You have finally decided to fulfill your dream of owning a home. You have also set your eyes on some amazing properties and now all you need is to pay for it. This is something that is the issue for the majority of people. How to arrange for the money? First thing that comes to mind is getting a house loan, for obvious reasons. It lets you have the money you need to buy a house, it helps you save tax, and it also is the fastest and the most convenient way to get the money for your dream.
Now, you have decided to make your dream of owning a house come true, what’s the next thing you need to do? The first step of getting a home loan is checking for eligibility. Home Loan eligibility depends on a lot of factors, such as the monthly income, present age, credit score, financial liabilities, credit history, retirement age etc.; we will talk about them in detail. Don’t worry. This may sound a bit overwhelming but it’s not. You can actually check your home loan eligibility in a jiffy. There are various home loan eligibility calculators available online which can be used to check the eligibility as well as to plan your finances.
The home loan eligibility calculator has some parameters that work across banks and other financial companies. It is not only available free online, but is super easy to use too. All you need to do is enter your current salary, age, location, credit score, and financial liability.
All banks have different criteria but, majorly it is the same.
Age limit for salaried individuals is 23 to 62 while it is 25 to 70 years for self-employed individuals.
Credit score of minimum 750 is required.
Minimum salary of 25,000 and work experience of 3 years is a must.
Business continuity for self-emplyed people is a minimum of 5 years.
However, there could also be specific criteria that are applicable for each lender according to their requirements. Understanding the criteria that is required to be eligible for a home loan helps to ensure that the process of application becomes smoother and easier for you.
Let’s discuss the different factors that can break or make your game when it comes to the home loan amount you are eligible to get.
Banks consider your employment history to understand if you are capable of paying back the loan or not. For employed people, if they have a steady income and can prove the same, it will directly make a positive impact on the bank. Your home loan amount will also directly depend on your employment details. Lenders will also check if you have been working at the same place for more than 3 months. That’s why it is advised that when you apply for a home loan, do not change your job before that. In case of self-employed people, lenders will require at least 2 years of your income documents. In case of self-employed people, lenders will require at least 2 years of your income documents.
The base of your home loan eligibility is your credit score. If you wish to have a good credit score, make sure that you pay your EMIs and credit card bills on time. Improving credit score is not just a one-night job. You have to maintain the consistency for years to keep it above the benchmark. The credit score is calculated by a trusted entity that shares it further with the banks or other lenders. More the credit score, more are the chances of getting your home loan approved. Make sure you check your credit score at least 6 to 12 months in advance before applying for a home loan.
Home loan approval requires understanding the required documents and being prepared to present them to a bank or housing finance company before applying. For your convenience, here is a checklist that you can refer to before applying for the home loan.
PAN card – Your PAN card will be verified by the lender and then only you will be able to get a home loan.
Aadhar card – This will act as the identity proof.
Bank statements – Typically, lenders ask for your 6-12 months of bank account statement. This is done to verify your income and check your ability to repay the loan.
Income tax returns or Form 16 for previous 2-3 years – This lets the bank know that you are a regular tax payer.