Can I Get a Home Loan On a 40,000 Salary?

17 AUGUST, 2022

Getting a home is one's ultimate dream. No matter how lavish or basic a home is, everyone dreams of owning one. Property prices are skyrocketing, especially in metro cities, and buying a house may seem unaffordable to salaried people. You may often feel that you will never be able to save enough to pay for that home you have been eyeing. 

A home loan is a solution to make your dream of being a homeowner come true. This process can start at a very young age. The first question that pops up in any salaried individual's mind is the amount of loan they can get and the home loan interest rate. You may wonder, 'How much home loan can I get on a 40000 salary?' By the end of this read, you will have an answer to your dilemma. 

A Lender Will Establish Your Home Loan Eligibility Based On Two Significant Factors: –

1.     Your willingness to pay:  Your willingness or inclination to pay is judged by your credit score. A credit score by CIBIL is a three-digit number that indicates your likelihood of repaying the loan. This report highlights your current financial obligations as well as your past behaviour with regard to credit repayment, types of credit, credit duration, etc. Financial institutions prefer loaning individuals with a higher credit score as it instils faith that the applicants are good at handling their credit. 
2.     Your repayment capacity: Your CTC is not the same as your in-hand salary. For financial institutions, your take-home is what matters in establishing whether or not you qualify for a home loan. Your gross salary comprises elements such as basic salary, leave travel allowance, medical allowance, house rent allowance etc. A few necessary deductions, such as TDS, gratuity, EPF, and Professional Tax, are subtracted, after which you get your in-hand income. This take-home or net income determines your home loan eligibility.

How Much Home Loan Can I Get On A 40000 Salary?

To answer the question, 'how much home loan can I get on a 40000 salary?' applicants need to check if they meet the essential eligibility criteria for applying for a home loan. These eligibility criteria are more or less the same for all lenders and require the applicant to be: 

• Between the age of 18 and 60 years (65 years if the applicant is self-employed)
• An Indian resident with a certain income depending on what city they reside in (For those living in Delhi, Mumbai, Pune, Bangalore or Chennai, a minimum monthly of Rs.20,000 is needed to apply for a Kotak Home Loan. For those residing in other cities, Rs.15,000 per month is the qualifying salary for a home loan)
• Have a minimum educational qualification

Our easy to use home loan eligibility calculator can ascertain the amount of loan available to a salaried individual earning Rs. 40,000/- per month. This loan eligibility calculator takes into account multiple data points apart from the monthly salary and is the best approach to figure out how much loan you can actually borrow. 

Apart from the monthly gross income, you will need to state if you have any other existing EMIs, the current rate of interest, the loan tenure and if you are an existing customer with Kotak Mahindra Bank. 

Multiple factors affect your home loan eligibility

Your salary, of course, is a prime decider in the amount of loan that will be made available to you. People with higher salaries can repay more every month, so the higher the income, the higher the applicant's eligibility for a higher loan amount. However, your salary is not the sole deciding factor in the amount of loan that you are eligible for. Other aspects are factored in a while establishing your loan amount. This includes  

Your Age

Your age is one of the prime factors that influence your home loan eligibility, and it may impact your tenor, your monthly payment and your home loan interest rate. Younger individuals are considered favourable borrowers because they are expected to have longer careers making the chances of repayment higher. Younger people can opt for lower tenures and can get loans with lowers rates of interest and lower monthly EMIs. 

Your Existing Loan Obligations

 Along with your income, other ongoing financial obligations can impact your home loan amount. They include but are not limited to credit card debt, other existing personal loans and vehicle loans. Since these are regular monthly outflows, they impact the borrower's affordability to repay the loan amount. They bring down the EMI portion you can set aside to repay your house loan. If you are over-indebted, your home loan amount can reduce. 

Your Credit Score

 Your credit score is an indicator of your creditworthiness and allows institutions to perceive you as reliable or not. Your credit report will give the lender an overview of your financial standing and help them determine your ability to repay the loan. It is a substantial factor in home loan rejection or approval. 

Value Of The Property

 The potential home you are planning to buy will be assessed as the underlying health of this asset is imperative. Lawyers and independent valuers authorized by the financial institution assess a prospective buyer's property. You can avail up to 90% of the intended property's value as a home loan.

Regulatory Requirements

 The National Housing Bank (NHB) has set limits on the maximum amount of loan that can be given out, which is a proportion of the home's purchase price. This acceptable limit varies depending on the residence cost; a lower-priced property could have a higher maximum limit and vice versa.