Lending institutions across India have set eligibility requirements that applicants must meet to get approval on their credit requests. You can borrow the required amount at attractive terms by meeting those eligibility parameters. Nevertheless, some factors like income, credit score, etc., can affect your home loan eligibility, and you may encounter refusal of credit request from the lender’s end.
You need to be aware of all these factors and take necessary measures so that you face no difficulty in getting approval for your home loan.
5 Influencing Home Loan Eligibility Factors
Following are some major aspects that can impact your eligibility:
1. Employment Status
The lending institutions check your employment status to understand if you have a stable income source. In this regard, lenders prefer borrowers employed at reputed public or private sector companies or an MNC. On the other hand, if you are self-employed, financers ensure that your income source is stable and you can easily pay off debts without the risk of default.
Lenders also consider your age as one of the major home loan eligibility criteria. They make sure that you can pay off their dues before your professional careers get over. Therefore, borrowing at the initial phases of your career helps you get a sizeable loan amount more conveniently. This is because, in these circumstances, you get a sufficiently long tenure to repay your loans.
Every lending institution comes with a pre-set minimum income benchmark which may vary according to various factors. You need to have a higher income to get the required home loan amount without difficulties. This is why salary slip and the Income Tax Return (ITR) forms are regarded as important documents required for a home loan. With the help of all these records, lending institutions become aware of your annual gross income from all earning sources.
4. Down Payment
In order to be eligible for a home loan, you must bear a considerable amount towards their home construction from their own savings.
In a home loan, the LTV (Loan-to-value) ratio is around 80% (it can be different across lenders). This means the financial institutions will lend up to 80% of the home construction cost. Borrowers are responsible for bearing the rest as a home loan down payment.
In this regard, you need to remember that a substantial down payment can help keep your loan amount lower. This way, you can reduce the overall interest component of your housing loan.
5. Credit Score
Lending institutions consider credit score as one of the most crucial home loan eligibility factors because it demonstrates the creditworthiness of borrowers. You need to possess a CIBIL score over 750 to get a home loan without inconvenience. Such a credit score shows that you have a positive record of repaying debts on time. Therefore, lenders will deem you less risky and sanction your loan requests quickly. Contrarily, with a lower credit score, you may face difficulties getting loan approval.
In conclusion, you need to meet the home loan eligibility criteria to obtain a sizeable credit for constructing your home. This will enhance the chances of getting approval on your loan request.