"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."
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.
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:
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.
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.
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.
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:
Or
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:
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:
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
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.
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:
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.
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.
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.
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.
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:
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!
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.
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.
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.
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.
