Decoding Home Loan Eligibility: Discover how much you can borrow based on your Salary

Decoding Home Loan Eligibility: How Much Can You Borrow Based on Your Salary?

Buying a dream home is one of the biggest milestones in life. For most of us, this journey begins with a home loan. But before approaching banks or financial institutions, one crucial question arises: How much loan am I eligible for based on my salary?

The Reserve Bank of India (RBI) has clear guidelines to ensure that borrowers do not overburden themselves with debt. According to these norms, 75% of your take-home salary can go into paying EMIs (Equated Monthly Installments).

In this blog, we will break down home loan eligibility at an interest rate of 7.45% and explore how much you can borrow for different tenures like 20 years and 30 years. Whether your salary is ₹1 lakh, ₹2 lakh, or ₹5 lakh, you will understand exactly what kind of home loan you can qualify for and plan your finances better.

Understanding Take-Home Salary

Before diving into the eligibility chart, let’s clarify what take-home salary means.

👉 Take-home salary = Gross Salary – Provident Fund (PF) – Income Tax

This is the actual amount credited to your bank account every month after statutory deductions. It is the money available for household expenses, savings, and EMIs.

The RBI Norm: 75% of Salary Towards EMI

The RBI suggests that a maximum of 75% of your take-home salary can be allocated to EMIs. This safeguard ensures that individuals have enough money left over for other living expenses and unexpected financial needs.

So, if your take-home salary is ₹1,00,000:

• 75% of ₹1,00,000 = ₹75,000 → This becomes your maximum eligible EMI.

Home Loan Eligibility at 7.45%

Here’s how much loan you can get based on your salary and tenure:

Breaking It Down

Salary: ₹1,00,000 per month

• Eligible EMI: ₹75,000

• Loan for 20 years: ₹0.93 crore

• Loan for 30 years: ₹1.08 crore

This shows that even with a 1 lakh salary, one can comfortably aim for a property worth over ₹1 crore depending on tenure.

Salary: ₹2,00,000 per month

• Eligible EMI: ₹1,50,000

• Loan for 20 years: ₹1.87 crore

• Loan for 30 years: ₹2.16 crore

Doubling your income almost doubles your loan eligibility. With ₹2 lakh income, you can aim for larger properties or better localities.

Salary: ₹3,00,000 per month

• Eligible EMI: ₹2,25,000

• Loan for 20 years: ₹2.80 crore

• Loan for 30 years: ₹3.23 crore

A ₹3 lakh monthly salary allows access to premium housing projects or luxury apartments in metro cities.

Salary: ₹4,00,000 per month

• Eligible EMI: ₹3,00,000

• Loan for 20 years: ₹3.74 crore

• Loan for 30 years: ₹4.31 crore

This segment is ideal for professionals or business owners who want to invest in high-value real estate.

Salary: ₹5,00,000 per month

• Eligible EMI: ₹3,75,000

• Loan for 20 years: ₹4.67 crore

• Loan for 30 years: ₹5.39 crore

At this income level, one can easily invest in ultra-luxury projects, villas, or even multiple properties.

Importance of Loan Tenure

Notice how the loan amount increases significantly when the tenure extends from 20 years to 30 years.

👉 For example, with a ₹2 lakh salary:

• At 20 years, you get ₹1.87 crore

• At 30 years, you get ₹2.16 crore

That’s nearly ₹30 lakh extra borrowing capacity simply by increasing the tenure. However, longer tenure also means paying more interest overall. So, balance your affordability and total cost before deciding.

Tips to Maximize Home Loan Eligibility

Here are some smart strategies to increase your loan amount eligibility:

1. Add a Co-Applicant – If your spouse or family member is earning, adding them as a co-applicant boosts eligibility.

2. Clear Existing Loans – Banks reduce your eligibility if you already have other EMIs (car loan, personal loan). Clear them to maximize your home loan amount.

3. Choose Longer Tenure – Extending tenure from 20 to 30 years increases borrowing limit.

4. Maintain Good Credit Score (750+) – Banks favor applicants with high creditworthiness and may even offer better interest rates.

5. Declare Additional Income – Bonus, rental income, or side businesses can be considered by lenders.

Why Interest Rate Matters

The example here uses 7.45% interest rate. Even a small change in interest rate can impact eligibility. For instance:

• At 7.45%, EMI for ₹1 crore loan is ~₹80,000.

• At 8.5%, EMI increases, reducing how much loan you qualify for.

Hence, always compare home loan offers from different banks before finalizing.

Benefits of Understanding Eligibility Before Applying

1. Saves Time – Know exactly what budget to aim for before house hunting.

2. Better Negotiation – Helps negotiate with developers when you know your financial strength.

3. Confidence in Approval – Applying within your eligibility range ensures smoother approval.

4. Avoids Over-Borrowing – Prevents stress by keeping EMIs manageable.

Real-Life Example

Imagine Ravi, an IT professional in Bangalore, earning ₹2 lakh take-home monthly. He wants to buy a house worth ₹2.5 crore.

• Eligibility for him (30 years): ₹2.16 crore loan.

• He needs to arrange ~₹34 lakh as down payment.

By understanding eligibility, Ravi can plan his savings and make the right buying decision.

Final Thoughts

Home ownership is a dream, but managing it smartly is a responsibility. RBI’s 75% rule protects borrowers from financial stress while ensuring they can still live comfortably.

Whether your salary is ₹1 lakh or ₹5 lakh, the key is to strike a balance between affordability and aspiration. Remember, increasing tenure boosts your eligibility, but always calculate the total interest outgo.

With home loan eligibility at 7.45%, you now have a clear picture of how much you can borrow and plan your next big step confidently.