1. What is Loan Eligibility?

The loan eligibility amount represents the maximum loan amount you may qualify for based on your income, existing debts, and the lender's multiplier. It helps you understand your borrowing capacity before applying for a home loan.

2. How Does the Calculator Work?

The calculator uses the loan eligibility formula:

Where:

• \( Income \) — Your gross monthly income
• \( Multiplier \) — Lender's risk assessment factor (typically 3-7x income)
• \( Debts \) — Your monthly debt obligations

Explanation: The multiplier represents how many times your income the lender is willing to loan. Higher income and lower debts increase eligibility.

3. Importance of Loan Eligibility Calculation

Details: Knowing your loan eligibility helps in financial planning, prevents unnecessary credit inquiries, and sets realistic expectations when house hunting.

4. Using the Calculator

Tips: Enter your gross monthly income (before taxes), the lender's multiplier (ask your bank or use standard 5x), and all monthly debt payments (credit cards, car loans, etc.).

5. Frequently Asked Questions (FAQ)

Q1: What is a typical multiplier value?
A: Most lenders use 3-7 times your monthly income, with 5 being common for stable incomes with good credit.

Q2: What debts should I include?
A: Include all monthly debt obligations - credit card minimums, car loans, student loans, personal loans, and other mortgages.

Q3: Does this include down payment?
A: No, this calculates the loan amount only. You'll typically need 10-20% of the home price as down payment separately.

Q4: What other factors affect loan approval?
A: Credit score, employment history, property value, and debt-to-income ratio (should be below 43% typically).

Q5: How can I increase my eligibility amount?
A: Increase income, pay down debts, improve credit score, or find lenders with higher multipliers.