With housing loan interest rates at an all-time low, more and more people are considering buying or building their own home. In order to do so, however, they need to be eligible for a home loan. While banks and other financial institutions have their own calculators to determine eligibility, it is sometimes useful for the borrower to calculate this manually in order to determine the best approach to securing a loan that is affordable and within their budget.

Here are the steps involved in calculating home loan eligibility manually:

  1. Calculate your monthly income

The first step in determining your home loan eligibility is to calculate your monthly income. This includes your salary, rental income (if any), any other expected earnings, and other allowances. The best way to determine your income is to look at your latest payslip.

For instance, if you have a monthly salary of INR 50,000 and a rental income of INR 10,000, your total monthly income would be INR 60,000.

2 Calculate your monthly expenses

Once you’ve determined your monthly income, the next step is to calculate your monthly expenses. This includes rent, utility bills, groceries, travel expenses, and all other regular and recurring expenses. You need to subtract this from your monthly income to determine how much money you can allocate towards the loan repayment.

For instance, if your monthly expenses come to INR 25,000, your available surplus would be INR 35,000.

  1. Check for existing loans

If you already have other loans, you need to subtract the total amount of the loan EMI from your income. This will help you understand how much surplus income you have to allocate towards your home loan repayment.

  1. Calculate the EMI

The next step is to calculate the EMI (Equated Monthly Installment) payable for the housing loan you plan to apply for. You can use the EMI calculator available on various lenders websites to do this. The EMI calculator takes into account your income, loan amount, and tenure to estimate the EMI payable.

  1. Check the eligibility criteria

All banks have their own eligibility criteria for granting housing loans. These may include your age, income, credit score, and other factors. You need to check the eligibility criteria of the bank you plan to apply to before you proceed.

  1. Calculate the loan amount

Once you know how much EMI you can afford, you need to calculate the loan amount you can apply for. Banks usually give loans up to 80% of the property value. You can use this as a benchmark to calculate the loan amount you can apply for.

For instance, if you plan to buy a property worth INR 70 lakhs, the maximum loan amount you can expect to get would be INR 56 lakhs.

  1. Check the loan tenure

The loan tenure is the duration for which you can avail of the housing loan. Banks usually offer a tenure ranging from 5 to 30 years. You need to select a tenure that will ensure that the EMI payable is within your budget.

You can use the EMI calculator to calculate the EMI payable for different loan tenures. This will help you determine the most suitable tenure for your loan.

  1. Check the interest rate

The housing loan interest rate is the rate at which the bank will lend you the loan. It is important to check this before you apply for the loan. You need to select a bank that offers the lowest interest rate for your loan. You can compare interest rates across various banks to find the best deal.


Calculating your home loan eligibility manually can help you understand how much loan you can avail and how much EMI you will have to pay. This can help you make an informed decision when selecting a housing loan. Remember to check the eligibility criteria, interest rates and loan tenure of various banks before you apply. Keep your monthly budget in mind to ensure that the EMI payable is affordable. By following these steps, you can make the right decision and achieve your dream of owning your own home.


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