Every banking or financial institute has its eligibility criteria which they consider when you apply for a home loan. You must consider these eligibility criteria before applying for the loan, as it can impact you adversely if your loan gets rejected. In addition, almost all home loan providers have their online eligibility calculator tool for your convenience, which you can use to ensure that you meet their requirements before applying. Checking the housing loan eligibility criteria also helps you save time and quicken the process by getting your documentation ready beforehand.
Factors for Determining Housing Loan Eligibility Criteria
Though the values of the eligibility criteria may vary for different financial institutions, the factors considered when applying for a housing loan are the same. Below you can find a list of various factors to consider:
How much you earn plays a significant role in determining the home loan amount and your ability to repay the loan and is used by banks or financial institutes.
2) Employment Status:
Usually, the applicant’s employment status is also a necessary factor that gets considered. The employment status classifications are salaried and self-employed individuals, which determines specific terms and documentation requirements.
The age limit for obtaining an instant home loan varies per the lenders and is mainly in the range of 18 to 70 years. Usually, the younger you are, the longer the lenders provide repayment duration.
4) Credit Score:
This factor is among the most critical criteria for determining your eligibility for a housing loan, and most banks prefer it if you have a score of 750 and above. The higher your credit score, the better your chances of qualifying for the loan and getting lower interest rates.
5) Employment Tenure:
An applicant who has been working for a company for a longer duration has a better chance of getting a home loan as it reflects the person’s stability.
6) Previous Financial Liabilities:
Whether you get a low-interest home loan or the amount you are looking for gets determined by your existing financial liabilities and whether you are paying them regularly.
7) Kind of Property:
There are different kinds of properties that you can purchase, and the lending institute considers this factor, too, to decide how much loan to give you. For example, here are some loans on different kinds of property:
- There are home loans that you can use to purchase a new apartment or a house.
- A loan for buying an empty plot of land where you want to construct a new house is also available.
- Financial institutions even provide loans for the construction of new residential buildings.
- You can get a Housing loan for home improvements.
- When you want to build an extension to your existing house, you can apply for a housing loan.
8) Valuation of the Property:
The lending institution will evaluate the property you want to purchase before confirming and approving the loan amount. They will look at details like land papers, building plans, architect’s designs, pending legal actions, and the government circle rate of the property, among other information.
Ways to Improve Your Housing Loan Eligibility Criteria
Planning before applying for a loan to buy or build a house is always better. This way, you can ensure that you take specific steps to improve your eligibility criteria by following the points given below:
- Make sure to pay any old liabilities you have before applying.
- If possible, apply for a loan jointly with your spouse if both of you are working, providing a better chance of getting the required amount.
- Ensure your credit score is healthy by paying your credit card bills on time and any existing loan EMIs. When you have higher credit scores, it increases your chances of getting the cheapest home loan interest rate.
- You can also apply for a longer time to repay your loan, which also helps.
- Also, ensure that you disclose any additional income source other than your salary to get more considerable sums to borrow.
Using a Housing Loan Eligibility Criteria Calculator
Every banking and non-banking financial institute provides a home loan eligibility calculator that is easy to use on its official website. It is a free tool that uses specific input criteria you must enter. Then, based on the requirements set up by the lender, it will calculate and show you your eligibility for the best home loan offer. Some of the inputs that you will have to provide are:
- Date of Birth
- Choice of the city where you would like to take the loan
- Your professional details
- Your net monthly salary
- Mention additional sources of income
- The EMI tenure preference
- The home loan amount you are looking for
- Any current liabilities that you are paying for
- You may even have to state the purpose of your loan
- Your contact details
Benefits of Using a Housing Loan Eligibility Criteria Calculator
Before you apply for a loan using the housing loan eligibility criteria calculator will benefit you in the following ways:
- Give you a quick understanding of the financial position you are in currently and help to take corrective actions.
- It will help you save time as you do not have to sit down manually and calculate everything.
- Some online calculators even compare different home loan offers from various lenders available in the market, which will help you narrow down the one suitable for you.
The decision to buy or build a house is not something that you should take lightly. There are many factors that you have to consider before you apply for a home loan. Planning for the future is essential to buying or constructing a house. The investments involved are significant, and taking a loan from banks and other financial institutions is the best way to achieve this goal. Once you understand the considerations and eligibility criteria for getting a housing loan, you can implement the required steps to get your finances on track and own that perfect house.