Banks have a certain set of eligibility criteria that applicants need to fulfill to get their home loan application approved. If the applicant is able to fulfill the eligibility criteria, the bank then ascertains that the borrower can repay the borrowed amount easily and would not default on the loan. However, if an applicant fails to fulfill the eligibility criteria, the bank would reject their application, which would result in a negative impact on the credit profile of the user. Not only a negative impact on the credit profile, but a rejection on a loan application decreases your overall credit score. A negative credit score means that it would now be difficult for you to get approval on a home loan in future. Repetitive loan rejections make you look credit hungry in front of the banks along with reducing your overall credit score.
The loan amount or the sum of money that you can borrow from the bank in the form of a home loan is also determined by the bank by taking into consideration the factors like your income, existing loans, age, employment status and your credit score. Whenever you apply for a home loan, your monthly income plays a vital ro;le in determining the maximum possible loan amount that you can get approved based on your income. Majority of the banks approve approximately 85% of the property value as a home loan. The rest 20% you would have to bear from your pocket as a down payment.
Home Loan Eligibility
Different banks might have their own set of eligibility criteria depending on various bank requirements. Although, the basic eligibility criteria remains the same across the major banks throughout the country. The standard eligibility criteria for a home loan depends on a lot of factors like your age, employment status, CIBIL Score along with your income levels.
Your eligibility on a home loan is an important factor in determining your loan amount that is to be disbursed. Banks generally approve home loans about 80% of the total property value. The rest of the amount has to be paid by the borrower as a form of down payment for the house that he is willing to buy. However, the maximum amount that a salaried employee can apply for as a home loan is set up to INR 3.5 Crores. Whereas on the other hand the maximum home loan limit for the self-employed applicants is set upto INR 5 Crores.
| ELIGIBILITY CRITERIA | |
| Age Limit (Salaried Individuals) | 23 Years to 62 Years |
| Age Limit (Self-Employed) | 25 Years to 70 Years |
| CIBIL score | 750 or above |
| Work Experience for Salaried Individuals | Min. 3 Years of Work Experience |
| Business Continuity | Min. 5 Years of Stable Business Background |
| Salary | A Minimum Salary of INR 25,000 |
| Nationality | Indian Citizen |
The above shown table shows the home loan eligibility criteria of major banks that you need to fulfil in order to get approval on your home loan application. In case you do not follow all the eligibility requirements, there are ways through which you can get approval for your home loan application. One of the most popular ways to get approval on a loan application without fulfilling the eligibility requirements is to assign a co-applicant on the whole home loan process. Along with the security that you provide the bank with, when you apply for a home loan if you assign a co-applicant on the loan you increase your creditworthiness in front of the banks. Banks tend to trust you based on your co-applicant. As banks tend to think that now you would not default on the monthly repayments of the loan.
Banks do not just want your CIBIL score to be above 750, but they also need a strong credit report. If you have ever defaulted on any of your previous loans. It would appear on your credit report and banks. Would then doubt if you would be able to repay the loan amount.
EMI Calculator
Banks take a lot of factors into consideration while determining your home loan EMI. To get more accurate information about the EMI on your home loan you can use a home loan EMI calculator. The EMI calculator is the best tool to get accurate information as it considers information like the principal amount of the loan. Loan tenure, and the interest rate to determine your EMI amount. The lower your loan tenure, the higher would be your EMI amount and vice versa. However, if you choose a shorter loan tenure, you save a lot on the final interest amount that you would have to pay on the whole loan amount, apart from the higher monthly repayments.
Below mentioned is a table that shows an example of EMI amounts for some loan amounts with a fixed rate of interest on different principal amounts and different loan tenures.
| Loan Amount | Interest Rate | Loan Tenure | EMI |
| INR 50,00,000 | 7% p.a. | 20 Years | INR 38,765 |
| INR 40,00,000 | 7% p.a. | 15 Years | INR 35,953 |
| INR 30,00,000 | 7% p.a. | 20 Years | INR 23,259 |
| INR 20,00,000 | 7% p.a. | 10 Years | INR 23,222 |
The above mentioned table shows the EMI amount for a home loan with different loan principal amounts as well as with different loan tenures. The table broadly shows the EMI on a higher amount with a longer loan tenure as well as a shorter loan tenure. The EMI on a home loan of INR 30 Lac. for a loan tenure of 20 years is almost equal to the EMI of a home loan worth INR 20 Lac. for a loan tenure of 10 years. Therefore, it is important to choose the loan amount as well as the loan tenure wisely. However, when you opt for a longer loan tenure, even the EMI amount would be less but you would end up paying more interest amount at the end of the loan tenure than what you would be paying on shorter loan tenure.
Therefore, it is a good idea to verify your maximum loan eligibility with a home loan EMI calculator and adjust your spending appropriately. Make quick comparisons of the perks given by several banks before applying for the home loan of your maximum capacity. By doing this you also make sure that your loan application would get approval and would not face rejection.