Determining your eligibility for a home loan is a crucial step before embarking on the journey of purchasing a property. Banks and financial institutions assess several factors to gauge your repayment capacity and decide the loan amount you can borrow. This calculator provides an estimated view of your eligibility based on common financial parameters.
How Eligibility is Calculated: The Math Behind It
The primary determinant of home loan eligibility is your Debt-to-Income Ratio (DTI), often referred to as the EMI-to-Income Ratio in the context of loans. Lenders typically have a threshold (commonly around 40-50% of your net monthly income) for how much of your income can be allocated to servicing debts, including the proposed home loan EMI.
Available Income for EMI: This is calculated as Monthly Income - Existing Monthly EMIs.
Maximum Loan Amount Estimation: Lenders use your available income for EMI and the prevailing interest rates and loan tenure to determine the maximum EMI you can afford. This maximum EMI is then used to calculate the maximum loan amount. A simplified formula to estimate this is:
n = Total number of EMIs (Loan Tenure in Years * 12)
This calculation provides a theoretical maximum loan amount you could be eligible for.
Loan-to-Value (LTV) Ratio: Banks also impose a limit on the loan amount relative to the property's value. This is known as the LTV ratio, typically ranging from 75% to 90%. This means you need to provide the remaining percentage as a down payment.
Maximum Loan Amount (based on LTV) = Estimated Property Value * LTV Ratio (e.g., 0.75 to 0.90)
Final Eligibility: Your actual eligible loan amount is the lower of the amount calculated based on your income (DTI) and the amount based on the LTV ratio, after accounting for your down payment.
Eligible Loan Amount = MIN(Maximum Loan Amount from DTI, Maximum Loan Amount from LTV) Your Required Loan Amount = Estimated Property Value – Down Payment
You are generally eligible if Eligible Loan Amount >= Your Required Loan Amount.
Factors Influencing Eligibility:
While this calculator uses key financial metrics, several other factors influence a lender's decision:
Credit Score (CIBIL Score): A higher credit score indicates good creditworthiness and can lead to better interest rates and higher loan approval chances.
Age and Employment Stability: Lenders prefer applicants with stable employment and sufficient years left until retirement.
Job Profile and Employer Reputation: Salaried individuals in stable companies often have an easier time.
Existing Liabilities: Beyond EMIs, other significant financial obligations can impact eligibility.
Property Type and Location: The nature of the property being financed also plays a role.
Disclaimer: This calculator provides an estimation only. Actual home loan eligibility and the amount sanctioned are at the sole discretion of the lending institution. It is always recommended to consult directly with banks or financial advisors for precise figures and personalized guidance.
function calculateEligibility() {
var monthlyIncome = parseFloat(document.getElementById("monthlyIncome").value);
var existingEMIs = parseFloat(document.getElementById("existingEMIs").value);
var loanTenure = parseInt(document.getElementById("loanTenure").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var propertyValue = parseFloat(document.getElementById("propertyValue").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var resultDiv = document.getElementById("result");
resultDiv.classList.remove("eligible", "not-eligible"); // Reset classes
// — Input Validation —
if (isNaN(monthlyIncome) || isNaN(existingEMIs) || isNaN(loanTenure) || isNaN(interestRate) || isNaN(propertyValue) || isNaN(downPayment) ||
monthlyIncome < 0 || existingEMIs < 0 || loanTenure <= 0 || interestRate < 0 || propertyValue <= 0 || downPayment < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
// — Calculations —
var dtithreshold = 0.5; // Common DTI threshold (50%)
var ltvRatio = 0.85; // Common LTV ratio (85%)
var availableIncomeForEMI = monthlyIncome – existingEMIs;
if (availableIncomeForEMI 0) {
maxLoanAmountFromDTI = maxAffordableEMI * (Math.pow(1 + monthlyInterestRate, numberOfEMIs) – 1) / (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfEMIs));
} else { // Handle zero interest rate case (though unlikely for home loans)
maxLoanAmountFromDTI = maxAffordableEMI * numberOfEMIs;
}
var maxLoanAmountFromLTV = propertyValue * ltvRatio;
var eligibleLoanAmount = Math.min(maxLoanAmountFromDTI, maxLoanAmountFromLTV);
var requiredLoanAmount = propertyValue – downPayment;
if (requiredLoanAmount = requiredLoanAmount) {
resultDiv.innerHTML = "Congratulations! You are likely eligible for a loan of up to ₹" + eligibleLoanAmount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
resultDiv.classList.add("eligible");
} else {
resultDiv.innerHTML = "Based on your inputs, you may not be eligible for the required loan amount (₹" + requiredLoanAmount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + "). Your estimated eligibility is around ₹" + eligibleLoanAmount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,') + ".";
resultDiv.classList.add("not-eligible");
}
}