Key to Approval: Decoding Housing Loan Eligibility - Loan Trivia


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Monday 13 May 2024

Key to Approval: Decoding Housing Loan Eligibility

The foremost eligibility factor for all Indian home loan seekers is that they should be at least 23 years old while applying. Also, many other aspects contribute to the overall home loan eligibility such as the loan applicant’s income, residential address, credit history, and so on. To know more about home loan eligibility criteria potential borrowers can continue reading. 

What factors determine home loan eligibility?

To ensure that the lender hands over the home loan sanction letter readily, loan seekers must present favourable metrics across the following parameters:

  • Credit score

An ideal credit score of 750 or above is believed to fetch a favourable home loan interest rate for the borrower. Besides the credit score, the lending institutions also check the applicant's overall credit handling record comprising the number of existing loans and card dues. 

  • Income

There is always a minimum income requirement for home loans which varies from one lender to another. A borrower should check this criterion before applying to avoid loan rejection chances. 

  • Age

Age of the home loan applicant is a crucial factor for lenders as it allows them to set an optimal repayment period. For instance, those who apply during the early stages of their careers, are more likely to get more attractive interest offers along with a prolonged tenor. This is because these candidates provide more confidence to the lenders as they still have many years left in their employment. 

  • Employment status

In addition to a stable income level, when the lending partner witnesses that the borrower has a long professional career with an MNC or public-sector company, they find such candidates to be more suitable for loan offers. Similarly, for self-employed individuals, their monthly business revenues decide the loan terms. 

Steps to use a home loan eligibility calculator

Evaluating the maximum approvable home loan amount over the Internet is too easy. Borrowers can simply follow the steps below to get the job done:

Step 1: Visit the lender’s website and navigate to the home loan eligibility calculator.

Step 2: Provide some key details like your residential city, date of birth, monthly income, etc.

Step 3: State the approximate monthly obligations or existing EMIs.

After following these 3 simple steps, one can view the maximum loan limit that their profile is eligible for as per the current details. 

Documents required for home loan application

The exact list of home loan documents varies as per the lender picked. So, hereby the borrowers may check out some common documents that are indispensable while applying:

  • ID proof documents (PAN card/ Aadhaar card/ Passport/ Driving licence)

  • Address proof documents (property tax paper/ telephone bill/ gas bill, etc.)

  • Documents concerning the property like NOC from the builder, certificate of Possession Estimated Construction Costs and stamped sales agreement

Additionally, the lender asks for the following documents from self-employed home loan seekers:

  • Bank statements for the past 6 months

  • Details of the ongoing loans

  • A cheque initiated by the loan seeker to disburse the loan processing fee 

If the borrower is a salaried individual then the lending institution will ask for the following income documentation:

  • Payslips of the previous 2 months

  • IT returns for the past 3 years

  • Form 16

To expedite the loan approval procedure, lenders give pre-approved offers to their existing customers at attractive interest rates. These offers are usually applicable on loans against property, home loans, etc. Interested individuals can check home loan eligibility for these offers by entering their details on the official website of the lending institutions. 

Before filling out the loan application one should thoroughly go through the home loan eligibility factors. It helps save time and also reduces the chances of a loan rejection that might hurt credit scores. 

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