Minimum Salary Requirement for Home Loan in Dubai
Having the perfect home curated upon your style and preference is the ultimate dream that draws millions of people to invest in the real estate. But, with the competitive market and soaring prices, managing the finances of your dream house on your own can be burdensome for most investors and buyers.
This is where home loans come to your aid. Dubai has a wide array of banks that provide sufficient home loans to interested investors and buyers and help them make their dreams a reality. However, securing a loan requires you to check certain boxes. Primary among them is your salary.
To help you figure out the minimal salary you need to get a home loan in Dubai, we have provided this guide for you wherein you will find everything related to the said topic, including the various factors that affect home loan eligibility in Dubai and the documents you need to apply for a mortgage loan.
Why should You Invest in Dubai’s Real Estate Market?
Before we get into the nitty-gritty of the minimal salary required to procure a home loan in Dubai, let us look into some of the reasons why one should invest in Dubai’s real estate market.
Strategic Location
Without a doubt, the strategic advantage that Dubai has due to its geographical location makes it a city worthy of investment from a global perspective. It is at the crossroads of three continents- Asia, Africa, and Europe, and serves as the gateway to the Middle East.
Needless to say, the business-friendly environment of the city along with its relevance to international trade guarantees employment in huge proportions and helps maintain economic stability.
High Return on Investment (ROI)
Dubai is known for its high Return on Investments (ROI), which is why it is a safe haven for investors from around the world. The high rental yields make investing in this city a smart decision.
Areas such as Downtown Dubai, Business Bay, Dubai Marina, Palm Jumeirah, International City, Jumeirah Beach Residence (JBR), Jumeirah Village Circle (JVC), Jumeirah Lake Towers (JLT), Dubai South, and Al Furjan, are among the best areas to invest in Dubai.
Valuable Visa Options
The Government of the UAE has led several initiatives to foster positive relations with foreign nations. Primary among them is the launching of various rewarding visa options that offer long-term residencies in the country, and by extension, Dubai.
The UAE Golden Visa allows you long-term residency through various ways including investing in properties in Dubai worth more than AED 2 million. The UAE Blue Visa rewards people who have made significant positive contributions to the environment. The UAE Green Visa is to promote freelancers, self-employed individuals, skilled employees, and investors. It allows its holders to sponsor themselves without requiring a UAE national or employer sponsor. This makes it extremely easy for foreign nationals to secure long-term residencies in the city.
Immense Taxation Benefits
The tax-free environment of Dubai makes it a prime area for those who don’t want to expend their income on unnecessary taxes. You are not subjected to taxes on income and capital gains in Dubai. This provides an increased opportunity for liquidity for investors.
This is one of the primal reasons why so many expats put Dubai on top of their list to invest in. Without the worry of paying too many taxes, you tend to save more and secure your finances better.
Quality Standard of Life
Dubai is the epitome of urban and modern life. The architecture of the city is breathtaking to begin with, with its skyline being one of the most majestic in the world. With a natural landscape beauty, you will be privy to real estate wonders in the city.
In addition, the access to bespoke amenities and quality education and healthcare makes it an ideal place for families to thrive. In addition, the low crime rate makes it one of the safest places in the world. Overall, the quality of life in the city is unparalleled and of the highest stature.
Minimum Salary Requirements for Home Loans in Dubai
Undoubtedly, the biggest concern one has while securing a loan is how much minimum salary in Dubai per month they need to earn to make themselves eligible for the loan they desire.
Banks check your salary to figure out whether you can make the monthly payments on time without any constraints. You need to have a sufficient amount of salary to essentially cover the loan repayments. Having a substantial and steady source of income will increase the odds of you obtaining a mortgage loan in Dubai.
Figuring out the minimum salary requirement to procure a home loan in Dubai requires you to make some calculations based on several variables. While it may seem a bit intimidating initially, we hope our pragmatic approach helps you get some clarity.
Please note that the figures mentioned below are an average estimation. The numbers may vary depending on the bank you are approaching for the home loan. But, more or less, it will be within a close range of it and hence, will give you a broad idea about the management of finances.
- Usually, the minimum salary requirement for expats in Dubai for obtaining a home loan is AED 15,000 monthly.
- You should be able to make at least 25% of the down payment or deposit on average to buy the property of your choice.
- The average mortgage interest rate is 4%.
- The average length of the mortgage period is 20 years.
- The Equated Monthly Instalment (EMI) shouldn’t be more than 25% of your monthly income.
Generally, the interest on your home loan is top-heavy. This means that you will have to pay off more of the interest than the principal during the early stages of your payments. Therefore, on your repayments, the interest will be more during the initial payments and will gradually decline over time with each payment you make.
Hidden Charges You Shouldn’t Ignore While Buying a Property
An underrated aspect of managing finances while buying a property is not to ignore the hidden charges that you need to bear during the purchase of a property. These charges include the following.
- Land Department Fee: 4% of the property value.
- Registration Fee: AED 4,000 for properties worth more than AED 500,000, plus VAT, and AED 2,000 for properties below AED 500,000, plus VAT.
- Valuation: AED 2,500-3,500, plus VAT.
- Title Deed Issuance Fee: AED 520
- Mortgage Registration Fee: 0.25% of the loan amount
- Mortgage Registration Administration Fee: AED 290
- Agency Fee: 2% of the sales price, plus 5% VAT
Factors Affecting Home Loan Eligibility in Dubai
Apart from paying attention to the home loan salary eligibility, there are several other factors you need to keep in mind to ensure you are eligible for a home loan in Dubai. Here is a list of criteria you need to check off for the same.
Nationality
Your nationality will play a role in obtaining the mortgage loan in Dubai because of different risk assessments and policies. Some banks and lending institutions offer lucrative terms and conditions for UAE nationals. In most cases, it is also easier for UAE nationals to get approval for the loans.
However, even if you are an expat looking for a mortgage in UAE, you will get plenty of options. There are mortgage options for non-residents as well, which also explains why there is so much demand for properties in Dubai from investors across the globe.
Age
The aspect of age is very interesting when obtaining a mortgage loan. While there is a minimum age limit for obtaining a loan in Dubai, the younger the applicant is, the longer time they have to repay the loan. They also have a chance at a better positive career trajectory. This actually makes younger applicants a better candidate from the perspective of banks and lending institutions.
That being said, generally, you need to be at least 21 years old to get a home loan. Older applicants might not be favored too heavily due to the sheer fact that they usually have fewer employment years left in their careers. Borrowers who can repay the loans before they retire are favored more by banks and lending institutions. Mostly, loan terms don’t extend beyond the age of 70 for self-employed individuals and 65 for salaried individuals.
Credit Score
Your credit score refers to the numerical representation of your creditworthiness. The better the credit score, the higher the chances of you obtaining a mortgage loan. A higher credit score increases your reliability in the eyes of lenders and positions you as a responsible borrower.
This is why, you must maintain a good credit score by responsibly using your credit and making timely bill payments. Small practices such as these will significantly improve your chances of getting a home loan approval in Dubai.
Employment Status
When your employment status is stable, it heightens your chances of becoming a favorable candidate to procure a mortgage loan in Dubai. Banks and lending institutions predominantly prefer candidates who have consistency in their job history and reliable employment with stable income.
Furthermore, if you own a reputed business or are employed in a well-known company, it shows your lender that you are capable of making loan repayments. As such, your potential to grab the mortgage loan increases.
Debt-to-Income Ratio
The debt-to-income ratio represents the graphical comparison between your monthly debt payments and your gross monthly income. When you have a smaller ratio, it shows that you have balanced finances, thereby becoming a better candidate in the process for home loan eligibility.
On the other hand, if you have a higher ratio, it shows your incapability to manage new debts and lowers your credibility to make loan repayments.
Documents to Apply for a Mortgage Loan in the UAE
It is very important to keep all the necessary documents handy before approaching a bank for a mortgage loan in the UAE. While the exact requirements of documents may vary from bank to bank, generally the following set of documents are the primary requirements and will get the job done.
- Emirates ID
- Passport
- Property ownership documents
- Trade license (for self-employed individuals)
- Liability letter (if applicable)
- Residence visa (applicable to expatriates)
- Bank account statements for the last 3-6 months
- Salary certificate (for salaried employees)
Make sure that the original as well as photocopies and digital copies of all these documents are present with you all the time during the mortgage procuration process.
Conclusion
Buying a property in Dubai is the ultimate urban dream. This city offers a wide range of amenities, luxury, and safety standards that make moving with family here worthwhile. With the highly competitive real estate market of the city, it often gets difficult to meet the financial needs to purchase the property of your dreams on your own.
With banks and lending institutions offering mortgages to UAE residents, affording that dream property becomes easier. Your monthly salary is pivotal in determining your eligibility for the home loan, among other allied factors that we have mentioned above. We hope this guide has helped you in figuring out your finances better and gaining knowledge on your eligibility for a home loan in Dubai.
FAQs
Questions about Minimum Salary for Home Loans in Dubai
Can I buy a house in Dubai?
Yes, you can buy a house in Dubai, irrespective of your nationality since the UAE Government has initiated several steps to encourage foreigners to buy properties in Dubai.
What is the average salary in Dubai?
As of August 2024, the average salary in Dubai is AED 191,807 annually, which comes to roughly AED 15,984 monthly.
How much down payment is needed for a house in Dubai?
Generally, the minimum down payment for a property under AED 5 Million is 20% for an expat and 15% for a UAE national. If the property value is more than AED 5 Million, the minimum downpayment for expats can be 30% and for UAE nationals, 25%.
How to get a loan in the UAE with a low salary?
It might be a bit difficult to obtain a loan in the UAE with a low salary. The minimum salary you need to be eligible for a home loan is AED 15,000 monthly in most cases. However, if you have a lower range than that, you can still approach the banks to see if any new scheme or offer is available.
Can expats get a mortgage in Dubai?
Yes, expats are eligible to get a mortgage in Dubai. Several banks and lending institutions in and around Dubai offer various lucrative mortgage options for both UAE nationals and expats.
How much home loan can I get in the UAE?
Although the exact figure varies depending on the price of your property, you generally can get a home loan of at most 75-80% of the property’s value. The rest of the payment, you need to make on your own as part of a down payment.