How Much Home Loan Can I Get on a 25000 Salary?

Owning a home is a dream for many. Home loans help people with minimum incomes to make their home-ownership dream come true.

It is important to know the eligibility and criteria to get a home loan if you are earning a monthly salary of 25k. Dig into the blog till the end to find your answers.

How Much Home Loan Can I Get on a 25000 Salary?

If you are getting a salary of twenty-five thousand per month, you are eligible for a loan amount of Rs. 18.64 lakhs. The criteria include:

Having a CIBIL score greater than 650
Having more than three years of work experience
Age must be between eighteen and seventy years

The actual amount varies depending on the individual’s eligibility.

Aid of Home Loans

Home loans are tools that help one achieve homeownership. They help individuals purchase homes with small down payments. They are also liquid, have market stability, and contribute to economic growth.

Estimating Loan Amount

The first step to acquiring a home loan is understanding the minimum amount you can borrow and the favorable conditions that allow you to access it effortlessly.

Scenario 1: Minimum Eligibility

The lender calculates your debt-to-income ratio (DTI) to understand affordability. It is the ratio calculated by comparing the gross annual income of an individual to the debt payment. Make sure the DTI is below 36%.

The loan amount is conservative, and it is made sure that the buyer can manage to pay the loan amount with interest. Additionally, choosing a loan amount that requires a shorter period to complete the payment will increase the credibility and decrease the interest rates.

Scenario 2: Favorable Conditions

Having a consistent income, making a large amount of down payment, and having a good credit score can potentially increase your eligibility for fast loans.

Remember, these are just estimates. Before finalizing your loan amount, visit a bank or utilize an online calculator to see how much loan you can obtain.

Factors to Consider That Are Affecting Loan Eligibility

Certain considerations have an impact on acquiring loan eligibility. These factors that need to be considered include:

Loan-to-Value Ratio (LTV)

The loan-to-value ratio is a financial measurement that is used by lenders to calculate the risk of giving money depending on a mortgage. The value of the property is compared to the amount of the appraised loan. To calculate the LTV, you can find by using:

LTV ratio = mortgage amount/appraised property value.

Having a lower LTV ratio is important as it denotes that the borrower has an upper hand in the equity compared to the lender, indicating a lesser risk in the loan. To get a lower interest rate, the LTV ratio should be below 80%.

Credit Score

Credit scores denote the numerical representation and should lie between 300 and 850. The credit score is calculated depending on the history of credit scores, loans, and other financial needs.

Here is the credit score breakdown:

Excellent: A credit score at or above 800.

Good: A credit score that lies between 700 and 799.

Fair: The credit score should lie between 600 and 699. You are eligible to receive loans but with a higher interest.

Poor: Any credit score that is less than 500 is considered poor, and you may not be eligible for a loan.

Debt-to-Income Ratio (DTI)

DTI is a crucial factor that helps lenders determine your ability to pay debt. The gross monthly income to the debt monthly payments is calculated.

Having a lower DTI indicates that the larger part of the income available is sufficient for your living expenses and loan payments. Additionally, lower DTI indicates lower interest rates and better terms on loans.

Around 36% of DTI is considered favorable, and above 43% is considered least favorable.

Down Payment

A down payment is an amount paid upfront during the purchase of a house. The remaining amount, other than the down payment, is usually financed through a loan.

If the down payment is huge, then the amount you have to borrow as a loan will be drastically reduced. It helps to reduce interest costs, establishes financial strength, and builds equity.

As home ownership is considered, making a down payment within twenty percent is considered good.

Conclusion

In wraps, owning a house is a dream to many. Irrespective of the salary, there are certain conditions that an individual should meet to make the process effortless and get a home loan easily. This includes having a lower DTI, a high credit score, larger down payments, and a stable employment history.