1. What is Loan Eligibility?

Loan eligibility determines how much money you can borrow based on your income, existing debts, and the lender's criteria. The calculation helps potential borrowers understand their borrowing capacity before applying for a home loan.

2. How Does the Calculator Work?

The calculator uses the loan eligibility formula:

Where:

• \( Income \) — Your monthly income in currency
• \( Multiplier \) — Lender's multiplier (typically 3-5 times income)
• \( Debts \) — Your monthly debt obligations in currency

Explanation: The formula calculates your maximum borrowing capacity by multiplying your income by a factor and subtracting existing monthly debt payments.

3. Importance of Loan Eligibility Calculation

Details: Knowing your loan eligibility helps in financial planning, prevents loan application rejections, and ensures you look for properties within your budget.

4. Using the Calculator

Tips: Enter your accurate monthly income, the lender's multiplier (ask your bank), and all monthly debt payments (credit cards, car loans, etc.). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a typical multiplier value?
A: Most lenders use a multiplier between 3-5, but this can vary based on credit score, employment stability, and other factors.

Q2: What debts should I include?
A: Include all recurring monthly debt payments - credit cards, 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 additional funds for down payment (usually 10-20% of property value).

Q4: Are there other factors that affect eligibility?
A: Yes, lenders also consider credit score, employment history, property value, and your debt-to-income ratio.

Q5: Should I borrow the maximum eligible amount?
A: Not necessarily. Consider your lifestyle, future expenses, and ability to handle payments if interest rates rise.