What is a Loan Eligibility Calculator?
A Loan Eligibility Calculator helps you determine the maximum loan amount you can borrow based on your income, existing financial obligations, age, and credit profile. It uses the same criteria that banks use to assess loan applications.
Key Factors Affecting Loan Eligibility
- Monthly Income: Higher income means higher EMI capacity and loan eligibility
- Existing EMIs: Current loan obligations reduce your available capacity for new loans
- FOIR (Fixed Obligation to Income Ratio): Banks typically allow 40-50% of income for EMIs
- Age and Retirement: Loan tenure is limited by years to retirement
- Credit Score: A score of 750+ qualifies for best rates and higher eligibility
How to Improve Your Loan Eligibility
- Pay off existing loans to reduce your FOIR ratio
- Improve your credit score by paying bills on time
- Add a co-applicant (spouse/parent) to combine incomes
- Choose a longer tenure if your age permits
- Reduce credit card utilization below 30%
Frequently Asked Questions
What is FOIR and why does it matter?
FOIR (Fixed Obligation to Income Ratio) is the percentage of your income going towards fixed obligations like EMIs. Banks typically allow 40-50% FOIR. Lower FOIR means higher eligibility as it shows you have capacity for new EMIs.
How does credit score affect loan eligibility?
A credit score of 750+ is considered excellent and qualifies for best rates and highest eligibility. Scores below 650 may significantly reduce your loan eligibility or lead to rejection. Good scores also mean you can get better interest rates.
Why does age affect my loan eligibility?
Banks want the loan to be repaid before retirement. If you are 50 and retirement age is 60, your maximum tenure is 10 years instead of 30. This shorter tenure means higher EMI for the same loan amount, effectively reducing eligibility.
Is self-employed eligibility different from salaried?
Yes, self-employed individuals typically get 5-10% lower eligibility due to income variability. Banks require 3 years of ITR, business stability proof, and may apply stricter FOIR limits.