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Housing Loan Eligibility Criteria and How to Apply

by Steven Brown
Housing Loan Eligibility Criteria and How to Apply

Buying a home of your own is a major decision and financially, it needs a lot of thought. Most people will agree that opting for an instant home loan does not only help buy a desired home but also allows one to do so while saving tax. However, is everyone eligible for a home loan? Banking and financial institutions check whether you fulfill their home loan eligibility criteria before sanctioning the loan. Similarly, a borrower can use the home loan eligibility calculator to check whether they fulfill the home loan eligibility criteria set by their preferred lender. One can also use the online home loan calculator to check the amount of home loan they are eligible for and the EMI rates.

Home Loan Eligibility Criteria

Here are some of the main home loan eligibility criteria simplified for you:

  1. Applicant’s Age – This is an important factor in deciding the home loan eligibility of a person. The minimum age to apply for a home loan is usually 18 years and the maximum age at the time of loan maturity should not be more than 70 years. Since the home loan repayment period usually stretches up to 30 years, many lenders cap the age of retirement, which is 60 years, as the maximum age limit. Hence, younger home loan applicants have higher chances of availing of home loans for longer loan tenors and at better EMI rates.
  1. Income & Employment – High income indicates a more substantial capacity to repay a loan, which means lower risk for the lender. Salaried employees usually have a better chance of availing of a home loan at lower interest rates due to their higher-income certainty. People employed with Central/State Governments, PSUs, reputed corporates, and MNCs are usually offered lower home loan interest rates. For many lenders, salaried individuals should have at least 2 years of total working experience in one place to be eligible for a home loan. Self-employed individuals must be able to show a running business for at least the last 3 years.
  1. Credit Score/Credit Report: Home loan lenders usually prefer to lend to applicants having credit scores of 750 and above. Such home loan applicants also have higher chances of availing of home loans at lower interest rates. CIBIL data shows that 80% of the home loan approvals are given to customers who have a CIBIL score of 750 plus. A low CIBIL score could get your home loan application rejected or make you pay a higher interest rate.
  1. Having a Co-applicant – Although it is not mandatory to have a co-applicant for a home loan in India, most lenders (both public and private) insist on having one to ensure the guarantee regarding the timely repayment of the loan amount and increase your financial credibility. So, although it is not legally required to have a co-applicant while applying for a home loan, having one can surely boost your home loan eligibility. 
  1. Repayment Capacity – Banks and HFCs usually consider the debt-to-income ratio of the borrower while evaluating the home loan eligibility of an applicant and their repayment capacity. Keeping the FOIR (Fixed Obligation to Income Ratio) below 40%, closing off other small loans and EMIs, and adding other sources of income can create a positive impact on one’s home loan eligibility. Banks calculate FOIR based on monthly income, spending, and the potential EMIs of the prospective loan. Lower FOIR or money spent on living expenses gives the lenders the confidence that you have the credibility to repay the loan EMIs. Based on the documents submitted, the lenders scrutinize your file checking your financial standing, past credit history, etc.
  1. Property – Sometimes lenders visit the property and examine its physical condition, building specifications, and market value to decide the eligibility criteria and the loan amount they could offer for the property. According to RBI’s guidelines, the maximum amount a lender can offer on a housing loan cannot exceed 90% of the property’s value. This means the greater the down payment, the better home loan interest options you will. Further, a higher down payment will also certainly increase your eligibility for a home loan.

How to Apply 

To check your eligibility for a home loan, go online and use the home loan eligibility calculator tool to check if you are eligible for a home loan. This will help you choose and compare the best home loans with the help of the home loan eligibility calculator. 

Follow these Steps to Check Your Eligibility:

  • Go online and go to the home loan eligibility criteria page (Any lender).
  • From the given options choose your employment type. 
  • Fill in your monthly income details and click on ‘Continue’. 
  • Enter the residence PIN code. 
  • Select the purpose of your home loan.
  • Enter your mobile number.
  • Put a tick to the box to authorize contact permissions.
  • Enter your full name, date of birth, and email ID in the available place and click on ‘Continue’.
  • Enter the OTP sent to your mobile and click on the ‘Submit’ button

Now check all the home loan offers that you are eligible for and apply for a home loan.

Final Words

Applying for a home loan today is easy and can be done online without any hassles. Just a few simple steps and you can get the desired home loan. What matters most is your eligibility criteria for the same. So, knowing in advance the home loan eligibility criteria and following them could help to secure an easy and quick home loan today.

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