The dream of owning a home is one that many people share. It’s a symbol of stability, security, and comfort. But for many, the dream of homeownership can seem out of reach. One of the biggest hurdles to buying a home is getting approved for a home loan. Lenders have strict home loan eligibility criteria that borrowers must meet to qualify for a desired amount.
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If you’re thinking about buying a home, it’s important to understand the home loan eligibility criteria of different banks/NBFCs. It will help you determine if you’re eligible for a loan and how much you can borrow.
The eligibility requirements for a home loan vary from lender to lender. However, there are some general requirements that most lenders will follow.
Lenders consider the borrower’s current and retirement age as key factors in determining home loan eligibility. With the maximum loan tenure capped at 30, most lenders require borrowers to be at least 18 years old while applying for a home loan and no older than 65 years at maturity.
As a rule, banks calculate home loan eligibility based on the number of working years the borrower has left before retiring. For instance, a person who has 10 working years remaining is likely to have a weaker ability to pay loan instalments than someone with 20 years.
Other than age, factors such as nationality, gender, and educational qualification are also considered when determining home loan eligibility. Additionally, lenders may consider a person’s professional profile, whether she/he is employed or self-employed.
Credit history or credit is a reflection of a person’s past payment behaviour on a credit card or a loan. This information allows a lender to decide whether to approve the new loan amount. A person with an average credit score of 750 has a higher chance of qualifying for a mortgage loan than a person with a credit score of 550. Moreover, having a higher credit score also ensures a larger loan amount at a low interest rate. Hence, it is advised to keep your cibil high by paying your debts on time.
Before approving a home loan, banks and NBFCs also look at the borrower’s repayment capacity, including the applicant’s income, employment status, assets, existing savings, and other sources of income. This ensures they have enough income to afford the monthly payments and that the EMIs charged do not exceed 50% of the income.
The higher your monthly income, the greater the space for loan repayment. Therefore, it’s always better to calculate repayments beforehand. One way to check the repayment schedule is by using a home loan EMI calculator.
A lender’s decision to approve a housing loan can be greatly affected by a borrower’s financial liabilities, such as student loans, personal loans, and credit card debt. The repayment history on these types of debts is taken into account when computing loan eligibility, as this ensures that a person will have the means and ability to make the necessary payments on the loan.
With all the existing liabilities involved, it helps them determine whether the borrower can manage the debt repayment. For instance, an institution may view a borrower as a higher risk if he or she has a large credit card balance and a high-interest rate on the loan.
The traits of the desired property include the location, type, age, or condition, and estimated value of the property. Lenders inspect the type of property to determine the level of risk associated with the loan. They also assess the revenue it will generate and its potential to appreciate over time.
A property in a desirable location with good condition often yields higher loan approval rates. Conversely, a property with the poor condition will likely receive an unfavourable assessment.
Those interested in taking out a home loan should check the eligibility criteria sought by top banks.
| Employment Type | Home Loan Criteria for Salaried | Home Loan Criteria for Self-Employed |
| Applicant’s Age | 21 – 65 Years | 21 – 65 Years |
| Minimum Salary | Rs 1.2 Lac per annum | Rs 2 Lac per annum |
| Loan Amount Offered | 75 to 90% of the total property cost. | 75 to 90% of the total property cost. |
| Loan Tenure | Up to 30 Years | Up to 30 Years |
| Nationality | Indian Residents/NRI | Indian Residents/NRI |
| Employment Type | Home Loan Criteria for Salaried | Home Loan Criteria for Self-Employed |
| Applicant’s Age | 18-70 Years | 18-70 Years |
| Minimum Salary | Rs 1.8 Lac per annum | Rs 2 Lac per annum |
| Loan Amount Offered | 80% to 90% of the total property cost | 80% to 90% of the total property cost |
| Loan Tenure | Up to 30 Years | Up to 30 Years |
| Nationality | Indian Residents/NRI | Indian Residents/NRI |
| Employment Type | Home Loan Criteria for Salaried | Home Loan Criteria for Self-Employed |
| Applicant’s Age | 21 – 70 Years | 21 – 70 Years |
| Minimum Salary | Rs 1.8 Lac per annum | Rs 2 Lac per annum |
| Loan Amount Offered | Up to 90% of the total property cost | Up to 90% of the total property cost |
| Loan Tenure | Up to 30 Years | Up to 30 Years |
| Nationality | Indian Residents/NRI | Indian Residents |
| Employment Type | Home Loan Criteria for Salaried | Home Loan Criteria for Self-Employed |
| Applicant’s Age | 23 – 60 Years | 28 – 70 Years |
| Minimum Salary | Rs 1.44 Lac per annum | Rs 1.5 Lac per annum |
| Loan Amount Offered | Up to 80% of the total property cost | Up to 80% of the total property cost |
| Loan Tenure | Up to 30 Years | Up to 30 Years |
| Nationality | Indian Residents/NRI | Indian Residents |
| Employment Type | Home Loan Criteria for Salaried | Home Loan Criteria for Self-Employed |
| Applicant’s Age | 23 – 62 Years | 23 – 62 Years |
| Minimum Salary | Rs 3 Lacs per annum | Rs 3 Lacs per annum |
| Loan Amount Offered | Up to 7.5 Cr | Up to 7.5 Cr |
| Loan Tenure | Up to 20 Years | Up to 25 Years |
| Nationality | Indian Residents | Indian Residents |
| Employment Type | Home Loan Criteria for Salaried | Home Loan Criteria for Self-Employed |
| Applicant’s Age | 21 – 60 Years | 21 – 65 Years |
| Minimum Salary | Rs 1.2 Lac per annum | Rs 2 Lac per annum |
| Loan Amount Offered | Up to 5 Crore | Up to 5 Crore |
| Loan Tenure | Up to 30 Years | Up to 30 Years |
| Nationality | Indian Residents/NRI | Indian Residents |
**The home loan criteria are subject to change at the discretion of the bank. Check the bank’s official website for the latest information.
For calculating your eligibility, home loan lenders compute some ratios.
This ratio is calculated by dividing your monthly debt payments by your monthly income. A higher DTI indicates that you may have difficulty maintaining loan payments, putting you at a higher risk of default. Generally, lenders expect a DTI of 36% or less.
An adequate down payment reduces the loan size and indicates the borrower’s commitment to the loan and ability to save money. The amount of the down payment helps calculate the loan-to-value (LTV) ratio. Lenders typically limit the LTV ratio to 80%. This means that you will need to make a down payment of at least 20% of the purchase price. However, some banks or NBFCs might offer loans with a lower down payment, such as 10%.
The amount of home loan you can get depends on your credit score, income, and other factors that an individual lender considers. You can get more information by talking to home loan advisors or visiting the lender’s websites.
To be eligible for a home loan, you need to have a good credit score, a steady income, and the needed down payment. You may also need to meet additional requirements set by the lender.
You may not need a co-signer to get a home loan, but it can help you get better rates if you do have one.
Generally, a credit score of 650 or higher is considered good and may make someone eligible for a home loan. However, lenders may also consider other factors, such as income and debt-to-income ratio.
Yes, it is possible to get a home loan with a bad credit score. However, you may have to pay a higher interest rate and/or have other qualification criteria met. In addition, it is critical to find lenders who specialise in home loans for people with bad credit.
Lenders usually accept income from a job, business, or investments.
Most lenders offer loans up to 80-90% of the home value.
Different lenders may ask for different documents, but some of the common ones include proof of income, proof of address, credit history, and bank account statement.
It depends on the borrower and lender. Considering everything is in place, it may take 3 days to 3 weeks.
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