Well , there is one question that bothers home loan seekers; Are we eligible for a home loan? The answer can be found simply by considering some factors that determine their chances.  

The most important factor of all is the money you bank in every month. After all, it is the amount you will be paying out from. So for a salaried individual the monthly income counts and for a self employed, the yearly profits identify the same. Ideally, the net income matters and banks provide home loans up to 60 times of it. For e.g. A person taking in Rs 25,000 may be offered a loan of around Rs 15 lakh. Still, the bank will consider other factors that matter too.

Additional EMIs and Handy Money
Well, the monthly installments that you will be paying along the home loan emis will also be taken into account. The money that remains in your hand after the deduction of all such installments will be the base of all calculations.

Value of the Property
Banks finance up to 85% of loan against the property’s value. So for a 40 Lakh property you would ideally get 34 Lakh. However, it will again depend upon the highest possibility of giving the emis. Hence it is a balance of income and property value that comes into the play. Ideally the bank considers carpet / built up area, age of the property, the location and the reputation of the builder. They also check the title status and ownership disputes to ensure there are no encumbrances.

Tenure of the Loan and Interest Rate

One of the most most important factors to be kept in mind. The longer the tenure, the higher the interest and the lower amount of EMI and vice-a-versa. With many lenders in the market banks are offering loans at very competitive rates of interest according to individual profile. So, before finalizing a bank its always advisable to evaluate and compare which bank fits into your pocket, in a manner of saying.

Your Credit History
One of the most deciding factor is the credit history of an individual. It is basically the information generated by credit bureaus on the basis of your past and ongoing credit records. Individuals are accorded with credit scores or points and banks take those into consideration to decide on the eligibility of an individual. The scores are affected by any outstanding on a credit card or unsecured loans. In India CIBIL is the company which awards such scores , also known as “CIBIL Score”, to individuals.

Your Age
A crucial aspect in determining the eligibility. You have to attain a minimum age of 21 years to apply which may however change with various banks. The maximum age may also vary from 58 to 65 years depending on the income source. It determines the tenure and EMI. For e.g. if an individual is 45 years of age and retires at an age of 60 then the loan tenure will be 60-45=15 years and emis will be calculated accordingly. Like said earlier, the longer the tenure, the lower the EMI’s. However, a longer period would also render the loan costlier.

A Co-applicant for the Loan
One can always tug along a co-applicant to maximise the eligibility and the loan amount. However, banks may permit only certain relationships such as friends and relatives who are not blood relatives. The banks may not consider some relationships at their own discretion.

This is not an exhaustive list and many such aspects may be brought into consideration. However, these form a base for a positive application.
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  • A Home Insurance Policy has been made just about mandatory as the rest of the things.
  • Good insight
  • Am I eligible for a Home Loan?

    I am 26. I was working 1 year back. Took a break from career and completed several certifications. Got a job offer few days back with an annual salary of Rs 5L CTC. I don't have 3months salary slip or 3Years Form16. I wanted to apply for a Loan of Rs 8Lacs Property Value Rs. 10Lacs. Would I be eligible? SBI PNB told me that they need 3 months slips. Will someNBFC or private bank entertain my application? Kindly advise.
  • Am I eligible for a Home Loan?

    I am 30. I am working since 3 years.with an annual salary of Rs 3L CTC. I have 2Years Form16. I wanted to apply for a Loan of Rs 15Lacs Property Value Rs. 18-20Lacs.

    Would I be eligible? Will some NBFC or private bank entertain my application? or Should i try my account with bank of India for home loan will be good. Kindly advise.
    • sunita33292 years ago
      For buying any house, a home buyer needs to shed 15 per cent of the marked price from his own pocket, as most banks provide up to 85 per cent home loan. And, whether a bank would lend a consumer 85 per cent of loan depends on the ability to pay that loan amount. Thus, the amount of loan a consumer can get depends on their income and existing borrowings to be paid.

      Banks, factoring in any unforeseen expenditures, make sure that all EMIs together do not exceed 40 per cent of your gross monthly income.

      Makaan.com has launched its tool that gives you a free access to check home loan eligibility and EMIs.
  • Thanks @sunita3329 ji for your response.
  • Having a previous loan (car, personal etc. ) and which has been paid correctly as per schedule also helps boost up the credit score.
  • What percentage of the salary of a home loan applicant is considered for a home loan servicing?
  • Generally, lenders consider 40% to 50% of a home loan applicant’s salary. The said percentage is considered as the percentage or the proportion available to service the loan. So it becomes obvious that the more the salary is, the amount of loan increases.
  • So all banks consider 40% to 50% of the total salary as home loan?
  • Well, the percentage varies from bank to bank and the amount may decrease or increase accordingly.