If this is your first home loan, there could be many questions on your mind and there are umpteen chances that you could miss out these factors. We did the heavy lifting and listed down all the important points that you need to watch out for before taking up a home loan

1. Obtain Your Credit Report 

The first and foremost thing that you should do is get your credit report. It has become simple ever since RBI has made it mandatory for the credit bureaus to provide their customers with 1 free credit report each year. So, get your credit report and check your credit score. Any credit score above 750 is considered a good credit score. The reason behind check your credit score first before doing anything else is because your credit score is like a report card on your credit health, i.e. how consistent you have been in repaying your past loans. With a high credit score you showcase that you are very meticulous in repaying your loans and viz-a-viz instills confidence in the lender to provide you with a home loan. With a good credit score you can negotiate with the lender for better terms. 

Additional Reading: Step-up home loans: The pros and cons

In case you have a low credit score check out our article on how to improve it. This way your loan approval will not get rejected outright.   

2. Meeting Eligibility Criteria 

Last but not the least meeting the bank’s eligibility criteria. Each bank has their own eligibility criteria which need to be fulfilled by the borrower before they approve any loan. Home loans being large sum banks/NBFCs are more stringent and do their due diligence before approving any loan. The general eligibility criteria are 

  • Age: Any potential borrower needs to be more than 21 years old and less than 60 years to make sure the loan end before they retire. Thus, the loan tenure will be determined by at what age you take a loan. 

  • Salary: It is based on your salary that banks will decide on how much loan a person is eligible for. They will take into consideration the loan to income ratio to make sure the borrower has at least 50% to 60% of the monthly income after paying EMI for their daily expenses. Thus, if you have higher salary higher will be your loan eligibility.  

  • Company you work for: Banks and NBFCs have a list of companies which they feel are good companies whose employees will have a secure and stable job. This list is there to safeguard the lender. If you work in a good company, you have a good chance of getting a great loan offer. 

  • Documents: Banks and NBFCs will scrutinize the documents submitted to bank, be it your personal information or the home documents. Even a small mismatch or issue will cause the bank to reject your loan application. So, make sure you double check all the documents that the lender asks for are in order. 

Additional Reading: How to Get the Cheapest Home Loans?

3. Keep Down payment ready 

The next thing that you need to keep ready is the down payment. You will start looking for properties only after finalizing your budget based on which you will decide the location. With this information you can keep your down payment ready which every seller will expect you to pay. The reason behind this down payment is not just to make sure the seller doesn’t look for other buyers but also to safe guard the seller’s interest to make sure the buyer should also not backout of the deal.  

Hence the down payment might be on the higher side as the money involved in real estate industries is also high. So be ready to pay the down payment to make sure you don’t loose out on your dream house. 

4. Fixed or Floating? Interest Rate dilemma  

Next comes choosing the interest rate type. There are 2 type of interest rates namely fixed and floating, where in the fixed interest rate you will pay the same EMI for the rest of the loan tenure. It will not get affected in anyway for the entirety of the loan tenure. On the other hand, the floating interest rate is where the EMI will differ with respect to the economy and market fluctuations. You are lucky if your EMI decreases with decrease in the interest rate but if the interest rate increases you will have to pay more.  

To read more on the difference between fixed and floating rates read this article 


Buying a home for the first time is a big achievement but also a scary one as a lot of money is involved. Keep these points in mind to sail through the process of buying your home without any glitches.