Loan Eligibility Calculator

Before You Apply, Know What You Qualify For

Applying for a loan and getting rejected doesn't just waste time — it creates a hard inquiry on your credit report, which can temporarily reduce your credit score. Knowing your eligibility beforehand lets you apply confidently, negotiate from an informed position, and avoid unnecessary rejections.

This calculator uses the same fundamental formula banks apply — the FOIR method — to estimate the maximum loan you can qualify for based on your income, existing financial obligations, the interest rate you expect, and the repayment tenure you're targeting.

How Banks Calculate Loan Eligibility

Banks in India (and most other markets) use a metric called FOIR — Fixed Obligation to Income Ratio. The principle is simple: your total monthly debt obligations (including the new EMI you want to take) shouldn't consume more than a certain percentage of your take-home income.

Most banks set FOIR at 40–55% of net monthly income, though this varies by lender, loan type, and your credit profile.

Step-by-step calculation:

Step 1: Available income = Net Monthly Income − Existing EMIs/Obligations
Step 2: Maximum new EMI you can take = Available Income × 0.40 (FOIR limit)
Step 3: Eligible loan = Max EMI × [(1+r)ⁿ − 1] / [r × (1+r)ⁿ]

Where r = monthly interest rate, n = tenure in months (the standard EMI formula solved for principal)

Example:

• Take-home income: ₹80,000/month
• Existing car EMI: ₹8,000/month
• Available for new EMI: ₹80,000 − ₹8,000 = ₹72,000
• Max new EMI (40% FOIR): ₹72,000 × 0.40 = ₹28,800
• At 8.5% rate, 20-year tenure: Eligible loan ≈ ₹28,00,000

What Changes Your Eligibility

Income level: The primary driver. Higher take-home pay means a higher affordable EMI, which means more loan.

Existing obligations: Every current EMI directly reduces your available budget for a new one. Clearing a ₹10,000/month car loan before applying for a home loan can increase your home loan eligibility by ₹10–12 lakhs.

Interest rate: Lower rates mean more of each EMI goes to principal — which increases the loan amount the bank can offer for the same monthly payment.

Tenure: Longer repayment periods reduce each monthly EMI, allowing the bank to approve a larger total loan amount. A 30-year home loan qualifies you for significantly more than a 10-year loan at the same monthly commitment.

CIBIL / Credit Score: This calculator estimates eligibility based on financial ratios. Banks additionally factor your credit score — below 700 in India typically means rejections or higher interest rates even if FOIR is acceptable.

Eligibility vs. Affordability: Know the Difference

What you qualify for and what you should borrow are different questions.

Banks will lend you up to their calculated maximum. But taking the full eligible amount at a 40% FOIR means 40% of your take-home income goes to debt servicing every month — leaving only 60% for rent, food, utilities, education, healthcare, savings, and emergencies.

A more sustainable approach: Target an EMI that's 25–35% of take-home income, leaving headroom for life events, savings, and income fluctuations.

Strategies to Increase Your Eligibility

Pay off existing loans before applying. Even clearing a small personal loan or closing a credit card EMI increases your eligible amount noticeably.

Add a co-applicant with income. Banks combine incomes of co-applicants (typically spouses or parents). A ₹80,000/month applicant with a ₹50,000/month co-applicant is evaluated on ₹1,30,000 combined income.

Choose a longer tenure. A 25-year home loan versus 15 years roughly increases eligibility by 20–30% — though total interest paid increases substantially.

Increase your income documentation. Self-employed applicants who can document additional income streams may qualify for more than salaried applicants at the same net income level.

Related Finance Tools

• EMI Calculator — Calculate monthly payment for a specific loan amount
• SIP Calculator — Build a corpus to reduce the loan amount needed
• Compound Interest Calculator — Understand how savings grow alongside loan obligations
• Salary Tax Calculator — Calculate net take-home income before entering it here

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