How Many Home Loans Can a Person Take in India?

Buying a second home

In India, the dream of owning a home is a common aspiration, driving many to explore the realm of home loans as a means to this end. A frequently asked question by prospective borrowers is either “Can I take 2 home loans” or about the number of home loans one can avail of. The simple answer is that there is no statutory limit to the number of home loans a person can take in India. However, the approval of multiple home loans depends on various factors, including the borrower's income, repayment capacity, credit history, and the lender's policies.

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Key Considerations for Multiple Home Loans

1. Income and Repayment Capacity

The most critical factor that lenders consider is the borrower's ability to repay the loan. Banks and other financial institutions assess the applicant's income, existing liabilities, and other financial commitments. It is advisable to keep your Fixed Obligation to Income Ration (FOIR) 40% or less in case you want to apply for a second home loan. A FOIR below 40% signals to lenders that you have the financial capacity to handle another monthly installment.

2. Credit Score

A healthy credit score (typically above 750) is crucial for the approval of any loan. It reflects the borrower's creditworthiness and repayment history. Applying for multiple home loans might affect your credit score due to the increased credit inquiry and liability.

Suggested read: Home Loan with a Low Credit Score

3. Purpose of the Property

Lenders also consider the purpose of the property being financed. Whether the loan is for a self-occupied property, an investment, or a commercial property can influence the lender's decision. Having a clear purpose and a repayment plan increases the chances of loan approval.

4. Lender's Policy

Each lender has its own set of policies and criteria for loan approval. Some may have restrictions on the number of loans or the total amount that can be borrowed by an individual.

Managing Multiple Home Loans

While there is no legal restriction on the number of home loans, managing multiple loans requires careful financial planning. Here are a few tips:

  • Assess Financial Stability: Ensure that you have a stable income and sufficient savings before taking on additional financial burdens.
  • Consider Loan Consolidation: If managing multiple EMIs becomes challenging, consider consolidating your loans into one with a better interest rate.
  • Maintain a Good Credit Score: Regularly monitor your credit score and maintain a good repayment history to improve your creditworthiness.
  • Seek Professional Advice: Financial advisors can provide valuable insights into managing loans and investments efficiently.

Suggested read: Second Home in India

In conclusion, while Indian regulations do not limit the number of home loans a person can take, the approval and management of multiple loans depend on the individual's financial health and the lender's criteria. It's essential to approach borrowing with caution, understanding the responsibilities and risks involved. With prudent financial planning and disciplined repayment, managing multiple home loans can be a viable strategy for achieving your property ownership goals in India.

FAQs About How Many Home Loans Can a Person Take in India?

In India, there is no specific limit on the number of home loans that are eligible for tax exemption. You can claim tax benefits for multiple home loans under the Income Tax Act. For the interest component, tax deductions can be claimed under Section 24, and for the principal repayment, deductions can be claimed under Section 80C.

Yes, a person can take two or more home loans in India, subject to their repayment capacity, credit score, and lender's policy.

Yes, there can be 3 applicants for a home loan, typically as co-applicants. This is common among family members looking to increase loan eligibility by pooling their incomes.

Yes, you can get tax benefits on two home loans. Tax benefits on the interest paid can be claimed under Section 24 for both loans. The principal repayment on both loans can be claimed under Section 80C within the overall limit of INR 1.5 lakhs.

The amount of home loan you can get depends on various factors including your FOIR (Fixed Obligation to Income Ratio), credit score, and other existing financial obligations. Generally, banks consider 40-50% of your monthly income for EMI payments. Roughly, you might be eligible for a loan amount where the EMI does not exceed INR 28,000 to INR 35,000, considering other factors are favorable.

Banks typically offer home loans ranging from 40 to 60 times of your monthly income or up to 6 times your annual income, depending on the lender's policy, your creditworthiness, and other financial commitments.

Published on 13th February 2024