
• Make sure to save 15-20% of the total property cost as your down payment.
• Evaluate different lending institutions based on their interest rates, processing charges, and modes of repayment.
• Make sure to have all important documentation handy – proof of income, bank statements, PAN card, Aadhaar Card, property documentations.
• Do not take any new loan or apply for any other type of credit immediately before you get a housing loan.

It is important to be aware of your eligibility for a home loan before buying any property. This will help you in planning and also help you find suitable homes within your budget. There are various parameters considered by the bank for determining your loan eligibility, such as income, current EMIs, credit score, age, repayment capacity, etc., and there are certain good financial habits that can make you more eligible for loans.

Rather than taking the maximum loan amount you are eligible for, take one which suits your budget and financial objectives for the long run. In case you are looking for home purchase, Homefleet can assist you in finding out various residential projects and help you through each phase of the home buying process.