Eligibility criterion: Two most important factors that decide the amount of home loan are your income and repayment capacity. Factors such as qualification, age, dependants, assets, liabilities, credit report, savings and the stability and consistency of your occupation also matter. The amount can also be a specific percentage of the cost of the property.
How is repayment capacity calculated? Your ability to repay is based on your income and expenditure pattern. It is assumed that you need around 40% of your income as living expenses. So if you get Rs60,000 per month and spend Rs25,000 as living expenses and Rs20,000 on heads, such as a car loan, your eligibility will be calculated on the remaining Rs15,000.
The formula: Home loan eligibility=monthly savings/equated monthly instalment (EMI) per lakh x 1 lakh. For a home loan of Rs1 lakh taken for 20 years at 10% interest rate, the EMI would be around Rs965. So, in this case, the eligibility would be 15,000/965 x 1 lakh, or Rs15.54 lakh.
How can you increase loan amount? You can club incomes of your spouse, children, parents or siblings to increase your eligibility. The longer the tenure, bigger the eligibility.