5 Factors that affect your Home Loan Eligibility

Do you intend to apply for a home loan? Before you proceed to complete all the nitty-gritty, do make sure to check your home loan eligibility. 

As per the fundamental requirements to be eligible for a home loan, you need to adhere to the basics. You should be a citizen of India and no less than 21 years of age when you plan on getting a home loan. 

Depending on the bank or financial institution that you are keen on applying from, they have numerous stipulations and pre-requisites that are required to be followed. To understand home loan eligibility criteria a tad bit better, take a look at the factors that determine your entitlement for a home loan. 

Income 
Your yearly income justifies the total loan amount that can be sanctioned.  Cities like Mumbai and Delhi will have stringent stipulations regarding your income and loan eligibility amount as compared to Gurugram or Hyderabad. For instance, you can get up to INR 5 crores as a home loan amount for a period of 25 - 30 years with a salary of INR 30,000 to INR 35,000 per month. Some banks and financial institutions offer additional benefits such as EMI holiday, repayment flexibility, low interest on the top-up of loan amount and many more value additions. Your income is a crucial determinant for eligibility for home loan. 

Employment Status
Similar to your income, your employment status is equally a decisive factor. You stand a higher chance for favourable loan approval if you are employed with an MNC or any private or public sector company. It provides surety of a monthly income. Even if you are self-employed with a stable business, the lender will offer you a loan with flexible terms for repayment as per your business income. An individual who has an unstable business or job has weaker chances to be eligible for a home loan. 

Credit Score
A credit score of 750 and above will increase your position higher for house loan eligibility.  The score has a direct impact on your interest rate. Your credit score entails essentials such as repayment history, the number of current loans and credit card dues, the type of debt borrowed in the past, the number of defaults for payment. The score aids the lender to gauge your financial credibility and creditworthiness for you to repay the principal amount and interest amount. 

 Age 
 To check home loan eligibility to all the other factors is age. The reason why age plays such a vital role is that the lender will calculate your repayment structure depending on the years left for you as a salaried or professional individual. Opting for a home loan years before retirement, especially during the early years of your career, not only allow for a seamless sanction process but also offer you a higher value and better interest rate. 

Existing Debt Commitments 
Having more than one loan and varied credit card payments due is not the issue. However, missing your EMIs regularly, settling the repayment after the due date, fluctuation of payment of your credit card bills all tally up as a concern when you apply for a loan. The lender will note a pattern and your chances for a loan will be reduced. It is advisable to pay your EMIs on time and settle your outstanding amounts to be eligible for higher sanction amounts at competitive interest rates. 

These are the key factors to ascertain your home loan eligibility. However, an integral part for your home loan is the actual property for purchase. The lenders scrutinise the property details as it could be a collateral pledge in case your eligibility for the total loan amount is not met. Additionally, the value of your property also determines the loan amount. Once you have the property details, you can chart out the down payment percentage to pay and then proceed to apply for a loan. 

Once you are equipped with the knowledge for the eligibility for home loan, you can get in touch with any bank or financial institution that offers this service. You can also get an idea of your home loan eligibility with the help of an online calculator. 

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