Housing finance companies have laid out a few eligibility criteria for individuals seeking home loans to finance their real estate property purchases. Potential home-owners need to adhere to the primary eligibility conditions to avail home loans from lenders most suitable to their financing needs.
Applicants can, however, implement a few techniques to improve their housing loan eligibility to attract the most beneficial offers on home loans in the housing credit market.
Which factors influence home loan eligibility?
Home loan eligibility is the sum of qualifying factors following which individuals can avail of home loans. Lenders evaluate an applicant’s requirement for a home loan on the basis of these eligibility criteria.
The factors affecting the home loan eligibility of an applicant are-
- Employment and income status
An individual’s employment and income status are vital while securing a home loan. A salaried employee or a self-employed individual with a steady monthly income is capable of loan repayment.
- Age of the applicant
Individuals belonging to the age bracket of 23-62 years are eligible for home loans.
In addition, lenders prefer individuals applying for housing credit closer to the lower age group bracket. This increases the chance of eligibility and loan repayment.
- Property price
Home loan approval depends on the ratio of the income of the individual with the price of the desired residential property. The price of the property should be a realistic figure in comparison with the current income of the applicant.
- Credit score
Home loan eligibility criteria also include the credit rating of an individual. Lenders prefer an applicant with CIBIL scores around or above 750 implying a positive loan repayment capability of an individual.
Ways to increase home loan eligibility
Lenders set home loan eligibility to check whether applicants have the financial means to repay the loan within the stipulated tenor. Individuals can consider the following steps for an easy home loan sanctioning and disbursement process-
- Repayment of existing loans
Individuals who are already in the repayment process for existing loans may face difficulties in availing home loans. Lenders check previous debt liabilities of applicants with respect to their monthly income.
HFCs consider the debt-to-income ratio of an individual before approving a home loan. A low ratio implies that an individual has sufficient disposable funds to repay the home loan, despite existing loans.
Repayment of existing loans thus increases the housing loan eligibility of individuals by reducing the chance of defaulting.
- An additional source of income
Individuals with additional income from rents and businesses have increased eligibility while securing home loans. Lenders approve home loans to those applicants who earn enough to repay the loan even under financial stress.
Individuals can provide proof of an extra income source to seek affordable housing loans through filed IT returns, Form 16, and other related proof.
- Home loans with co-applicants
An individual can increase home loan eligibility by adding a co-applicant while availing housing credit. A salaried co-applicant or a spouse reduces the repayment burden on the primary applicant.
With an increased chance of repayment, lenders approve proportionately higher home loan amounts for the purchase of high-value properties. Thus individuals can experience the benefits when they take a home loan jointly thanks to relaxed eligibility.
- Step-up home loans
Individuals seeking a home loan early in career are eligible for step-up home loans. This feature allows a customer to pay lower EMIs initially. Higher EMIs can be paid later during the loan tenor.
A home loan eligibility calculator enables an individual to check home loan eligibility online.
Home loan document requirement
The documents required for home loan eligibility include-
- Aadhaar Card, Voter ID, and PAN Card.
- Electricity bill, gas bill, and driver’s license.
- Form 16 and other income proof details.
- Account statement from the applicant’s financial institution.
Individuals can possibly increase their home loan eligibility by maintaining a few healthy financial practices. Refer to leading lenders and fulfill the set eligibility criteria to avail a home loan at the most beneficial terms and features.