What Should be the Minimum Salary Required for Home Loans?

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With the rising real estate prices in India, a Home Loan is the only way through which most people fulfil their dream of buying a home. To better meet the needs of the borrowers, lenders in India now offer different types of Home Loans.

One of the most vital Home Loan eligibility requirements is your monthly income. Read this post to know more about the minimum take-home pay, to be eligible for a housing loan.

Home Loan providers approve loan applications based on a fixed set of eligibility requirements. The monthly income of the applicant is one of the most vital considerations in the approval process. Any lender would like to ensure that with your monthly income, you can comfortably pay off the loan EMIs, while also taking care of your other expenses and liabilities.

So, what should be the minimum take-home pay for a Home Loan applicant after deductions? What are the other Home Loan eligibility requirements? Take a look-

How do lenders analyse the monthly income of salaried Home Loan applicants?

The salary of employees is commonly stated as their gross salary. The gross salary amount is a combination of:

• Basic salary
• Leave Travel Allowance (LTA)
• Medical allowance
• Vehicle allowance
• House Rent Allowance (HRA)
• Other allowances based on the policies of the employer.

All of these components together make up the CTC or Cost to Company. However, this is not the take-home salary of the employee. As per company policies, the net salary is calculated after deducting the amount towards EPF contribution, TDS, and other deductions. So, the lenders consider the take-home salary and not the gross salary or CTC for Home Loan approval.

What is the minimum take-home pay for Home Loans?

While the minimum take-home pay for a Home Loan can vary between lenders, most loan providers prefer salaried employees and professional/non-professional self-employed applicants to have a monthly income of Rs 25,000 to Rs 40,000. Also, the Home Loan EMI should not be more than 50% of the monthly income.

Apart from the monthly income, lenders also consider factors, such as the employment history, employer, existing loans, etc., before approving the loan application of a salaried applicant. For a Home Loan for the self-employed, business/practice continuity, income history, tax returns, etc., are taken into consideration.

What is the importance of credit score for a Home Loan?

The credit score is a 3-digit score that demonstrates an individual's creditworthiness. A higher score suggests that a person has a responsible repayment behaviour and healthy credit history. Apart from the monthly income being higher than the minimum requirement, it is also essential for an applicant to have a credit score of or above.

How does one know if you are eligible for a Home Loan?

Whether you are looking for a Home Loan for a salaried person or a self-employed person, you can always check the eligibility requirements of the lender to confirm your eligibility. Alternatively, most top lenders in India now have Home Loan eligibility calculators on their websites.

You can use the online tool to know how the lender analyses your eligibility and whether you are eligible for the loan.

Fulfilling the Income Criteria of Home Loan Providers

As a borrower, it is essential to choose a Home Loan amount whose EMI you can comfortably pay every month, without delays or defaults. Such delays and defaults could lead to penalties and negatively impact your credit score.

Choose a lender carefully and check the eligibility requirements before applying, to avoid rejections and ensure that your Home Loan is approved, at the earliest.

Terms and Conditions apply.

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