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Home Loan issuers in India

Overview

Having a home is the biggest asset that a person can own. Everyone dreams of owning a home. It’s the space where they can create happy memories with their family. However, buying a home is no easy task. Over the decades, real estate prices have gone so high that buying a home without any external financial help has become practically impossible in today’s times.

This is where the banks step in. Banks and HFCs (Housing Finance Companies) provide home loans to eligible customers to help them purchase their dream homes. There are also government-backed schemes where a percentage of the cost of the house is borne by the Central or State Government or both in combination with financial institutions.

Since the quantum of home loans is huge and the tenure of the loan is usually 20 or 30 years, the eligibility criteria for the loans is quite stringent to ensure that the loans do not turn into NPAs. On this page, you can find answers to all your queries on home loan eligibility.

What is home loan eligibility?

The eligibility of a person for a home loan product of the bank is the qualifications that a borrower must meet, in order to qualify for a home loan. These requirements usually pertain to various factors like the age of the applicant, income of the applicant, credit profile of the applicant, etc. The applicants have to meet all the eligibility criteria set by the bank to be approved for a home loan. The eligibility criteria for home loans vary from one lender to another.

What are the common criteria to be eligible for a home loan?

Home loans are a very popular loan product in the loan segment. These loans are in the nature of term loans and are provided by banks as well as Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs). The eligibility criteria set for home loans are dependent on many factors that determine the eligibility of the applicant. Some of the common factors of eligibility for home loans are mentioned below.

Nationality of the applicant

The nationality of the applicant is one of the basic parameters in determining the eligibility for home loans. The majority of lenders provide home loans to only resident Indians.

Type of applicant

The lenders provide home loans to generally two types or categories of applicants namely, the salaried applicant and self-employed persons. The lender will determine the employment status and the income level of the applicant to determine the eligibility for home loans.

The Age of the applicant

The age of the applicant is a huge factor that determines the eligibility for the home loan of any lender. The applicant has to meet the eligibility criteria set by the lender to be eligible for the loan. Lenders set a maximum age restriction beyond which the applicant is not considered to be a viable candidate for home loans.

When the applicant applies for a home loan at an early stage of life the tenure of the loan is higher. This will result in lower EMI and also an affordable rate of interest. The majority of lenders require the applicant to be a minimum of 21 years of age to be eligible for home loans and a maximum of 70 years (retirement age in case of salaried applicants). These criteria vary depending on the guidelines set by the lender.

Credit score

The credit score of the applicant helps in determining the eligibility of the applicant as well as the rate of interest and the quantum of loan that can be sanctioned by the lender. A person with a higher credit score will get a home loan at a lower interest rate and vice versa.

The income of the applicant

Income is another important factor in determining eligibility for home loans. The lenders set a minimum income criterion to ensure that the lender has the capacity to repay the loan sanctioned. The applicant needs to provide documents that prove the eligibility of the applicant for a home loan from the lender.

Prior liabilities and commitments

The home eligibility also considers any prior external liabilities that the applicant may have that may make it difficult to meet the EMI for the proposed home loan. A person not having any external liabilities and a sound repayment capacity is a prime candidate for home loans

Overview of Home Loan Eligibility Criteria

There are certain factors or criteria stipulated by banks which needs to be satisfied before loan applications are approved. They are

Eligibility Criteria

Salaried and Self-Employed

Income Criteria

The minimum salary for Home Loans is Rs.12000 per month

Age Criteria

Minimum: 21 years Maximum: 65 years

Loan Tenure

Up to 30 years

Loan Amount

The loan amount varies from bank to bank starting from 70% of property value to no cap where the loan amount is based on repaying capability of the borrower

Interest Rate

6.75% - 12%

Processing Fees

0.25% to 3% (maybe waived)

Prepayment Charges

Nil

Nationality

Indian

How can I increase my home loan eligibility?

Home loan eligibility is the basis for sanctioning the loan. If you don’t meet the eligibility criteria set by the lender, worry not! You can boost eligibility by following these smart guidelines. These measures help the applicant get a higher loan at lower rates of interest or for a higher tenure. Some of such measures or tips are mentioned below:

Apply for a home loan jointly with your Spouse or other Family Member

The home loans have very stringent eligibility criteria to ensure that the loans do not turn bad and can be repaid in full by the borrowers. The applicants can increase their eligibility by jointly applying for home loans with their parents or spouse. This lets the lender increase the loan amount that can be sanctioned to the borrowers. While choosing a joint applicant, an immediate family member with a high credit score can improve your chances of getting the loan as well as offer you affordable interest rates on it.

Apply for a longer tenure

The tenure for home loans is usually for a long period of 20 years or more. A longer tenure ensures that the borrower has a longer time to repay the loan taken.

Clear existing dues

When the applicant has existing external liabilities like any other loans or credit card dues etc., such expenses reduce the eligibility or disqualify the applicant from being eligible for the home loan of the lender. One of the easiest ways to increase home loan eligibility is by reducing such external liabilities.

What is a home loan eligibility calculator?

A home loan eligibility calculator is the facility or a tool that is usually available on the websites of most lenders. This tool enables potential borrowers to get an estimate of the maximum home loan that can be sanctioned to them. The borrower will have to provide certain basic parameters for the calculation of such eligibility. Some of these parameters are mentioned below.

  • Age of the applicant
  • Loan amount required
  • Rate of interest
  • Net Monthly Income of the applicant
  • Net Monthly expenses of the applicant
  • External Liabilities (If any)

Different Types of Home Loans Available in India

In India, most banks provide the following types of home loan

Home Purchase Loans

Commonly known as a home loan or housing loan are provided for buying houses or apartments. Banks usually offer 80 to 85% of the market value of the property as a loan. They are available for various tenure periods and with fixed and floating interest rates. This can be used for purchasing new homes or old homes which have entered the real estate market as resale.

Plot Loans

This type of loan is provided for the purchase of land or an empty plot for residential activity, construction or investment purpose. This loan cannot be used for buying any agricultural plot of land. Unlike home loans where the loan amount provided is about 80 to 85% of the price of the property, land purchase loans are offered only up to 70% of the cost of the land.

Home Construction Loan

Home construction loans are provided for the sole purpose of constructing a home on an already available piece of land. The land can be an empty plot or demolishing an existing house and building a new one in its place. The loan amount provided for this is normally 85% to 90% of the construction cost.

Home Improvement Loans

These loans help the borrower with all home renovation or improvement work. They are extended towards all construction and renovation work. This could include paint job, new flooring work, plumbing or exterior elevation works are all covered under home improvement loans.

Home expansion loans

These are loans provided to the borrower for expanding their existing home. This includes expanding a single room, adding additional rooms to building a new floor above the existing house. These projects could vary from Rs. 20,000 to more than Rs.10 lakhs based on the project.

FAQs – Home Loan Eligibility

1. What is home loan eligibility?

A. Home loan eligibility is the determination of the amount of home loan that can be sanctioned to an eligible applicant based on certain preset parameters as per the guidelines of the bank.

2. How is home loan eligibility based on salary?

A. Home loan of any lender is generally provided to the salaried applicants and self-employed applicants. The salaried applicants have to meet the minimum monthly income criterion set by the bank to be eligible for the home loans along with the minimum work experience in the current employment or the overall work experience as required under the guidelines of the bank.

3. What is the eligibility for a home loan?

a. The eligibility for home loans is the parameters set by the bank to ascertain if the applicant can get the home loan of the bank. These parameters usually include the income of the applicant, age of the applicant, tenure, etc.

4. How much home loan can I get on Rs. 30,000 salary?

A. The salary of the applicant is one of the crucial conditions for home loan eligibility. Applicants can use the EMI calculator or the home loan eligibility calculator on the website of the bank to get the estimate of the loan that can be sanctioned to an applicant based on their income. If the income of the applicant is Rs.30,000, assuming the interest rate is approximately 7% per annum and the loan tenure is 20 years, the maximum loan that can be sanctioned to such applicant is Rs. 15,47,000 approximately.

5. How much home loan is eligible for my salary?

A. The amount of loan that can be approved by a lender depends on the income of the applicant subject to the maximum loan limit set by the lender. The applicant will have to get in touch with the lender to get a fair estimate of the loan amount that can be approved based on their income.

6. How can I qualify for a home loan?

A. A person can qualify for the home loan of a lender by meeting all the eligibility criteria set by such lender.

7. How much home loan can I get on Rs. 50,000 salary?

A. The amount of home loan that can be sanctioned to a person if the salary of such person is Rs. 50,000 is Rs. 32,24,000 approximately assuming that the rate of interest is 7% per annum and the tenure is 20 years.

8. How much home loan can I get on Rs. 20,000 salary?

A. The amount of home loan that can be sanctioned to a person if the salary of such person is Rs. 50,000 is Rs. 10,31,000 approximately assuming that the rate of interest is 7% per annum and the tenure is 20 years.

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