How Much Home Loan Can I Get On A 40000 Salary

"Looking for a home loan for 40000 salary? Find out how much home loan can I get on 40000 salary, eligibility criteria, and the best loan options available."

How Much Home Loan Can I Get On A 40000 Salary
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Anjali Singh

6 mins read

Published: 27 February 2025

Updated: 13 March 2025

Buying a home is a dream that everyone nurtures. However, it is not really easy to invest in one unless you can secure a home loan. Do you know that the amount of home loan a bank or financial institution will offer you depends on your income? So, if you earn ₹40,000 as a salary, knowing your loan potential can help you set realistic expectations. 

Have you been wondering how much home loan can I get on 40000 salary? This article is a comprehensive guide that will give you a clear idea about what to expect. 

Importance of Salary for Home Loan Approval with 40000 Salary

Before discussing the amount that you can get as a home loan for 40000 salary, take a look at why salary plays a vital role in loan approval:

1. Ability to Repay

If you’re looking for an answer to – how much home loan can I get on 40000 salary, you must understand that it is directly proportional to your ability to repay. When you apply for a home loan, the bank or financial institution assesses your salary because it reflects your ability to repay. The higher the income, the higher the likelihood of your home loan being approved. 

2. Loan Amount 

Your salary also plays a crucial determinant in the amount of home loan the lender is likely to approve. Since your income determines if you will be able to repay the loan, hence it is used as a judging factor to assign you a loan amount. If you have a higher income, you have a higher chance of being sanctioned an amount that will meet your requirements. 

3. Interest Rate on Home Loan

Do you know that the interest rate on your home loan also depends on your salary? If you have a low salary, the lender is likely to charge a higher interest rate on your home loan and vice versa. This is because higher salaries indicate better repayment ability and lower chances of defaulting on payments. 

Calculating Home Loan Eligibility for ₹40000 Salary

Usually, banks and financial institutions sanction an EMI that is about 40-50% of your monthly income. So, if you secure a home loan for 40000 salary, your EMI will be:

  • 40% of ₹40000 = ₹16000 

Or 

  • 50% of ₹40000 = ₹20000

Now, along with these figures, let us take the standard Debt Burden Ratio (DBR) of 70% and a 9% interest rate (ROI) into consideration. Here is a breakdown of home loan eligibility depending on the tenure you select: 

  • For 10 years: ₹20-22 lakhs
  • For 15 years: ₹26-28 lakhs
  • For 20 years: ₹30-32 lakhs

Know the Other Factors Impacting Home Loan Eligibility with 40K Salary

Is the question, “how much home loan can I get on 40000 salary?” continuously pestering you? Well, be informed that there are some other factors other than your income that can affect your eligibility for a home loan. These include:  

1. Credit Score

Your credit score represents your financial status and is taken into account when you apply for a home loan. A credit score of 700 or above indicates a good payment history and healthy financial habits. This can enhance your chances of acquiring a home loan.

2. Existing Debts and Financial Obligations

Before approving a home loan, the bank verifies if you have any existing loans or unpaid credit card dues. This affects the amount of home loan that will be approved for you, as pending commitments reduce your ability to repay.

3. Down Payment

Agreed that when you apply for a home loan, a significant part of it is paid by the lender. However, you should pay an initial amount, which is known as the down payment. When you make a high down payment, it shows your commitment and reduces the loan amount that you need. 

4. Employment Status

Just like your income, the company you work in also plays an important role in determining your home loan eligibility. If you work in an MNC or a reputed company, you are considered to be a more reliable borrower. 

5. Your Age

Usually, when you apply for a home loan, the banks check your age to see how long you will continue to work before retiring. If you avail of a home loan many years before you retire, you are likely to be sanctioned a significant amount. 

Discover Ways to Improve Your Home Loan Eligibility

While looking for a home loan for 40000 salary, if the bank tells you that you are not eligible for one, fret not! Here are some steps you can take to improve your chances of securing a home loan: 

1. Enhance Your Credit Score

In order to be eligible for a home loan, you should have a minimum credit score of 700. If your credit score is low, you can increase it by paying your debts on time. Make sure that you do not default on any repayments, as this can have an adverse effect on your credit score. 

2. Reduce Existing Debts

If you are not able to get a home loan due to existing debts, you must try to clear these off first. This will improve your repayment ability and, thereby, your financial credibility. 

3. Opt for a Longer Tenure

If you opt for a longer repayment tenure, your monthly instalments or EMI will come down considerably. This will not only reduce the financial burden on you but will also improve your chances of getting a home loan. 

4. Co-Apply for Home Loan

If you have a double-income family, you can apply for a joint home loan. This is a great idea as your consolidated salaries would make you eligible for a higher amount of home loan. 

Know the EMI for Different Home Loan Amounts

Getting a home loan approval from the bank is only half the battle won. While you may be able to buy that dream home, you also have to make sure that you repay the amount timely. Wondering what EMI you will be paying for a home loan for 40000 salary? 

Banks and financial organizations use a formula to calculate the EMI, which is as follows: 

EMI = P x R x [{(1 + R)^N} / {1 – (1+R)^N}]

Here, P is the Principal Loan Amount

          R is Monthly Interest Rate [(annual rate/12)/100]

          N is the Total Months of Loan Tenure

Let us understand this with an example. If you take a home loan of 3200000 at an interest rate of 8.5% for 20 years, here’s how your EMI will be calculated:

R = [(Annual rate /12)/100]= (8.5/12)/100= 0.70/100= 0.0070N = 240

EMI = 3200000 × 0.00708333 × [(1 + 0.00708333)^240 / (1 - (1 + 0.00708333)^240)]
EMI = 3200000 × 0.00708333 × [5.44123824 / 4.44123824]
EMI = 3200000 × 0.00708333 × 1.22516243
EMI =  ₹27102

If this seems too complicated, you can also use the EMI calculator, which is available online on the websites of all leading banks. 

Additional Costs When Applying for Home Loan with 40K Salary

While you are busy considering “how much home loan can I get on 40000 salary,” consider the other costs that can impact your overall budget. These include: 

1. Down Payment

Banks expect you to pay at least 10-25% of the property’s value as a down payment. If you can pay a larger amount, you will need a smaller loan, which has a higher chance of getting approved. 

2. Processing Fees

As the entire application for the home loan is taken care of by the banks, they charge a processing fee for their services. This is usually a small percentage of the approved home loan amount.

3. Insurance and Other Charges

While purchasing a home, you will have to pay for the insurance to protect it from any unforeseen incidents. This is not included in the home loan. Additionally, you will be charged extra for documentation and administrative fees. 

4. Stamp Duty and Registration Fees

When you buy a property in your name, you are supposed to give the government a one-time fee. This could vary based on the state in which the property is located and its cost.

Avoid These Common Mistakes When Applying for Home Loan

Securing a home loan is a breeze, with superior customer service and prompt processing provided by banks. But this can result in some errors that can ruin your peace of mind and leave you in a financially-strained position. So be careful to avoid these mistakes:

  • Borrow an amount that you can easily pay back. Overstretching your budget may lead to missing EMIs. 
  • Always take the hidden costs, like processing fees, registration fees, insurance, etc., into account. 
  • Understand the prepayment terms to avoid penalties for early repayment. 
  • Do not neglect your credit score, as a low score can lead to a higher interest rate. 

Conclusion

If you are concerned that you might struggle to obtain a home loan for 40000 salary, this article should have provided you with a better understanding. Based on your credit score, current debts, and loan term, you can obtain a home loan to make your dream of investing in a house come true. So, if you have been thinking of purchasing your dream home, why delay? Begin planning today.  Use our Home Loan EMI Calculator to get a fair idea of the payments. Apply for a home loan with My Mudra!

Frequently Asked Questions
How much home loan can I get with a ₹40,000 monthly salary? +

Most banks offer loan amounts up to 60 times your monthly salary, so you can get around ₹20–30 lakhs, depending on your credit score, expenses, and liabilities.

 

Which banks offer home loans for a ₹40,000 salary? +

Major banks like SBI, HDFC, ICICI, Axis Bank, PNB, and Bank of Baroda offer home loans for this salary range. NBFCs like Bajaj Finserv and LIC Housing Finance also provide home loans.

Can I get a home loan without a co-applicant on a ₹40,000 salary? +

Yes, if your income and credit profile meet the bank’s eligibility criteria. However, adding a co-applicant (like a spouse) can help increase your loan eligibility.

 

Does my credit score affect the home loan approval on a ₹40,000 salary? +

Yes, a credit score of 700+ improves approval chances and helps you get lower interest rates. A lower score may lead to a higher interest rate or loan rejection.

 

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Anjali Singh Assistant Manager
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Hey there, I'm Anjali Singh. With over 6 years of experience in finance, I specialize in creating content on banking, loans, and financial planning. My goal is to simplify complex financial topics and help readers make informed decisions through my articles.

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