Know Everything About the Home Loan Eligibility

The rise in property prices has made it difficult for individuals to afford a property on their own. In such a scenario, home loans are one of the most secure ways to avail funding to purchase or renovate a property. Individuals can avail of such loans to purchase land or to construct a house. They can also avail tax exemptions on their home loans.

However, before applying for a loan, borrowers should go through the home loan criteria.

They are as follows –

They should have a minimum CIBIL score of 750
Borrowers need to be a citizen of India.
Salaried individuals should have work experience of three years.
Self-employed individuals should have a business operating for a minimum of 5 years.
Applicants should have a minimum income of Rs.25,000.

Apart from the criteria, you should also know about the factors that affect your home loan eligibility –

CIBIL score – A credit score is a numerical summarization of your credit report. Lenders go through borrowers’ credit reports to gain an idea regarding their creditworthiness. If you have a low credit score, lenders may reject your loan application.
Age – Home loans come with a long repayment period of up to 30 years, which means an applicant who has been working for a few years and earn a stable income have a better chance of repaying the home loan.
Employment history – If an individual is employed at a reputed company or has a steady source of income every month, then he or she has a high repayment capacity. It creates a favorable impression on lenders and enables them to process their loan applications quickly.
FOIR – This refers to all the fixed obligations that a borrower has to meet monthly such as rent, food, EMI, credit card bills, etc. If someone has an increased number of obligations, lending institutions assume that he or she is not capable of repaying the loan on time, which can affect your eligibility. The FOIR ratio needs to 40-50% of your total income.

Calculating Your Home Loan Eligibility

Additionally, borrowers should also know how to calculate home loan eligibility using online tools like a calculator for home loan eligibility. It will enable you to know the exact amount you can avail of as a housing loan. Since the calculations are conducted automatically, there is no chance of errors. To calculate the loan amount, you have to enter the following information regarding yourself –

Date of birth
Place of stay
Current income
Any other source of income
Current obligations or debts
Loan tenor

Additionally, one can also use a home loan EMI calculator to calculate the amount of EMI he/she needs to bear. There are several benefits of calculating EMIs before taking a home loan.

Reputed lending institutions provide pre-approved offers that make the loan application process quick and hassle-free. Besides, home loans, these offers can also be availed on other secure investments such as mortgage loans. You can check your pre-approved offers by entering your name and contact information.

List of documents

Aside from the eligibility criteria, one should also make sure to provide the necessary home loan documents during the application process to avoid rejection.

The list of documents required for a home loan that you should keep in handy are –

Income proof – latest salary slip, bank account statement, form 16, financial statements
KYC documents which include PAN card, Aadhar card, voter ID card, driving license or any other officially recognized documents
Proof of business
Property documents like sales deed or a signed agreement of sale, possession certificate, occupancy certificate, NOC from the housing society

Borrowers who are eligible for housing loans can also choose to avail additional financing in the form of top-up loans without meeting any eligibility criteria or providing documents. This top-up loan does not have any end-use restriction so it can be used to finance several things such as medical emergency, wedding, educational expenses, and the like.

Also Read: Beneficial Tips to Increase Your Housing Loan Eligibility