The home loan market has witnessed significant growth in recent years because of factors like incentives offered by the government, increasing demand, etc. Financial institutions are also offering home loans at competitive interest rates to borrowers to incentivise borrowing.
However, before applying for a home loan, an individual should go through the home loan eligibility criteria set by the lending institution to establish reliability. Lenders may reject a borrower’s loan application if he or she does not meet the specified eligibility requirements. It is thus essential to meet eligibility parameters before applying to improve chances of quick loan processing and approval.
Go through the basic home loan criteria given below that an applicant is required to meet before applying for a housing loan.
For salaried applicants –
- They should be within the age of 23 – 62 years.
- Applicants should have a minimum of three years of work experience.
- Minimum in-hand salary should be Rs.25,000, which can vary as per the city.
For self-employed applicants –
- Borrowers should be between 25 – 70 years of age.
- They should have a business operating for at least 5 years.
- They should have a stable source of income.
Apart from the above-mentioned criteria, applicants also need to be residents of India and have a minimum CIBIL score of 750.
Home Loan Eligibility Calculator
Furthermore, individuals can also use a home loan eligibility calculator to estimate the loan amount they are eligible for. It will enable you to plan your finances beforehand. Follow the steps below to gain an idea about how to use a housing loan eligibility calculator –
- Visit your lending institution’s website to check if they provide home loan eligibility calculator.
- Enter your date of birth and place of residence.
- Enter your net salary and choose the repayment period.
- Also, mention if you have any other source of income and EMIs that you are paying off at the moment.
- Once you have entered the above information, the loan amount you are eligible for will be displayed.
Factors Affecting Home Loan Eligibility Criteria
Borrowers should also have a thorough idea about the factors that affect their home loan eligibility, which will enable them to get their loan approved quickly. These factors are –
- Age – It is an important factor that determines your home loan eligibility. It is because home loans have a long repayment tenor of 20 – 30 years. For this reason, individuals nearing their retirement may not be able to service the home loan and end up defaulting.
On the other hand, applicants in their 30s who have a stable income have much higher stability towards loan repayment. Such borrowers can also benefit from other advantages of taking a home loan in your 20s.
- Employment status – Individuals with a stable source of income or employed with a reputed MNC or public sector reflect that they have a high repayment capability. It means that their applications are viewed favourably by lenders.
- CIBIL score – CIBIL score is a numerical representation of your credit report which contains your information regarding current EMIs, loan rejections, defaults and the likes. Lenders analyze your repayment capabilities from the CIBIL score, which may impact your home loan eligibility. Besides eligibility, your credit score will also determine your home loan EMIs.
Some lenders also provide pre-approved offers which make the credit application process more efficient while saving time. You can check your pre-approved offers by including your name and contact information.
List of Necessary Documents
Besides home loan eligibility criteria, borrowers should also keep in mind the documents they need to furnish for a hassle-free loan sanction. The list of home loan documents is as follows –
- KYC documents – Aadhar card, PAN card, Voter ID, passport, driving licence or any other officially valid document.
- Income proof – Bank account statements, salary slips or Form 16.
- Proof of business (for self-employed individuals).
- Any other additional documents as asked by the lender.
Applicants who meet the home loan eligibility criteria and have the necessary documents can choose from housing loan options as per their requirements. You can choose to apply online for a hassle-free and quick application processing.