Lenders determine your home loan eligibility primarily based on your repayment capacity. The most common metric used is the Fixed Obligation to Income Ratio (FOIR). Most banks assume that 50% to 60% of your gross monthly income should be the maximum available for all your debt repayments, including the new home loan.
Key Factors Influencing Your Loan Limit
Credit Score: A score above 750 often grants you access to lower interest rates and higher loan amounts.
Age: Younger borrowers typically get longer tenures (up to 30 years), which increases the total loan eligibility.
Existing Obligations: Car loans, personal loans, or credit card debts reduce the amount you can borrow for a home.
Property Value: Banks usually fund only 75% to 90% of the property's market value (Loan-to-Value ratio).
Realistic Calculation Example
Suppose you earn $8,000 per month and have an existing car loan payment of $600. If the bank applies a 50% FOIR:
Total Disposable for Debt: $8,000 * 50% = $4,000
Available for Home Loan EMI: $4,000 – $600 = $3,400
If the interest rate is 7% for 20 years, your eligible loan amount would be approximately $438,000.
Tips to Increase Your Eligibility
If your calculated eligibility is lower than your requirement, consider adding a co-applicant (spouse or parent) with a steady income. This combines both incomes and significantly boosts the loan amount. Alternatively, paying off smaller high-interest debts before applying for a mortgage can free up your FOIR limit.
function calculateLoanEligibility() {
var income = parseFloat(document.getElementById("grossIncome").value);
var existingEmi = parseFloat(document.getElementById("monthlyEmi").value) || 0;
var rate = parseFloat(document.getElementById("interestRate").value);
var years = parseFloat(document.getElementById("tenure").value);
if (isNaN(income) || isNaN(rate) || isNaN(years) || income <= 0 || rate <= 0 || years <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
// Standard FOIR (Fixed Obligation to Income Ratio) is usually 50%
var foir = 0.50;
var totalAvailableForDebt = income * foir;
var availableEmi = totalAvailableForDebt – existingEmi;
if (availableEmi <= 0) {
document.getElementById("maxLoanAmount").innerHTML = "Insufficient Income";
document.getElementById("estEmi").innerHTML = "$0";
document.getElementById("foirLimit").innerHTML = "$" + totalAvailableForDebt.toFixed(2);
document.getElementById("hl-result-box").style.display = "block";
return;
}
// Mortgage Formula: P = (EMI * [ (1 + r)^n – 1 ]) / [ r * (1 + r)^n ]
var monthlyRate = rate / (12 * 100);
var totalMonths = years * 12;
var power = Math.pow(1 + monthlyRate, totalMonths);
var loanAmount = (availableEmi * (power – 1)) / (monthlyRate * power);
// Display Results
document.getElementById("maxLoanAmount").innerHTML = "$" + Math.floor(loanAmount).toLocaleString();
document.getElementById("estEmi").innerHTML = "$" + Math.floor(availableEmi).toLocaleString();
document.getElementById("foirLimit").innerHTML = "$" + totalAvailableForDebt.toFixed(2).toLocaleString();
document.getElementById("hl-result-box").style.display = "block";
document.getElementById("hl-result-box").scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}