How to Calculate Home Loan Eligibility
Understanding how banks assess home loan eligibility helps you prepare better and potentially qualify for a higher loan amount.
Key Eligibility Factors
Income (primary factor): Banks typically allow EMI up to 40-50% of monthly income. CIBIL Score: 750+ for best rates, 650+ for approval. Age: Affects maximum tenure (retirement age minus current age). Existing EMIs: All ongoing EMIs reduce eligible loan amount.
FOIR Method
FOIR (Fixed Obligations to Income Ratio) is the main metric. FOIR = (All existing EMIs + Proposed EMI) / Monthly Income. Banks prefer FOIR below 50%. So if you earn ₹1L/month and have ₹15K in existing EMIs, maximum new EMI = ₹35K.
How to Increase Eligibility
Add co-applicant (spouse's income gets added). Pay off existing loans before applying. Choose longer tenure (lower EMI). Improve CIBIL score. Show additional income sources. Avoid new credit applications 6 months before applying.