Home Loan Affordability Calculator

A home loan is a long-term financial commitment. Home Loan Eligibility is determining whether you qualify according to a set of criteria as stated by the institution offering a home loan.

Through your home loan affordability, you get to know how much amount you will be able to get as per the criteria of the institution. If you fail to meet the criteria as stated, your loan application will be rejected and it will negatively impact your credit score. …read more

Down Payment (in INR) 1000000

Gross Monthly Income (in INR) 100000

Loan Tenure (in Years) 120 Years

ROI (annual) 10 %


Other Existing EMIs(in INR) 0

Eligible Loan Amount ₹

Affordable property cost ₹

Home Loan Affordability Overview:

Home Loan Eligibility:

A home loan is a long-term financial commitment. Home Loan Eligibility is determining whether you qualify according to a set of criteria as stated by the institution offering a home loan. Through your home loan affordability, you get to know how much amount you will be able to get as per the criteria of the institution. If you fail to meet the criteria as stated, your loan application will be rejected and it will negatively impact your credit score. In order to avoid unnecessary enquires and rejection, you must check your home loan affordability using the online home loan affordability calculator before you apply for a home loan and you must prefer to apply for an amount equal to or less than amount shown on the calculator as home loan.

 

Why it is important to check your home loan affordability?

It is important for you to check how much home loan you are eligible for before you go for application of a Home Loan. This will help you to manage your finances every month and will also ensure whether you are capable to pay your monthly installment on time or not without putting pressure on your monthly budget or without increasing your budget. Checking your home loan affordability have been made so easier with online home loan affordability calculator. It is available on websites of various leading banks for free use.

 

What is Home Loan Affordability Calculator?

Home loan Affordability calculator are provided as self-help Planning Tool which helps you to analyse how much loan you can borrow and what will be your monthly repayment schedule. The results depend on various assumptions provided by you. The calculator, however, does not guarantee the accuracy, or applicability to your circumstances. It can be used to explore all the options before you avail a home loan. The calculator shows results in a fraction of seconds and is dynamic as it can be used for different inputs to make a better decision. It considers your gross income and repayment capacity as the basis for calculating affordability. 

 

Factors that affect your Home Loan Affordability

Your Home Loan Affordability depends on the following factors:

  1. Your Age- Younger Individual can be benefited with easy approval and higher amount of loan than older individuals as a young person has more years ahead than the older one and his income is subject to increment with age. Therefore, you must prefer to go for a home loan in your younger years.
  2. Monthly Expenditure- Your Monthly expenditure is required to be considered in order to calculate how much EMI you can pay. If your expenses are higher, your EMI payment may be less thereby decreasing your loan approval amount or increasing your tenure of the loan. 
  3. Your Monthly/Annually Income- It is an important factor in determining your home loan affordability. Your actual income after deducting relevant tax will provide you correct amount that you can easily repay monthly/annually.
  4. Stability of Income- If your income is steady and stable, approval of the loan is easier even of higher amounts. It is checked through your bank statement whether you have a steady or irregular income. 
  5. Your Existing EMIs (if any)- If you already have existing EMIs payments or outstanding loans then your chances of higher loan amount decrease. You can consider closing your existing loans so that you can have more cash on your hand to pay for home loan EMI. 
  6. Your Credit Score- Credit Score also plays a vital role in determining your affordability of a home loan. Higher your credit score, easier and faster you will get a home loan and vice versa. Your credit score is negatively affected if you have earlier rejection loan applications.
    It is better to avoid making applications for amounts higher than your affordability. You must check your affordability before making an application through the free online home loan affordability calculator.
  7. Collateral Security- If you have any collateral security such as gold or land, then your loan approval will be easier as it is secured and back by an asset.

How to use the Home Loan Affordability Calculator?

Home loan affordability calculator works on a mathematical formula on the basis of few parameters. These calculators have boxes/sliders for different factors/input that affect the home loan affordability. You will have to input these parameters which include your age, down payment you want to make at the time of purchase of a home, your gross monthly income, tenure of your house loan, interest rate chargeable on your loan. Follow the steps for calculating how much home loan you can afford-

  • Go to any reputed bank or any third-party website offering a home loan or search on google for home loan affordability calculator. 
  • Go for Home Loan Affordability calculator and input the details such as your gross monthly income, any other EMIs (if any), down payment you are willing to pay, the tenure of the loan your age (in some cases) and the applicable rate of interest.
  • Click on” Calculate.”
  • The calculator will show you how much amount you can take as home loan along with Estimated home budget.

Example- Suppose you are 25 years old having gross monthly income after deductions and tax of Rs 40,000, with other EMIs of Rs 3,000. You can make down payment of Rs 3,00,000. The interest rate on loan is 9% and tenure for loan is 25 years, then the loan amount as calculated by the Online Home Loan Calculator = Rs 15,49,101 and Estimated Home Budget = Rs 18,49,101.

Estimated Home Budget is nothing but just the sum of down payment you can make and home loan you can afford. 

 

How you can increase your Home Loan Affordability?

  • You can increase your home loan affordability by increasing the tenure of loan repayment. If you opt for a higher period then your loan amount will be enhanced.
  • You can make a higher down payment in order to increase your loan eligibility amount. Higher contribution as down payment lowers LTV ratio, in turn improving home affordability.
  • Improving your credit score is the best option to enhance your home loan affordability. Your credit score reflects how well you can handle your debts. It can be improved by paying your other EMIs and credit card bills on time. Higher the credit card score, the higher the benefit you will get. 
  • It is suggested that you pay off your existing loans/debts (if any) before applying for a home loan. It makes the affordability higher and loan approval easier. 
  • You can also apply for a joint home loan along with any other co-applicant. It will increase your affordability/eligibility to borrow a higher amount of home loan. The co-applicant, in this case, must be an earning family member and if such applicant is a woman, you can be benefitted with the concessional rate of interest (in some cases). 

 

Benefits of Home Loan Affordability Calculator

Home Loan Affordability Calculator provides numerous benefits which are stated hereunder:

  1. Home Loan Affordability calculator provides a clear understanding of finances for your home loan finances as well as the amount you are required to arrange from your own sources thus, enabling you to fix a budget for the purchase of your own house.
  2. It provides you with information and calculations to make a decision and prepare yourself with an informed and well-planned home buyer. 
  3. It also gives you better bargaining power with the seller of the property or the developer.
  4. The calculation through the Home Loan Affordability Calculator helps you to focus on your search of affordable properties without wasting effort and time and making it easy.
  5. It helps to make your search on properties that fit into your budget easier.
  6. With the help of home loan affordability calculator, you can plan your finances in a better way when you very well know your down payment and EMIs (Equated Monthly Instalments).
  7. It is very easy to use and provides you with accurate results instantly.