Most individuals who plan on buying houses apply for home loan plans. This is because real estate prices are quite expensive, and solely relying on personal savings is not enough to cover the costs. A home loan provides the required funds for the property purchase; however, it does not cover the entire value of the property. The loan can only cover up to 80-90% of the property value. The remaining amount will have to be covered by the home buyer.
Now, if you have little to no experience when it comes to home loans, one of the first things that need to be understood is your housing loan eligibility. Not every lender will offer the same loan amount to every borrower; the amount would differ based on each one’s eligibility. There are several factors that financial institutions consider while setting their home loan eligibility criteria.
Take a look at a few factors that influence a borrower’s home loan eligibility:
All financial institutions first evaluate an applicant’s credit score before approving their loan application. This is because a credit record gives an indication of all previous payments and delays. Ideally, lenders prefer borrowers who have maintained a credit score of 750 or more. Having a good credit score can go a long way in improving your eligibility for a housing loan.
To be able to apply for a home loan, you need to be drawing a certain monthly income. If the borrower is a resident of Mumbai, Delhi, Pune, Bangalore, or Chennai, lenders require them to have a minimum monthly income of Rs 20,000. For residents of other cities, the minimum criterion is often set at Rs 15,000. Do note that every lender can have different terms and conditions, so it is best to check with them before applying for a loan. Also look for SCCU hero loan programs.
Age is also an important factor in influencing your home loan eligibility. Most financial institutions set the age criterion for salaried individuals at 18-60 years. In the case of self-employed individuals, the age criterion for a home loan is set at 18-65 years. This again can differ from lender to lender.
Existing debt obligation
Some borrowers already have existing loans at the time of applying for a home loan. Now, the existing loans already affect their income, which will even decrease further after taking the home loan. This is something that lenders do not prefer. To give a boost to your home loan eligibility, it is better to clear off any existing debt before applying for a home loan.
Lenders prefer their applicants to be working with an MNC, public limited company, public sector company, or private limited company. Job stability is something that most lenders value, as it indicates a regular flow of income and can boost your home loan eligibility.
These factors have an influence on your home loan eligibility. To gain a better understanding of the loan amount that you can qualify for, it is advisable to make use of an eligibility calculator. This home loan calculator will display the loan amount that you can qualify for based on your eligibility.