Factors That Determine Your Home Loan Eligibility_Banner_WC
Factors That Determine Your Home Loan Eligibility_WC
Are you planning on taking a loan for your dream house? Then you must have a specific figure in mind – but have you assessed whether or not you are eligible for the amount? Your home loan eligibility plays a vital role in determining the amount you will be sanctioned. Therefore, you must be well aware of the factors determining your eligibility and how you can improve the same so as to get your hands on the desired loan amount.
What Is Home Loan Eligibility
Home loan eligibility simply means a borrower’s credibility of receiving a certain amount as a loan. It is typically measured on the basis of one’s financial background, age, previous credit behaviour and CIBIL score. When applying for a housing loan, lenders assess your eligibility to ensure you are capable of repaying the full amount.
Factors Determining Your Home Loan Eligibility
Listed below are the major factors that determine your eligibility for a home loan –
- Credit Score
One of the most crucial factors looked into by lending institutions is the credit score or CIBIL score. The score typically ranging from 300 to 900 represents your creditworthiness based on past repayment records – existing debts, bills and EMIs etc. To get the housing loan amount sanctioned, it is important to maintain a good CIBIL score, preferably above 750. Banks and financial institutions often check the CIBIL score using an online calculator to assess your eligibility.
- Borrower’s Age
Getting a loan approved at a younger age is easier and more profitable since it leaves you with ample time to repay the amount in full. That is why lending institutions usually prefer sanctioning the amount to borrowers in their early career stage than to those nearing the age of retirement.
The type of employment or profession you are into also determines your eligibility for a loan. Most lenders prefer the borrowers to be employed in a public or private sector organization or an MNC or have a demonstrated history of own business as it implies a stable source of income.
Another deciding factor that comes to play is your income. Banks and financial institutions generally consider a minimum monthly salary of INR 25,000/- suitable for home loan sanctions. Any amount less than that may project the customer as a high-risk borrower.
Assets and Liabilities
Lending institutions evaluate your assets and liabilities to determine your home loan eligibility since it helps them assess your repayment capability. The more assets you have with zero liabilities, the better the chances of getting your housing loan sanctioned.
The following table shows the detailed home loan eligibility for both salaried and self-employed borrowers –
23 to 62** years
25 to 70 years
Minimum Monthly Income
3+ years of experience in an MNC or in the private/public sector
5+ years of experience running a business with a steady flow of income
**Note: The upper age limit is considered as age at the time of loan maturity
Home Loan Eligibility Based on City and Property Value
Here is a comparison of the monthly net income and property value based on the city of loan application –
Name of the City
Minimum Monthly Net Income
Aurangabad, Ahmedabad, Baroda, Bangalore, Banswara, Bhubaneshwar, Bhopal, Calicut, Chennai, Cochin, Chandigarh, Coimbatore, Dholka, Didwana, Goa, Halvad, Hyderabad, Indore, Jamnagar, Jaipur, Jhalawar, Junagarh, Jodhpur, Kolkata, Kolhapur, Kisangarh, Lucknow, Mysore, Madurai, Nasik, Nagpur, Pune, Rajkot, Suratgarh, Surat, Trivandrum, Tiruchirappalli, Vijayawada, Vapi, Vizag
INR 15 Lakh
Faridabad, Delhi, Gurugram, Ghaziabad, Navi Mumbai, Mumbai, Thane, Noida
INR 15 Lakh
How to Increase Your Home Loan Eligibility
If all the above factors fall in place, you need not worry about having the loan amount approved. However, if you are far from meeting the above criteria, you may have to work towards improving your home loan eligibility. Here are a few smart ways that you can increase your chances of getting the desired loan amount –
Pay Your Dues on Time
Firstly, make sure you do not delay or default payments – be it a previous loan EMI, credit card bills, and so on. This will help you boost your credit score and make you more eligible for a housing loan.
Monitor Your Credit Report
Sometimes, a glitch or an error in the credit report may affect your home loan eligibility. Therefore, it is important to keep a track of your credit report on a regular basis and rectify any discrepancies that may show up.
Add a Co-applicant
One way to boost home loan eligibility is by adding a co-applicant – a spouse or parent who has a stable job and source of income. This works as a solid financial backup as the lender sees both applicants as capable of repaying the loan amount.
Limit Your Debt-to-Income Ratio
Your debt-to-income ratio measures the amount you owe each month with respect to your earnings. You should aim to keep this ratio below 30% to qualify for a lump sum.
Besides adopting the above measures, you can use an online home loan eligibility calculator to check your eligibility from time to time.
Calculate Your Home Loan Eligibility Online
A home loan eligibility calculator is a specially designed online tool that helps to assess the loan amount one is eligible for depending on the various factors discussed above. Borrowers can access the online tool from the chosen lender’s website and provide a few details to calculate their home loan eligibility.
The steps to use a home loan calculator for eligibility are as follows –
- Access the housing loan eligibility calculator tool online
- Enter the name of the city where you are purchasing the house
- Enter your date of birth
- Key in your monthly salary details
- Mention the amount you will spend on other financial obligations
- Wait for the calculator to show the estimated loan amount according to your eligibility
The home loan eligibility calculator is a great option owing to the following reasons –
- Easily accessible and user-friendly
- Faster, accurate results
- No end-usage restrictions
Documents Required for Home Loan Eligibility
Once you meet the home loan eligibility criteria and have an estimate of the suitable loan amount, you can apply for a housing loan. For that, you must have the following documents in place –
- KYC Documents – Aadhaar Card, PAN Card, Voter’s ID, Passport, Driving License (any one of these)
- Employment ID Card
- Last 3 months’ bank account statements for salaried individuals and the last 6 months’ bank statements for self-employed individuals
- Last 3 months’ salary slips
- Paperwork showing at least 5 years of business proof
Note: Additional documents might be required during loan processing.
With the cost of real estate scaling up exponentially, a housing loan with affordable EMIs and home loan interest rates can be the perfect solution. But before you venture that path, you must be sure of the eligibility parameters set by lenders. The above pointers can help you increase your home loan eligibility and get your hands on a loan amount of up to INR 5 Crores for a duration of 30 years. Start by improving your CIBIL score and clearing any outstanding debts. Take some time out to do extensive market research and get in touch with the best home loan providers who can guarantee easy loan sanctions and faster disbursals.
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