As per research, the demand for a home loan has increased nearly to 38% in the past few years. This can be because now home loans are available at a reduced cost, and the rules have become less stringent. However, all have to meet the required eligibility criteria and home loan requirements specified by the financial institution to avail the process.
Here are some important details to make sure you get your home loan approved!
What are the home loan eligibility criteria for individuals?
The home loan eligibility criteria vary from one financial institution to another. However, certain specifics are common for all. These are mentioned in brief below:
- The nationality of the applicant must be Indian
- Age criteria for a salaried individual vary from 23 years to 62 years. However, if it’s a self-employed individual, it will range between 25 years to 70 years.
- The lenders require you to have a minimum CIBIL score of 750
- Under employment status criteria, you will require a 3-year work experience if you are a salaried employee. On the other hand, if you are self-employed, your current business must have at least 5 years of operating history.
- The minimum salary to qualify for home loan eligibility criteria is Rs.25,000.
Other home loan requirements by lenders
Apart from the above eligibility, there are other factors that can affect your home loan eligibility. These are:
LTV or Loan-to-Value ratio denotes the percentage of loan amount a financial institution can offer you in exchange for your property mortgage’s current market value. RBI has fixed this percentage between 75% and 90% for lenders.
Better property condition
Condition of your property, its resale value and the extent of damage influence your eligibility to get a home loan to a large extent. So, if you have a property with required amenities situated in a prime location, it increases the chances of your housing loan approval.
FOIR stands for Fixed Obligation to Income Ratio, which serves as a parameter to measure your capability to repay the loan. Lenders will calculate it by comparing your monthly income with your fixed liabilities like rent and EMIs. As per the lender’s home loan requirement, your debt percentage must not exceed 50% of your monthly income for loan approval.
These are only the basic criteria that an institution requires you to fulfil. There can be more depending on the institute you choose to avail loan from. However, if you desire an effortless and minimum requirement process, you can check the pre-approved offer provided by many NBFCs. It allows you to get home loans, loans against property and others in less time.
However, before that, make sure you calculate your home loan eligibility so you can take measures beforehand if there is even a slight chance of rejection.
How to calculate your home loan eligibility?
Home loan eligibility calculators allow you to calculate your eligibility in less time. However, you will have to provide details of your birth date, monthly income, debt obligations and other details to find the ultimate result.
Calculating your eligibility using a calculator can benefit you as you can avoid all manual errors, and there is not much effort involved.
Ways to improve your home loan eligibility
To improve the result of your home loan eligibility calculators, here are some positive measures you can undertake:
- Back your application with the support of an earning family member by adding them as your co-applicant
- Show you have a steady flow of income, indicating your several investments and savings
- Avail only structured repayment plan
- Rectify CIBIL score problem (if any)
- Repay your previous loans and debts if possible
- Furnish additional sources of income (if any)
This is all the information on home loan requirements, including eligibility criteria, how to calculate it and other details. So, go through them to know where you can work to improve your chances to get a home loan.