The first and foremost eligibility criteria to get a home loan is that the applicant must be a citizen of India and should be at least 23 years of age. Apart from this, the parameters for eligibility vary from lender to lender, most of which include age, income stability, credit history, city of residence, etc.
If you are looking forward to getting the sanction letter for a home loan with a higher amount and affordable interest rate, it is important to fulfil all the eligibility criteria. Let’s find out the factors that determine the eligibility of your home loan application.
Your monthly income basis is one of the first questions that loan agent will ask you. Without a stable income, you will not get home loan eligibility. The lender will cross-check the sources of income to ensure that the applicant can repay the loan amount every month on an EMI basis. Make sure to have a strong and stable income to qualify quickly for lending.
Similar to income, employment status also plays an important role in getting eligible for the loan. In most cases, employment working employment at government jobs gets easy approval. The lenders are also flexible if the applicant works in an MNC or Private Limited firm. But if the borrower is associated with a proprietorship firm, the eligibility gets difficult. Again, lenders want to give loans to individuals associated with stable and profit-making firms.
If you are applying for a home loan and then any existing loan, you may not get the eligibility. In some cases, even if the borrower is eligible for the loan, do not get the approval. In case 40% of your monthly income or even around 30% of the same is exhausted by paying EMIs for the existing loan, chances are very high that your application will be rejected.
In an ideal case, the debt-to-income ratio (a percentage of income that a borrower pays for debt) is 30% or even lower than that to get approval for the home loan at excellent terms. So, if you have an existing loan, it is important to foreclose it before applying for a home loan. For more help, you need to settle all your previous dues and consider adding a co-applicant with a stable income and good credit score.
A healthy credit score is a crucial metric in determining home loan eligibility. It helps determine the borrower’s creditworthiness and checks the repayment ability of the loan on time. As per the norm, the applicant must have a credit score of more than 700 and comply with all the criteria discussed above.
The higher the credit score, the better the chances of getting approval for the home loan. In most cases, lenders consider the credit score offered by CIBIL while processing the application. Keep in mind that do not check the credit score as it affects the creditworthiness.
A down payment is an instalment of the borrower’s amount to pay to the promoter to get the home loan application approved. In most cases, banks, financial institutions, or NBFCs approve 90% of the property value as a loan and rest 10% needs to be paid by the buyer/borrower to the builder.
In case the loan amount is more than 20 lakhs, the borrower needs to pay 20% of the property value as a down payment. Though in some cases, the percentage of the property price that the lender grants as a loan depends on different factors like location, the value of the property, nature, repayment capacity, etc.
To get the best eligibility for a home loan, all these factors need to work in your favour. You should proceed with buying your dream home after you are confident about the steps and they are in your favour.