I am a salaried individual with no current loan. Is there a way to know how banks evaluable my maximum home loan amount?
As a salaried individual if you apply for a home loan, banks check your financial credentials including your credit score. Your income, age, retirement age and any monthly financial obligations help the bank decide whether to offer you a loan or not. Once the bank considers you as eligible the final home loan amount is calculated using the formula Monthly Income X 50% - minus other liabilities if any / per lakh EMI.
Banks use several parameters to evaluate your maximum eligibility for a Home Loan. This will include your income, loans that you already hold, and your monthly outflow. They will measure these using your bank account statement. Most banks will ensure that your loan EMI doesn’t exceed 50% of your take home pay. This might go down if you have existing loans. The best way you to get a higher loan amount is by having a co-applicant for the loan.