However, not everyone can avail of a home loan. Before applying for a home loan, one must have the answer to a few questions, like ‘How much will I get for a mortgage loan?’ and ‘How much mortgage can I afford?’.
Based on the home loan eligibility criteria of the lending institution, one needs to meet certain requirements in terms of age, occupation, credit score, and monthly income, among others.
For those wondering how to qualify for a home loan, a few proactive steps can help. Maintaining a good credit score (typically above 750), reducing existing debts, and ensuring a steady source of income can significantly boost eligibility. It is also advisable to keep all necessary documents, such as income proof, bank statements, and property papers, in order to ensure a smooth application process. Understanding home loan requirements and meeting the lender’s criteria for home financing can further improve the chances of approval.
This article attempts to demystify home loan criteria in India and outline tips for homebuyers on how to qualify for a home loan. Keep reading.
Factors that Determine Home Loan Eligibility
Although home loan eligibility criteria may vary from one lender to another, below are some common factors that determine loan eligibility for a housing loan in India. These factors will also shed light on the answer to essential questions like ‘How to get pre-approved for a home loan?’.
Age of the borrower
One of the primary factors that determines home loan eligibility is the borrower’s age. Since a home loan usually involves a significant sum of money and comparatively longer repayment tenure, lenders want to make sure a homebuyer has enough time to repay the home loan.
Generally, lending institutions in India offer home loans to those aged between 21 to 60 years. However, some lenders may have a higher home loan age limit of up to 75 years.
Credit score
Another crucial factor that determines home loan eligibility in India is the borrower’s credit score. The credit score is a three-digit number that reflects the creditworthiness of a homebuyer.
It is calculated based on several parameters, including the history of timely repayments, credit utilisation ratio, the number of active loan accounts, credit mix, and the average length of credit history.
Generally, lenders seek a credit score of 650 or more to approve home loan applications. Therefore, if you are wondering ‘How to get pre-qualified for a house loan?’, a decent credit score is the first step to take.
Monthly income
The borrower’s monthly income plays a huge role in determining their home loan eligibility. Different lending institutions have different criteria concerning eligibility for home loans on salary.
Generally, lending institutions in India prefer providing home loans to those with a monthly salary of at least ₹25,000. In the case of self-employed individuals, the lender may look at the average annual income. The rationale behind this is to make sure the borrower is earning enough money to pay their home loan EMIs in time.
Existing debts or liabilities
If a homebuyer is already struggling with too many loans or liabilities, it can be a concern for lending institutions. Those with little to zero liabilities may find it easier to qualify for a home loan than those who are already paying several EMIs or insurance premiums.
Who is Eligible for a Home Loan?
Anyone who can fulfil the home loan eligibility criteria of the lender can apply for a home loan. Typically, the following categories of homebuyers are eligible for home loans:
- One must be a citizen of India
- One must be a salaried or self-employed individual
- One must have a credit score of 650 or more
- One must be able to furnish the required home loan documents
How to Qualify for a Home Loan?
The following tips can help a homebuyer enhance their chances of qualifying for a home loan:
- One must check their credit score frequently and take steps to improve it. An excellent credit score significantly boosts one’s home loan eligibility.
- One can apply for a joint home loan with a co-borrower. Doing so can increase their chances of qualifying for a home loan.
- One can increase the down payment amount. The higher down payment results in a lower loan amount, thereby boosting the chances of loan approval.
- One can opt for a longer home loan tenure. It helps in reducing the EMI amount, and subsequently, in qualifying for a home loan.
- One must make sure that all the documents are accurate. Submission of incorrect or incomplete documents may also lead to the rejection of a home loan.
To Conclude
With careful financial planning, one can easily qualify for a home loan and fulfil their dream of buying a house. A home loan eligibility calculator can help homebuyers check home loan eligibility online within a few minutes. One can also consult a mortgage professional to get personalised guidance throughout the process.
Piramal Realty offers uber-luxurious housing projects in Mumbai with a gamut of modern amenities. One can buy premium apartments at prime locations and enjoy a lifestyle of dreams. One can also easily qualify for a home loan with dedicated financing partners.
Frequently Asked Questions
Which bank is best for a home loan?➕
The best bank for a home loan depends on factors such as interest rates, loan tenure, processing fees, and customer service. Leading banks like SBI, HDFC, ICICI, and Axis Bank offer competitive home financing options with attractive home loan requirements. It's advisable to compare different lenders before making a decision.
How much home loan can I get?➕
The loan amount you qualify for depends on factors like income, credit score, employment status, and the lender’s home loan requirements. Typically, banks offer up to 80-90% of the property’s value as a home loan, depending on eligibility.
How to calculate home loan EMI?➕
You can calculate your home loan EMI using an online EMI calculator provided by banks and financial institutions. Enter the loan amount, interest rate, and tenure to get an estimate of your monthly payments under home financing.
How much home loan can I get on a ₹40,000 salary?➕
Depending on the lender’s criteria and home loan requirements, you may get a loan amount ranging between ₹20-30 lakh on a ₹40,000 salary. The final loan amount depends on factors such as your credit score, existing debts, and repayment capacity.
How to get home loan?➕
To get a home loan, you need to meet the lender’s home loan requirements, such as a stable income, good credit score, and proper documentation. Apply online or visit the bank with necessary documents like income proof, identity proof, and property details to initiate the home financing process.
How much home loan can I get on ₹60,000 salary?➕
With a ₹60,000 salary, banks may offer a home loan between ₹30-50 lakh, depending on your financial profile and home loan requirements. Factors like credit score, employment type, and existing liabilities also impact the final loan amount.
Home loan interest comes under which section?➕
Home loan interest payments qualify for tax deductions under Section 24(b) of the Income Tax Act, while the principal repayment is eligible for benefits under Section 80C. These tax benefits on home financing help reduce the overall cost of the loan.
Disclaimer- This article is based on the information publicly available for general use as well as reference links mentioned herein. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.
