Check Home Loan Eligibility

Home Loan Eligibility Criteria

Buying a house through loan comes with several tax benefits. These helps in managing cash flow along with reduction to taxes. It is up to the borrower to decide the type of loan that is required. Also, it is essential to be aware of all criteria before applying for a home loan. Home loan money can be used for any purpose like construction of a new house, renovation, purchasing a new or used house. Irrespective of the applicant’s occupation or profession, there is a need to check eligibility before approaching banks and this can be done through online with a help of few clicks.

Factors That Decide Applicant’s Eligibility for Home Loan

Every bank that offers loan will look into many criteria prior to sanctioning it. Among the long list of factors, few important ones are:

  • Employment Stability: It’s a crucial aspect for home loan consideration. Unless the applicant is salaried and employed for at least 2 years in the current profession or if the applicant is self-employed with minimum 5 years of total earnings loan will not be processed.
  • Age Criteria: The younger the applicant is there is more probability of getting loan. Most banks offer home loan for salaried employees only if they are between the age group of 20 to 60 years. However for self-employed this will change to 24 to 65 years.
  • Credit Rating: Apart from the applicant’s company’s performance, individual credit rating has a lot of importance. Good credit rating will increases the chance of getting the loan with more flexibility on loan amount, EMI, tenure and interest rates. Default payment records, fraudulent tracks, and outstanding loan, will reflect negatively on the applicant, this could lead to bank’s cancelling the loan request or will charge high rate of interest.
  • Employer: If the applicant is working with an employer who has high reputation and impressive turnover, the credibility of the applicant will respectively increase. Being a part of reputed and high turnover companies is an asset for the applicant especially when it comes to applying for home loan.
  • Financial Situation: For this factor, not just present status is considered, the past records of financial stability holds lot of value in deciding the eligibility for home loan. It is a key to success in all fields if you have good financial records, this can decide the interest rate percentage, loan amount and tenure when applying for loan.
Eligible Criteria Salaried Self-employed Professionals
Age (Min-Max) 24-60

24-65

Income 1,80,000

1,50,000

Preference Bank account holders preferred

Current or saving account with the bank from where loan is applied is preferred.

Co-applicant Not mandatory – but should be family members

Not mandatory – but should be family members

Employment Fulltime job with at least 2 years of experience

At least 45 years of experience with good turnover

Documentation Bank Account Statement/ Latest Telephone Bill/ Latest Credit Card Bill/ Latest Electricity Bill/ Employers letter certifying current mailing address/Passport(Valid)- provided the passport address is present address mentioned in application form/ Government I-card with photo / Existing Registered House Lease

Bank Account Statement/ Latest Telephone Bill/ Latest Electricity Bill/ Latest Credit Card Bill/ Passport(Valid)/ Employers letter certifying current mailing address

CIBIL Required 750 or above

Required 750 or above

Banks’ Methods of Calculating Eligibility for Home Loan

There is no doubt, at the beginning every bank says it can offer 30 times of your net income, this makes the applicant exciting. But when loan is being processed, things change. The eligible loan amount will fall; too many other criteria will have a call on the loan amount and interest rate decision. It is advisable to be aware of how banks calculate home loan eligibility. Nothing is rocket science, it’s all merely Maths calculation and here it goes. Net income is the total of Basic salary, HRA (House rent allowance), Medical allowance, LTA (Leave travel allowance), Performance bonus, Special allowance, Conveyance allowance, PF, Food coupons, and any other allowance. But only few of these are considered when it comes to home loan net income calculation. This is the first and basic reason things change while loan is getting processed.

Banks exclude LTA and medical allowance while calculating net income. Thus the calculation is Net income minus (LTA+ medical allowances amount) = New net pay. The other expenses to be considered while purchasing a house through loan are the sources of fund for stamp duty and registration charge. It is essential to be mindful that this charge is calculated on the super built up area and not-built up area.

To put this into few simple steps:

Step 1: Bank will look into your salary slips and banks statements to calculate the income level
Step 2: It then calculates the amount that is saved, bank usually assumes 30% of your income as savings, say your income is 50,000, and then saving is 15,000.
Step 3: If there are existing loans EMIs it will be reduced from the income
Step 4: Banks do a backward calculation to understand how much loan amount can be offered according to the saving amount determined

Specific Eligibility Criteria of Various Loan Providers

The top 3 banks that offer home loan in India are SBI, ICICI and Axis. Loan eligibility criteria for each of these providers differ according to various factors. Some of these criteria are listed below:

SBI Home Loan Eligibility Criteria

SBI offers home loan only post thorough scrutiny of the applicant’s request. It has fast approval processes with minimal and easy documentation. The list for the same is here:

Eligibility:

Criteria Salaried Self employed
Age 18 years to 70years 21 years to 70years
Income Rs.1,20,000 (p.a.) Rs.2,00,000 (p.a.)
Loan Amount Offered 5,00,000 - 1,00,00000 5,00,000 - 2,00,00000
Tenure 5years-20years 5years-20years
Current Experience 2years 3years
1) Identity & residence proof 1) Identity & residence proof
2) Application form with photograph 2) Application form with photograph
3) Form 16 3) Education qualifications certificate & proof of business existence
Documentation 4) Last 3 months salary slip  4) Business profile
5) Processing fee cheque 5) Last 3 years profit/loss & balance sheet
6)  Last 6 months bank salaried credit statements 6) Processing fee cheque
  7) Last 6 months bank statements
1) Identity & residence proof 1) Identity & residence proof
2) Application form with photograph 2) Application form with photograph
3) Form 16 3) Education qualifications certificate & proof of business existence
Documentation 4) Last 3 months salary slip  4) Business profile
5) Processing fee cheque 5) Last 3 years profit/loss & balance sheet
6)  Last 6 months bank salaried credit statements 6) Processing fee cheque
  7) Last 6 months bank statements
CLR Rate for 1 Year 9.10% Base Rate 9.30%
Repayment period 5 - 30 Years Processing Fees 0.25% or Max. Rs.10000
Age Eligibility Factor 18 – 70 years Balance Transfer Pro. Fee 0% till 30 Sep 2016
Min. Income for Salaried 10000 p.m. Min. Income for Self Employed 16500 p.m.
Max Loan amount upto 30 Lakh property value 27 Lakh Max. loan amount above 30 Lakh 80 - 85%
Interest Rates for women 9.30%
Interest Rates for Others 9.35%
Interest Rates for Women above 10 million 9.65%
Interest Rates for others above 1 million 9.70%
Minimum EMI per 1 Lakh 826 for women, 830 for others

ICICI Home Loan Eligibility

It is possible to get home loan with just 15-20 days from this bank if you have all necessary documentation and if you meet all criteria. This bank offers competitive pricing and also maintains transparent process.

Eligibility:

  • Aged between 21-65 years
  • Minimum 2 years of total work experience with regular source of income
  • Co-applicant minimum age limit is 18 years

Documents Required

Documents Salaried Self Employed Professional Self-Employed Non Professional
Application form with photograph duly signed
Identity, residence and age proof
Last 6 months bank statements
Last 3 months Salary-slips
Processing fee cheque
Form 16 / Income Tax Returns
Proof of business existence    
Business profile    
Education qualification certificate and proof of business existence  
Last 3 years Income Tax Returns with computation of Income  
Last 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account  

Axis Bank Home Loan Eligibility

If you are looking for a bank that offers fast service with less interest rate, this is the best option. It is very transparent and flexible in its eligibility criteria.

Eligibility:

Employment Type Eligibility Criteria
Salaried Individuals Government employees or individuals in reputed companies.
Minimum Age - 24 years
Maximum Age - 60 years at the time of loan maturity
Professionals Professionals - Doctors, Engineers, Dentists, Architects, Chartered Accountants, Cost Accountants, Company Secretary, Management Consultants only
Minimum Age - 24 years
Maximum Age - 65 years at the time of loan maturity
Self Employed Individuals All tax filing individuals
Minimum Age - 24 years
Maximum Age - 65 years at the time of loan maturity

Documents Required

Purpose Salaried Self Employed
Proof of Identity and Address Passport or Voter's ID card or Driving License or Job Card issued by NREGA or Aadhaar Card or PAN card (PAN Card only as identity proof) or any other document as acceptable to the Bank  
Proof of income Latest 3 Months salary slip showing all deductions and Form 16 IT returns for the last 2 years and computation of income for the last 2 years certified by a CA
Bank statement or Pass Book where salary or income is credited Last 6 months Last 6 months
Guarantor form Optional Optional

Ways to Improve Eligibility for Home loan:

  • Identify credit score reductions reason, it could be because of credit card late payments or loan EMIs defaults, etc. Defaulting and late payment is the core factor for bad credit scores thus it is essential that every individual should maintain a good track record.
  • Never default payments in future. Make all payments on time and keep sufficient balance in your bank account for ECS transactions.
  • Continuous rejection of Credit cards and personal loans will lead to drop in the CIBIL scoring, at these situations give it a break. This will help in gradually increasing the credit worthiness of the individual.

Apart from these, having good relationship with the bank manager is an add-on. Every branch manager has discretionary rights to alter loan requirements. Strive to maintain a good financial track record, to enjoy home loan benefits.