If you are a salaried employee who is applying for a home loan or personal loan to fund home or other expenses respectively, then it becomes imperative for you to know the loan amount you are eligible for. Most lenders provide loan approval based on the individual’s Salary. While some banks need you to have a minimum monthly Salary of Rs. 20,000 for home loan approval and Rs. 15,000 for personal loan approval, some may have a much higher eligibility requirements!
Let us discuss how much funds you can borrow from the lender based on your salary.
Loan Amount Based On Salary
Loan eligibility depends heavily on income. Since lenders fear the risk of default on loans, they consider salary the most important factor in determining whether the borrower is likely to do loan repayment or not.
All banks need their borrowers to comply with the minimum salary and other eligibility requirements. So, if you are a salaried employee and the question of how much home or personal loan you can get based on your salary is hovering in your mind, then here we answer your query. However, to arrive at that answer, it is significant to understand the different parts of your salary first. Lenders consider these vital salary components while determining your eligibility for the loan.
Salary Components Explained
Since overall compensation may involve gross or net figures, it is important to understand the difference between the two. While some lenders or financial institutes consider net salary, some consider gross salary when checking one’s loan eligibility. Salary structure also varies with organizations.
- One of the main parts of the salary is the ‘Basic Salary’.
- The other part of the salary is the ‘Allowance’, such as medical, house rent, HRA, leave travel, LTA, and other allowances. These make up a gross part of the salary.
- There are also mandatory deductions from the gross, like Employee Provident Fund (EPF), Tax Deduction at Source (TDS), Professional Tax, Cess, etc. After the deductions, the remaining amount is the net salary or ‘in-hand’ salary.
Most home loan eligibility calculators use the net salary component along with other factors.
How much Home Loan can I get on my salary?
As a thumb rule, individuals can get a home loan of 60 times their net monthly salary. Alternatively, some lenders offer secured loans of up to 72 times their gross monthly income. So, if your net monthly salary is ₹40,000, you can get a home loan of ₹24 lakh. If you earn ₹35,000 per month, you can get a home loan of ₹21 lakh. This method is also called the multiplier method. Many banks and NBFCs use the multiplier method to determine the eligible loan amount, where the lenders calculate the amount based on a pre-set multiple of an individual’s salary.
This is the table of the home loan amounts you can get for different net monthly incomes.
| Net Monthly Salary | Eligible Loan Amount |
| ₹ 20,000 | ₹ 10,36,246 |
| ₹ 25,000 | ₹ 13,73,026 |
| ₹ 30,000 | ₹ 17,09,806 |
| ₹ 35,000 | ₹ 20,46,586 |
| ₹ 40,000 | ₹ 23,83,366 |
| ₹ 50,000 | ₹ 30,56,926 |
There is another method to determine the loan amount, too, called the Ratio EMI/NMI method. The EMI/NMI ratio is the amount of the applicant’s net monthly income that they pay in their current and proposed EMIs. Most banks and NBFCs provide home loans to people with total EMIs between 50% and 60% of their monthly income.
You can also use a home loan eligibility calculator to know the exact amount you can get based on your salary. It is also important to note that if there is another earning member in the family, the net monthly salary of the family will increase, and you may get a higher home loan amount. The online home loan eligibility calculator also considers other factors while determining amount eligibility. Factors like the age of the applicants, employer, work experience, other obligations, LTV, property approval, credit score, etc., are considered. So, even if you earn a handsome salary but have a poor credit score, you may not get a home loan. With a good credit bureau score, you can bargain for a lower home loan interest rate. To help you in his regard, visit Duefactory.com, the credit building company.
How much Personal Loan can I get on my salary?
Like a home loan, a personal loan can be obtained based on your salary and other eligibility criteria. The personal loan amount can range between Rs. 500 and Rs. 50 Lakhs. The banks determine the loan amount for this unsecured loan based on the multiplier method, like a home loan. The range of this multiple remains between 10 and 28 times the borrower’s net monthly salary.
Considering the lender multiplies your net monthly salary by 24 to determine the sum of a personal loan eligible for you:
| Monthly Salary | Maximum Loan Amount |
| Rs. 15,000 | Rs. 2.25 Lakh |
| Rs. 20,000 | Rs. 3.00 Lakh |
| Rs. 25,000 | Rs. 3.75 Lakh |
| Rs. 30,000 | Rs. 4.50 Lakh |
| Rs. 35,000 | Rs. 5.25 Lakh |
| Rs. 40,000 | Rs. 6.00 Lakh |
| Rs. 45,000 | Rs. 6.75 Lakh |
| Rs. 50,000 | Rs. 7.50 Lakh |
Some lenders also use the Ratio EMI/NMI method, providing personal loans to people with total EMIs between 50 to 75% of their monthly income.
Wrapping Up
Income is the most critical factor for determining loan eligibility. The higher the income, the higher will be your loan eligibility. Setting the budget and knowing the loan amount you can get is the most critical part of a home-buying process. While each lender has their way of calculating the loan amount they can offer, here we have included the rule of thumb to help you get the closest estimate of the home loan or personal loan amount you can expect. So, take the help of this guide and understand the loan amount you can get. Accordingly, you can plan your dream home or other major expenditures in a better way.
Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
FAQ’s
1. How much home loan can I get for my salary?
Ans. Your home loan amount will depend on factors like age, income, financial obligations, credit insights, etc. Different banks may have different criteria for determining the loan amount. According to the most followed rule, you can get a home loan of 60 times your net monthly salary.
2. How much home loan can I get on 30,000 salary?
Ans. Assuming you fulfill other eligibility requirements, such as a good LTV percentage, no fixed monthly obligation, credit health, etc., your loan amount eligibility can be Rs. 17k.
3. How much home loan can I get on a 50,000 salary?
Ans. Assuming you fulfill other eligibility requirements, your home loan amount eligibility can be around Rs. 51k.
4. What are the different loan eligibility criteria?
Ans. Loan eligibility criteria depend on factors such as income, current age, remaining working age, financial position, credit history, credit score, and financial obligations like car loans and credit card debt.
5. How can I enhance my loan amount?
Ans. Loan eligibility can be enhanced by making an earning family member a co-applicant, taking a structured repayment plan, showing regular savings and investments, submitting the details of additional income sources, repaying debts, improving your credit score, etc. To improve your credit health and ensure financial wellbeing, connect with Due Factory, the credit repair partner.
6. How much personal loan can I get on a 30,000 salary?
Ans. Considering the lender multiplied your net monthly salary by 24 to determine the sum of personal loans eligible, you will get Rs.4.5 Lac if you have a 30,000 monthly salary.