Home Loan Eligibility

Home Loan Eligibility Calculator 

Home loan eligibility criteria share common parameters among all banks and Non-Banking Financial Companies (NBFCs).

However, it's essential to note that individual lenders may have specific criteria tailored to their unique requirements. Familiarizing yourself with these eligibility criteria can streamline and simplify the home loan application process.

Eligibility Criteria for Home Loan

Note: Loan eligibility criteria vary depending on the specific bank or lender. Approvals are determined based on factors such as borrowers' income, credit history, and their pre-existing relationship with the bank.

Home Loan Eligibility Calculator

(CALCULATOR)

Eligibility for Home Loans of Top Banks in 2023

After determining your eligibility for a home loan, you can compare home loan interest rates from various banks and choose the one that best fits your needs.

How to Verify Home Loan Eligibility on CredBharat? 

Utilize CredBharat's home loan eligibility calculator to determine which banks offer you eligibility for a home loan. You can effortlessly compare and select the most suitable home loan using this tool available on the CredBharat platform. The process is straightforward and requires only basic information. Here are the steps to check your eligibility through CredBharat.com:

• Visit the CredBharat Home Loan Eligibility page.
• Select your employment type from the provided options.
• Input your gross fixed monthly income and proceed by clicking 'Continue' on the following screen.
• Enter the PIN code of your current residential address.
• Specify the purpose of your home loan on the next page.
• Enter your mobile phone number.
• Check the box to grant contact permissions.
• Fill in your full name, date of birth, and email ID in the designated fields and click 'Continue.'
• Enter the OTP sent to your mobile phone number and click the 'Submit' button.

Following these steps, you will be able to view all the home loan offers for which you are eligible and initiate the home loan application process. You may also consider using the CredBharat Home Loan EMI Calculator to compute your monthly EMI payments for the selected home loan product.

How Home Loan Eligibility Gets Computed? 

Let's consider the case of Chandra Patra, an employee at a prominent company in India. Here's a breakdown of his salary:

Let's assume that Chandra has no existing loans or financial liabilities, and his net available income is Rs. 1,03,400. It's essential to note that the bank does not consider the Leave Travel Allowance (LTA) or medical allowance when calculating the eligible salary. These allowances are excluded because they are not part of an individual's regular salary; instead, they are provided as reimbursements for specific expenses like medical needs or travel.

As a result, the bank or lender deducts the LTA and medical expenses from the net income. Chandra's adjusted net income is now Rs. 1,03,400 - Rs. (9,000 + 2,000), which equals Rs. 92,400. Therefore, Chandra Patra's loan eligibility is calculated as Rs. 92,400 multiplied by 60, resulting in Rs. 55,44,000.

For home loans, most banks typically cap the Equated Monthly Installment (EMI) at a maximum of 40% to 50% of the monthly net income. This means that your eligibility for a home loan is determined by ensuring that the EMI does not exceed 50% of your monthly income.

What Factors Impact Home Loan Eligibility? 

Age Limit: The age of the applicant is a crucial factor considered by lenders when assessing housing loan applications. Typically, financial institutions aim to limit the home loan term to the primary applicant's expected retirement age. This means that younger professionals in their 20s and early 30s can secure loans with terms of up to 25 years without much difficulty. However, older applicants, especially those over 40, may encounter challenges in qualifying for extended loan tenures. In some cases, single applicants aged 50 and above have been denied home loans solely based on age criteria.

Income: Income is categorized into three groups: salaried individuals, independent professionals, and self-employed individuals. Regardless of the category, a steady and consistent source of income is essential for loan eligibility. Banks generally require salaried individuals to have completed at least one year with their current employer at the time of application. Commonly requested documents include pay slips, Form 16, bank statements, and employer reference letters. Similar proof of income is also required for co-applicants and guarantors (if applicable).

• Salaried Individuals: This category includes those working for government departments or registered private companies. Independent Professionals: This group comprises doctors, dentists, architects, engineers, management consultants, chartered accountants, freelancers, and others. They need to provide bank statements and income tax return (ITR) documents. Self-Employed: Individuals who own businesses or have additional income sources like rental properties or shareholdings fall into this category. They can apply for a home loan by providing bank statements and relevant tax-related documents.

Interest Rate: Home loan eligibility is often inversely related to the interest rate. Higher interest rates tend to reduce eligibility, while lower rates increase it.

Loan Term: Opting for a longer loan tenure can enhance eligibility by lowering monthly EMIs and making them more manageable. However, a longer tenure results in higher overall interest payments.

Existing Loans: Most Indian banks and financial institutions recommend maintaining an EMI to Income Ratio between 50% and 60% to leave room for future loans or to repay existing ones. Unsettled loans can significantly impact your eligibility.

CIBIL Score Report: Banks also assess your credit repayment history through the Credit Information Bureau India Limited (CIBIL), the country's primary credit information bureau. CIBIL maintains detailed records of your credit history and relationships with lenders and creditors. Negative entries on your credit report can substantially reduce your eligibility.

How to Assess Home Loan Eligibility for Salaried and Self-Employed Individuals?

The criteria for home loan eligibility exhibit slight variations between salaried and self-employed individuals. In most cases, lenders maintain consistent requirements related to age, residential status, and credit score for both categories. However, distinctions arise in terms of overall work experience and minimum income prerequisites. Depending on your employment status, it's advisable to contact your lender to ascertain the specific requirements for minimum work experience and income.