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Personal Loan
Planning a home makeover? Calculate your home renovation loan amount
Key Takeaways
Before finalising your renovation budget, check how much you qualify for under a home renovation loan based on income, credit score, and existing EMIs.
- Plan your EMI carefully when choosing a personal loan for home improvement so that the monthly repayment stays comfortable and does not strain your long-term finances.
- With competitive rates, flexible tenures, zero foreclosure charges, and a simple way to apply for a loan online, FIRSTmoney personal loan offers a convenient solution for funding your home renovation.
You have got it all planned: the modular kitchen with better storage, the bathroom upgrade with anti-skid tiles, and perhaps even turning that unused balcony into a cosy sit-out. Since you do not want to dip into emergency savings or rely on credit cards, you consider a home renovation loan.
But before you finalise contractors, there is one question you want answered. How much loan amount are you eligible for? Knowing your limit for home remodel loans in advance helps you plan within your comfort zone. Let’s explore how much personal loan you can get for home improvement and how you can plan your equated monthly instalments (EMIs) smartly.
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What determines your eligibility for home improvement loans?
Before you start interviewing contractors or picking out paint swatches, you must understand where you stand in the eyes of a lender. Eligibility is the filter that determines not only whether you get the money but also at what cost.
Here are the key factors that shape the eligibility for your home remodel loans:
1. Age and career stage
Most lenders prefer applicants aged 21 to 60. If you are younger, you have the advantage of a longer repayment window. But if you are closer to retirement, lenders prioritise high income stability and a lower debt-to-income ratio to ensure the home renovation loan is closed before you retire.
2. Income stability and employment type
Whether you work at a multinational corporation or are self-employed, lenders look for a steady stream of income to ensure you can service the EMIs. Usually, a minimum monthly income threshold is set, varying by city and lender.
3. Credit score
This is perhaps the most critical factor. A credit score of 700 or above signals that you are a disciplined borrower. A high score not only eases the approval process for home remodel loans but can also help you negotiate a lower interest rate.
4. Debt-to-income ratio
Lenders look at how much of your monthly income is already committed to existing EMIs. If a large portion of your income goes toward car loans, personal loans, or credit card dues, your chances of getting approved for a home repair loan are lower.
Eligibility for FIRSTmoney personal loan
Be salaried or self-employed
Be in the age group of 21 to 60
Have a stable monthly income
Have a CIBIL score of 710 and above
How much home renovation loan amount can you actually get?
The exact eligible amount for a home improvement loan depends on a combination of the following factors.
1. Income level
Your monthly income is the starting point. Lenders assess your net take-home income to determine how much EMI you can comfortably manage. Higher income will help you qualify for a higher amount.
One common method to calculate your personal loan eligibility is the multiplier method, where your monthly income (after deducting existing obligations) is multiplied by 27 to estimate the loan amount for a 60-month tenure.
Another method is the Fixed Obligation Income Ratio (FOIR), where banks analyse your account statements, creditworthiness, EMIs, and other monthly expenses. Based on this financial assessment, the bank decides the final loan amount you qualify for.
2. Repayment capacity
Lenders determine the final loan amount by assessing your existing financial commitments. If a considerable portion of your income is already allocated toward ongoing EMIs, the loan amount may be reduced to keep your total monthly repayment burden within acceptable limits.
For example, if your take-home salary is ₹80,000 and your existing EMIs are ₹20,000, many lenders may cap your total EMI outgo at around 50% of your income. That means your total EMIs should not exceed ₹40,000. In this case, you may be eligible for a new EMI of up to ₹20,000, subject to the lender’s policy and your credit profile.
3. Credit profile and CIBIL score
Your credit score and repayment history influence the amount approved. Most lenders prefer a CIBIL score of 750 or above, as it reflects responsible credit behaviour.
A higher score increases the chances of a higher sanctioned amount and better interest rates. A lower score may lead to a reduced loan offer or stricter terms, as lenders factor in higher perceived risk.
4. Employment type and income stability
Whether you are salaried or self-employed also plays a key role in determining your eligibility.
Salaried individuals with a stable job and consistent monthly income may find it easier to qualify for a personal loan. Self-employed applicants can also apply, but lenders usually assess the stability of their business income, financial records, and income consistency before approving the loan amount.
5. Age of the applicant
Age is another important eligibility factor. Most lenders require applicants to fall within a specific age bracket, usually between 21 and 60 years at the time of loan maturity.
Younger borrowers may qualify for longer repayment tenures, while applicants closer to retirement may receive a shorter tenure and a comparatively lower loan amount.
6. Lender policies
Each lender has its own risk assessment model, minimum and maximum loan limits, and eligibility criteria. Some may cap personal loans for home improvement at a fixed amount. Others may offer higher limits based on your profile and relationship with the bank.
What is the documentation requirement and application process
Home improvement loans usually have simple documentation. Unlike home loans, renovation loans structured like personal loans often do not require property valuation or collateral. You will generally need the following documents:
- KYC documents (PAN and Aadhaar)
- Address proof
- Income proof (salary slips, bank statements, ITR for self-employed)
- Employment or business proof
However, some personal loans, such as IDFC FIRST Bank FIRSTmoney, do not require any documents to be uploaded. You only need your PAN and Aadhaar number to apply for, and show your original PAN card during your video KYC.
You can apply for a FIRSTmoney personal loan in just five simple steps:
Step 1- Click on ‘Apply Now’
Step 2- Register using your basic details
Step 3- Choose your loan preferences including amount and EMI plan
Step 4- Link your bank account where you want to receive the funds
Step 5- Complete video KYC by showing your PAN card
The digital-first process speeds up approval and disbursement. This speed allows you to start renovation work without much waiting.
Tips to improve your eligibility for a home renovation loan
Planning your repayment is just as important as securing the loan. Here’s how you can plan your eligibility and EMIs:
1. Maintain a healthy credit score
Pay your bills in full and avoid taking multiple small loans just before applying for a large home remodel loan.
2. Reduce existing debt
If you have a small gadget EMI or a lingering credit card balance, pay it off. This lowers your fixed obligation-to-income ratio (FOIR) and instantly increases your borrowing capacity.
3. Choose a realistic loan amount and tenure
Don’t just borrow the maximum. Only borrow what you need for the project, plus a small buffer for contingencies. This keeps your EMI manageable and reduces the total interest you pay.
4. Opt for a comfortable EMI tenure
Select a repayment tenure that balances affordability and cost. A longer tenure lowers your monthly EMI but increases overall interest outgo. A shorter tenure saves on interest, though the EMI will be higher. Assess your monthly budget and future financial commitments before deciding.
5. Add a co-applicant
If your spouse is also working, applying for a home renovation loan jointly can increase the total loan amount, as both incomes are considered. However, this option is not provided by all lenders, and terms for the same may vary depending on lender policies.
6. Avoid multiple applications
Applying to multiple lenders simultaneously may negatively affect your credit score. Research first, then apply to your preferred lenders.
Why IDFC FIRST Bank’s FIRSTmoney personal loan is the ideal option for your home transformation
IDFC FIRST Bank’s FIRSTmoney personal loan offers features suited to renovation financing needs. Here’s why it can be a preferred choice for home repair finance:
1. On-demand loan, flexible usage and repayment
Renovation expenses are usually spread across stages. An on-demand loan lets you withdraw funds as needed, whether for civil work, materials, or finishing, so you pay interest only on the amount you use. This keeps your renovation budget more manageable and cost-efficient.
Additionally, IDFC FIRST Bank offers flexible repayment options with FIRSTmoney, allowing you to plan your finances according to your personal situation. This flexibility helps you plan your EMIs comfortably while managing other commitments.
2. Competitive interest rates and flexible tenures
IDFC FIRST Bank’s FIRSTmoney personal loan offers interest rates as low as 9.99% p.a. These competitive rates help keep your home improvement loan affordable. You can choose a repayment tenure that aligns with your monthly cash flow, ranging from 9 to 60 months.
3. Zero foreclosure charges
If you receive a bonus or have extra savings, you can pay off your FIRSTmoney personal loan early without worrying about any foreclosure penalties.
A better home begins with better planning
Before picking tiles or finalising layouts, assess what your income can comfortably support. A well-structured home renovation loan should enhance your living space without adding financial pressure. Borrow thoughtfully and plan repayments wisely.
Explore FIRSTmoney personal loan today and take the next step towards responsibly upgrading your home.
Frequently Asked Questions
1. Can I claim tax benefits on a home renovation loan?
Tax benefits depend on the loan type. Personal loan interest usually does not qualify for tax deductions. But home loan top-ups for structural improvements may be eligible under applicable sections of the Income Tax Act. Please consult a tax advisor for more information.
2. Is a renovation loan better than a home loan top-up?
A renovation loan offers faster approval and minimal paperwork, while a home loan top-up may provide lower interest rates if linked to your existing mortgage.
3. Does renovating increase property value?
Yes, upgrades like modular kitchens, modern bathrooms, and improved flooring can significantly enhance resale value and buyer appeal.
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.
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