Home Loan with Rs. Buying a house worth Rs 1 crore is a significant financial commitment, but with proper planning, it can be achieved.
Rs. Buying a house worth Rs 1 crore is a significant financial commitment and most home buyers in India rely on home loans to make this dream a reality. However, before taking this step it is important to understand how much salary you need, the loan eligibility process and other related costs. In this guide, we’ll break down how much you need to earn to comfortably afford the loan and related expenses. Let’s explore the key factors including your monthly EMI repayment and overall financial requirements.
Key assumptions for calculation
The following assumptions are being made to give an idea of the minimum salary required to get a loan for a house worth Rs 1 crore.
- House Price: Rs. 1 Crore (Rs. 1,00,00,000).
- Home Loan Amount: Banks generally lend up to 80% of the property’s value. Rs. For a 1 crore home, this means a loan of Rs. 80 lakhs (Rs. 80,00,000) will be.
- Down Payment: You need to arrange 20% of the property price yourself. This amount is Rs. 20 lakhs (Rs. 20,00,000).
- Loan Period: A longer loan tenure gives smaller EMIs and here we will assume a 30-year loan tenure (360 months).
- Interest Rate: The interest rate for home loan is around 8.5% per annum (subject to change based on market conditions).
- EMI Affordability: To ensure loan affordability, most banks recommend that your monthly EMI should not exceed 40% to 50% of your monthly income.
EMI calculation
Now, let’s calculate the monthly EMI for a loan of Rs 80 lakh.
Formula for EMI
The EMI formula is: P x R x (1+R)^N / [(1+R)^N-1]
P: is the principal loan amount
R: is the monthly interest rate, which is the annual interest rate divided by 12
N: Loan tenure in months
Where:
P = Loan Amount = Rs. 80,00,000
R = Monthly interest rate = Annual interest rate / 12
(So, 8.5% annual interest = 8.5/100 / 12 = 0.007083 monthly)
N = Loan tenure in months = 30 years × 12 = 360 months
Using the formula, the EMI is Rs. 80 lakh per month for a loan of Rs. 61,500.
How much salary do you need?
Salary calculation for loan eligibility
Banks generally believe that 40% to 50% of your monthly income should go towards loan repayments. Rs. Based on an EMI of 61,500, here’s how we calculate the required monthly income:
If EMI is 40% of income, your monthly income should be at least:
Required monthly income = EMI/0.4
61,500/0.4 = Rs. 1,53,750
Annual Salary: If your monthly salary is Rs. 1,53,750, then your annual income will be:
Required annual salary= Rs. 1,53,750×12=Rs. 18,45,000
Other costs to consider
Down payment:
You will need 20 lakh rupees for down payment, which is 20% of the house price.
Stamp Duty and Registration:
Generally, stamp duty and registration charges are 6-8% of the property value. For a Rs 1 crore property, it would be around Rs 6-8 lakh.
Miscellaneous Expenses:
You may have additional expenses such as legal fees, maintenance, home furnishings and moving expenses.
summary
- Loan Amount: Rs. 80 lakhs (80% of Rs. 1 crore).
- Down payment: Rs. 20 lakhs (20% of Rs. 1 crore).
- Monthly EMI: Rs. 61,500 (for a loan of Rs. 80 lakh at 8.5% interest for 30 years).
- Minimum Monthly Salary: Rs. 1,53,750.
- Minimum Annual Salary: Rs. 18.5 lakhs.
Home Loan in India with Rs. Buying a house worth Rs 1 crore is a significant financial commitment, but with proper planning, it can be achieved. In order for you to comfortably afford the loan, you need to have a minimum annual income of Rs. 18.5 lakhs will be required.
Before making any decision, it is important to assess your financial stability, other obligations and long-term goals. If you’re ready, a 30-year loan tenure can make monthly EMIs more manageable, while helping you invest in a property that meets your needs.
By keeping your budget in mind and choosing the right loan option, you can take the necessary steps towards home ownership without overstretching your finances.