Lenders evaluate your home loan eligibility on the basis of your age, credit score, monthly income, credit history, etc. Read further to know home loan eligibility criteria of India’s top lenders and different ways to improve it.
Home Loan Eligibility by Top Banks and Housing Finance Companies
|Interest Rate (p.a.)
|9.00% – 13.30%
|Bajaj Housing Finance
|Bank of Baroda
|8.40% – 10.90%
|Bank of India
|8.50% – 10.75%
|HDFC Bank Limited
|9.00% – 10.05%
|Kotak Mahindra Bank
|LIC Housing Finance
|8.50% – 10.75%
Eligibility Criteria for Home Loan
Some of the major parameters used by lenders to set their home loan eligibility criteria include the applicant’s age, credit score, income, occupation profile, job/business stability and repayment capacity.
Who is Eligible for Home Loan?
|Home Loan Eligibility Criteria
|Income for Salaried
|For salaried: At least 10,000 per month
For self-employed: At least 2 lakh p.a.
|Preferably 750 or above
|Salaried and Self-Employed Professionals/Non Professionals
|For salaried: At least 2 years of work experience
For self-employed: At least 3 years in the current business
Key Factors Affecting Home Loan Eligibility
Multiple factors influence an applicant’s home loan eligibility. Knowing and understanding these factors might help home loan applicants in improving their chances of availing loan approval. Here are some of these parameters based on which lenders determine home loan eligibility:
Home Loan Eligibility based on Salary/Income
Most lenders have not yet disclosed the minimum income criteria for their home loan applicants. Lenders that have disclosed their income requirements usually require their salaried applicants to have net monthly income of at least Rs 15,000 to Rs 20,000 and self-employed applicants to have net annual income of at least Rs 1.5 lakh p.a. Lenders usually set lower income requirements for applicants availing affordable housing loan schemes.
Home Loan Eligibility based on CIBIL Score or other Credit Scores
Banks and HFCs usually prefer approving home loan applications of those having credit scores of 750 and above. This is because applicants having such high credit scores tend to exercise greater credit discipline, thereby, reducing the possibility of loan default. This reduces the lending risk for banks and HFCs, leading them to set lower home loan interest rates for such home loan applicants.
Note that the minimum credit score requirement for availing a home loan may vary across lenders. Some lenders also offer home loans to consumers having no credit history.
Home Loan Eligibility based on Age
The minimum age required to apply for a home loan is 18 years with some lenders setting the minimum age requirement of 21 years. Whereas, the maximum age at the time of loan maturity is usually set at 70 years with some lenders offering it until 75 years of age. Home loan tenure usually stretches up to 30 years with many lenders capping the age of retirement as the maximum age limit. Hence, younger home loan applicants have higher chances of availing home loans for longer loan tenures.
Home Loan Eligibility based on Employment
While home loans are offered to both salaried and self-employed individuals, salaried employees have higher chances of availing home loans due to their higher income certainty. Due to the same reason, among salaried applicants, those employed with Central/State Governments, PSUs, reputed corporates and MNCs have higher prospects of availing home loans. Some lenders also set lower interest rates for such loan applicants.
Among self-employed applicants, professionals like doctors, architects, chartered accountants, etc. have higher prospects of availing home loans. Applicants whose occupation or employer profile is not included in the lenders’ list of approved employers/occupation profiles might have their loan applications rejected.
Many lenders require their salaried individuals to have at least 2 years of total working experience to be eligible for a home loan. In case of self-employed individuals, the business should run for at least 3 years. Hence, consumers planning to avail home loans in future should avoid changing their jobs, if possible.
Home Loan Eligibility based on Repayment Capacity
Banks and HFCs usually sanction home loans to applicants whose total EMI obligation, including that of the proposed home loan, does not exceed 50% of their total income. As opting for longer loan tenure will decrease the home loan EMI, those having lower home loan eligibility can improve it by opting for longer tenure.
Lenders use metrics like EMI/NMI ratio or Fixed Obligation to Income Ratio (FOIR) for determining their applicants’ loan repayment capacity. EMI/NMI Ratio or FOIR is the proportion of an applicant’s monthly income used for servicing his loan EMI obligations, including the proposed home loan EMI. Generally, lenders require EMI/NMI ratio of less than 50% to 55%, exceeding this limit will decrease the applicant’s prospects of availing loan approval.
Home Loan Eligibility based on Property Value and LTV Ratio
Property value and LTV ratio are two primary factors based on which lenders determine an applicant’s eligible loan amount. LTV Ratio is the proportion of the pledged property’s value that lenders finance through home loans. The Reserve Bank of India (RBI) has capped these ratios based on the property value, seen as below:
|LTV Ratio Limit
|Up to Rs. 30 Lakh
|Up to 90% of the property value
|Between Rs. 30 Lakh & Rs. 75 Lakh
|Up to 80% of the property value
|More than Rs. 75 Lakh
|Up to 75% of the property value
Subject to the aforementioned limits, home loan lenders further set the LTV ratio based on the risk assessment and credit profile of the applicant. Those with lower creditworthiness are usually offered lower LTV ratios.
What is a Home Loan Eligibility Calculator?
Home loan eligibility calculator is an online tool that helps prospective borrowers in determining the loan amount they are eligible for. The calculator takes inputs on age, income, tenure, interest rate and pre-existing debts to give an estimate of the eligible loan amount.
Housing loan eligibility calculators of some lender websites also require location to ascertain whether the property falls under their loan serviceable location. Consumers planning to apply for home loans should visit their respective bank websites to get a fair idea on their maximum eligible home loan amount.
Also Check: Eligibility Criteria for Top 10 Banks and HFCs
How to Use Home Loan Eligibility Calculator?
Home loan eligibility calculators are easy to use. To get results, users need to enter their gross monthly income, tenure, interest rate and existing loan EMI obligations (if any), with some lenders additionally requiring users to provide details like city, date of birth, city, and employment type.
How is Home Loan Eligibility Calculated?
An applicant’s home loan eligibility is calculated primarily on the basis of his income, loan repayment capacity and the value and other attributes of the pledged property. Other factors that lenders consider when assessing your eligibility for a home loan includes credit score, age, occupation profile, job/business stability and employer’s profile.
6 Tips to Increase Home Loan Eligibility
Some of the ways to improve your home loan eligibility are:
- Maintain a high credit score: A high credit score of preferably 750 and above improves your chances of getting loan approval and better loan rates. Responsible credit behaviour like repaying your credit card and loan EMIs by their due dates and avoiding making multiple loan applications within a short period can help in improving your credit score.
- Add a co-applicant: Lenders consider the income and loan repayment capacity of both primary applicant and co-applicant at the time of loan evaluation. Hence, adding an earning family member with a good credit history and satisfactory repayment capacity can decrease the lending risk for your home loan lender and thereby, improves your chances of loan approval. As co-applicants are equally liable for home loan prepayment, adding a co-applicant would allow the borrowers to avail bigger loan amounts and/or shorter tenures. Moreover, having a female primary loan applicant or co-applicant might even help applicants to avail concessions on home loan interest rates. Note that any delay/default in making EMI payments would also cause the credit scores of both the primary applicant and the co-applicant(s) to drop.
- Check for interest-only home loan repayment options: Many lenders offer interest-only home loan schemes branded as Step Up Home Loan, Interest Only Home Loan, Flexipay Home Loan, etc. In such schemes, borrowers pay just the interest component of the loan during the initial years and later on regular EMI payments (comprising both interest and principal component) commence until the loan maturity. These home loan schemes are best suited for those who are living on rent and intend to purchase an under-construction property. These are also beneficial for those who want to defer higher loan EMIs in the later years when they expect their income to be higher. Note that while these loan schemes increase your loan affordability, it also leads to an overall increase in the overall loan repayment amount.
- Pay higher down payments: Lenders can finance only up to 90% of the property’s value depending on the property value. The rest of the property’s value has to paid by the borrowers from his own sources as down payment or margin contribution. As making a higher margin contribution or down payment reduces the credit risk for the lenders, opting for a lower LTV ratio would increase the chances of home loan approval.
- Limit your EMIs within 50-55% of your net monthly income: Applicants having total EMI obligations, including the EMI of the proposed home loan, within 50-55% of their net monthly income have higher chances of availing home loans. Thus, those exceeding this limit can choose longer tenures for their proposed home loans to reduce their home loan EMIs. This in turn may help in bringing their total EMIs within the aforementioned limit and thereby, improve their home loan eligibility.
- Avail Mortgage Guarantee-backed Home Loans: India Mortgage Guarantee Corporation (IMGC) has tied up with lenders to offer mortgage guarantee-backed home loans to those having lower eligibility for home loan. In this collaboration, IMGC offers home loan lenders partial credit risk coverage in the form of guarantees in case of loan default. This reduces the credit risk for the banks and housing finance companies, allowing them to have more relaxed loan eligibility conditions and offer higher loan amounts through longer tenures (in case of applicants nearing their retirement age) and/or through higher LTV ratio.
FAQs on Home Loan Eligibility
1. How to Check Home Loan Eligibility?
To check an applicant’s eligibility for a home loan, lenders look into various aspects of his credit profile including his age, credit score, income, loan repayment capacity, occupation profile, employer’s profile, property features, etc. As the eligibility conditions can vary across lenders, applicants would have to check their loan eligibility by individually visiting the branch or website of their preferred banks and HFCs.
However, the easier alternative would be to visit online financial marketplaces, wherein you would be able to check and compare home loan offers from multiple lenders based on your credit profile.
2. How to check home loan eligibility in HDFC?
Use HDFC Bank’s home loan eligibility calculator to know the maximum eligible home loan amount. The calculator is easy to use and requires just a few basic inputs such as your gross monthly income, tenure, interest rate and other EMI obligations for making the final calculation.
3. How is the Eligibility for Home Loan Calculated?
Lenders calculate an applicant’s home loan amount eligibility based on multiple factors including his age, income, existing EMIs and property value.
4. How to Calculate Home Loan Eligibility for a Salaried Applicant?
Lenders determine home loan amount eligibility of salaried applicants on the basis of their monthly income, age, existing EMI obligations and market value of the property. Prospective applicants can use the home loan eligibility calculator of the respective lenders to know the maximum home loan amount available from various lenders based on their credit profile.
5. How to Calculate Home Loan Eligibility for Self-Employed Applicants?
Lenders determine home loan amount eligibility of self-employed applicants based on their age, annual income, existing EMIs and property value. Those planning to avail home loan can estimate the eligible loan amount using the home loan eligibility calculator of their respective banks and HFCs.
6. How to calculate home loan eligibility in SBI?
SBI does not have a home loan eligibility calculator of its own. Hence, those wanting to determine their SBI home loan eligibility can use online eligibility calculators available at various online financial marketplaces to get an estimate on their eligible home loan amount. Factors that may influence your eligibility for SBI home loan includes your age, income, existing EMI obligations, employment type, etc.
7. How to Increase Home Loan Eligibility?
Here’s how you can increase your home loan eligibility:
- Keep your credit at 750 or above
- Take a joint home loan
- Enquire for interest-only repayment option
- Make higher home down payment
- Limit your EMIs within 50-55% of your net monthly income
- Check for mortgage guarantee-backed home loans
8. How much Home Loan am I Eligible for on a Rs. 60,000 Salary?
Banks and HFCs decide your eligible home loan amount based on EMI/NMI (Net Monthly Income) Ratio or LTV. Let’s say, your FOIR is 50% and LTV is 90% for a property, which amounts to Rs. 66 lakh. Considering you have no other financial liabilities, the maximum amount you can pay every month is Rs. 60,000*50% = Rs. 30,000.
If you choose the tenure to be 30 years, then as per EMI/NMI Ratio, your eligible housing loan amount will be =
Rs. 30,000*12*30 = Rs. 1.08 crore. But, the LTV ratio of 90% of the property value, which will be Rs. 1.08 crore*90% = Rs. 97.20 lakh. So, the loan you can get on Rs. 60,000 salary is of Rs. 97.20 lakh.