Home Loan Eligibility

If you are planning to take a home loan, it is vital to understand all the home loan eligibility criteria that may affect your ability to get a loan. While most banks have similar parameters to decide housing loan eligibility it is best to understand home loan criteria and prepare in advance before applying to ensure a smooth process later.  

Home Loan Eligibility Criteria

Buying/owning a house is a dream for most people across the globe. Irrespective of your background and financial status, purchasing a home of your own is not impossible with the help of a home loan. However, there are several schemes that banks and financial institutes offer in India to help the citizens construct or renovate their dream homes.

Home loans make the task easier for you by easing financial decision making and providing you with the necessary and timely monetary support.

Every bank has different policies that come with different home loan eligibility criteria. The criteria may vary from one bank to the other regarding your age, income details, credit history, and further details. Make sure you properly check all the details regarding the loan before you apply for it.

Also Read -  Home Loan Tax Benefits

Home Loan Eligibility Calculator

Calculating monthly instalments before taking any kind of loan is extremely important. When it comes to home loans, repaying the massive amounts gets tricky for most people. Without a proper financial strategy, you will not be able to plan your finances well.

Make sure you calculate home loan eligibility beforehand to avoid any financial troubles during your repayment tenure.

The housing loan eligibility differs from one bank to the other based on age, income, credit history, and other factors. Therefore, the best way to calculate your monthly instalments beforehand is to use an online home loan EMI calculator before you apply for a loan.

To check your home loan criteria, visit the official website of your preferred bank and select the details correctly. 

  • The first thing that you need to select is your monthly income. It will affect your monthly instalments after you take out a loan from any bank or financial institute in India. It will determine your interest rates and the tax benefits that you may enjoy.
  • After that, select your preferred tenure in years that suits your affordability. The tenure in select affects your monthly instalments immensely. The longer the tenure, the laser the EMI will be every month and vice versa.
  • Your interest rate plays a huge role in determining your monthly instalments when it comes to home loan eligibility. The current offered interest rate by the bank differs based on your credit history, income details, and other details.

Also Read - Tax Benefit on Second Home Loan

Home Loan Eligibility Criteria of Top Banks

The housing loan criteria differ from one financial institute to the other financial institutes and banks. Leading banks that offer home loans to the citizens of the country include HDFC Bank, SBI Bank, Axis Bank, ICICI Bank, Bank of Baroda, Punjab National Bank, Bajaj Finserv, Yes Bank, IDFC First Bank, Canara Bank, IndusInd, IDBI Bank, LIC, to name a few.

Based on your preferences, go for the scheme that you think will fit your budget properly.

Your loan eligibility for home loan directly determines whether or not you are eligible to apply for home loans. Go through the chart to understand and analyse the different eligibility criteria offered by the leading banks in India at the contemporary time.

Bank NamesLoan percentage (Max) on the total property valueLoan amounts for maximum offered tenuresAge
State bank of India90%Up to 7 crores for a tenure of 30 years18- 70 years
Bank of Baroda90%Up to 7 crores for a maximum tenure of 30 years 21 years- 60 years
HDFC Bank90%5 crores cor maximum tenure of 30 years24 years- 60 years
Axis Bank90%2 crores for 30 years24 years- 60 years
Citibank80%5 crores for around 25 years23 years- 60 years
ICICI Bank90%7 crores for 30 years21 years- 60 years
LIC Housing Finance 80%15 crores for 30 years 21 years- 60 years
Kotak Bank80%5 crores for 20 years21 years- 60 years
IDFC First Bank85%10 crores for 30 years21 years- 60 years
Yes Bank90%5 crores for 25 years21 years- 60 years
Syndicate Bank90%5 crores for 30 years21 years- 60 years
Reliance Capital 80%100 crores for 20 years21 years- 60 years

These are some of the leading banks and financial institutes that offer home loans at low-interest rates that help customers construct, renovate, extend, and fulfil other property desires at ease.

Check your preferred bank’s home loan eligibility criteria before you apply for a home loan. If the interest rate seems high for your affordability, make sure you check other banks and the offered home loan schemes to pick the right plan for the future.

Also Read - HDFC Bank Home Loan Eligibility

How Home Loan Eligibility is Calculated?

The home loan eligibility criteria affect your abilities as a potential borrower. During the review process of the home loan applications, several factors are considered, such as your credit history, income details, financial background, bank statements, other financial obligations, and other details.

The eligibility to get home loan plays the most crucial part in determining whether or not you are an ideal borrower. The first step is to visit your preferred bank's official website and select all your personal and financial details for further procedures. After you submit the details successfully, wait for a few days for the approval of your loan.

During the review procedure, to check your home loan eligibility, the bank goes through your income proof, income tax amount, provident fund details, special allowances, medical expenses, and your total net income to determine whether the loan request can be approved or not. Your leave travel allowances and medical allowances are excluded from the calculation during the procedure. All other allowances that you do not receive as a part of your salary are cut off during the review procedure.

Home loan interest rates are applied based on your credit history, income details, and other details. Most banks and financial institutes keep the EMI restricted to 40% to 50% of the entire net income of the applicants.

Also Check - SBI Home Loan Eligibility

Home Loan Eligibility For Salaried Person

Both salaried and self-employed people are eligible to apply for home loans in India. Interest rates for all kinds of loans vary from one individual to the other based on their income details and financial backgrounds.

Home loan eligibility for salaried person does not remain the same for self-employed individuals. If you are a salaried individual, your home loan eligibility depends on certain factors in India:

  • Most banks and financial institutes prefer candidates who have completed at least one year in their present working sectors.
  • You need to have your bank statements for the last six months that reflect your income details properly.
  • Make sure you have all the necessary home loan documents required for your application. These include your address proof- utility bills, electricity bills, telephone bills; identity proof- voter card, Aadhar Card, or passport
  • The bank officials examine your payslips and reference letter from your employer before they grant you a home loan.
  • You need to have form 16 to apply for a home loan.
  • If you have a co-applicant and counter when you apply for a home loan, their income details and financial background are also examined by the bank officials during the review process of your home loan application.
  • Home loan for womens eligibility differs from men most of the time. Banks offer home loans to women for a minimum interest rate of 6.45%.

Also Check - ICICI Bank Home Loan Eligibility Criteria

Factors Affecting Home Loan Eligibility

Several factors affect your home loan eligibility that you need to be aware of before applying for a home loan in India.

The most essential factors that affect your home loan application include:

  • Age: Your age plays a huge role in determining whether or not you are an ideal borrower. Most banks offer home loans to those who are at least 18 years old. Young professionals are more likely to get home loans with higher 10 years of up to 25 years to 30 years compared to those who are older. 
  • Income: Your income details are one of the first things that the bank professionals review before granting you a home loan. On average, a monthly income of 25,000 is considered decent for home loans. You can get home loans at lesser incomes as well with shorter tenures. However, income expectation remains higher for self-employed individuals compared to those who are salaried.
  • Credit History: Your credit history reflects your nature as a borrower. How you handled your past repayments makes a huge difference in your housing loan eligibility. On average, 750 is considered a decent credit score for all home loans offered by the leading banks in India. If your credit score is low, ensure that you focus on improving it before applying for a home loan to increase your chances of getting home loan tax benefits.

Selected Tenure: Banks are more likely to grant loans to those who select longer tenures. If you select a long tenure of up to 25 years to 30 years, or home loan eligibility improves. 

Also Read - Home Loan Eligibility Criteria Varies by Your Employment Type

How to improve home loan eligibility?

There are several ways that you can follow in order to improve your housing loan eligibility. Some of the most common ways that most people can follow include:

  • Improve your credit score: If you do not have a decent credit score, chances are your loan requests will end up getting rejected by banks. Make sure you focus on maintaining a credit score of 750 and above all the time. Pay your EMIs, bills, and debts properly and maintain a good credit score.
  • Choose a longer tenure: Select a longer tenure of up to 25 years to 30 years to increase your home loan eligibility. Your EMI amount will be lower in this case which will help you make timely payments.
  • Apply with a co-applicant: If you do not have a decent credit score, make sure you consider applying with a co-applicant with a good credit score to improve your housing loan eligibility

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Home Loan Eligibility FAQs

✅ How can you Check Home Loan Eligibility based on salary?

Visit your preferred bank's official website and use the online EMI calculator to calculate your monthly instalments by selecting your preferred loan amount. For example, in order to check 50 lakh home loan EMI with a monthly income of 30,000/-, you need to select the loan amount, your preferred tenure, and your income in order to check your monthly instalments. The Loan-to-Value ratio is used to review the risk factors in case of loan disbursals.

✅ What are home loan eligibility documents?

You need to have valid identity proof, address proof, and income proof, including your bank statements for the last six months, salary certificates, form 16, property detailed documents, payslips, and other documents that reflect your income details.

✅ What are the Minimum home loan eligibility requirements for an NRI?

The eligibility for a home loan for NRIs differs from one bank to the other. However, on average, those who have a monthly income of at least 40,000 are considered decent borrowers by financial institutes in India. Those who have a credit score of 750 and above are preferred.

✅ Can I get a top-up loan in addition to my existing home loan?

Yes. If your current loan amount does not fulfil all your property’s construction and renovation requirements, you can apply for a top-up loan to cover your additional expenses. Many banks also allow you to utilise the top-up loan amount for business or personal purposes.

✅ Am I eligible for tax benefits if I take a home loan?

Under section 80 C of the income tax act, every individual is entitled to receive tax deductions on the entire loan amount. The amount can go up to 1.50 lakh as per the policies.

✅ What security needs to be provided when applying for a home loan?

It can be your life insurance policies or other documents such as your pledge of shares or securities and investments details.