It’s not just enough to apply for a home loan; you should be conversant about home loan eligibility criteria. While eligibility criteria varies from one lender to another, there are a few basic tenets which you would do well to keep in mind. Age is a key factor with banks needing applicants to be a minimum of 18 years of age and a maximum of 70 years of age. Younger customers can apply for loans for longer durations. Banks will assess your monthly income as well for sanctioning a home loan. You should be earning a steady income since this is reflective of your capabilities in terms of making timely EMI repayments. You should be a salaried or self-employed borrower and you should have documents that demonstrate your income suitably in accordance with the bank’s eligibility criteria.
The loan tenor also matters since by choosing a longer tenor, you will have to pay a lower EMI although the overall interest outgo will be higher. A lower EMI amount will scale up your home loan eligibility. A minimum credit score of 650 and above should be there for lenders to approve your home loan. Your application may be rejected in case your credit score is lower than 650.
FOIR (Fixed Obligation to Income Ratio) also matters in terms of home loan eligibility. This considers all the fixed obligations of any home loan customer every month which includes current loan EMIs and so on and compares it to the borrower’s monthly income. Your fixed obligations should be a maximum of 50% of your net monthly income. This should include your home loan EMI. The value of the property is also very important. The loan amount is limited to 75-90% of the value of the property. Home loan eligibility is worked out by banks on the basis of LTV (loan-to-value) and FOIR.
Your employment details also matter immensely. A few particular industries and other sectors are considered safer by banks and some are considered as riskier. If you are working with a reputed company, you can get your chances of loan approval are higher and you can obtain the same at a more competitive rate of interest. The property location and title will also be evaluated by the bank which will also check the value of the property, its age, area of the property and sanction plan among other aspects. Also, if your chosen property has not been built on the basis of the sanction plan or cannot be sold, the bank may reject the application for a home loan. Always collect the entire lot of documents including the property title and other vital papers when you buy any property.