With the repo rate remaining constant at 4%, following the recent announcement from the RBI, India’s prospective homebuyers can celebrate. As a result of this decision from the apex bank, the home loan interest rates are not likely to alter. Thus, availing required funds for buying a house is expected to remain affordable.
Nevertheless, individuals still need to go through the home loan eligibility and documentation process to qualify for a housing loan. In this process, they take the assistance of an eligibility calculator for more details.
Home loan eligibility criteria
To avail a home loan without any hiccups, one needs to meet the following criteria –
- Age: 23-70 years
- Credit score: 750+
- Employment type: Both salaried and self-employed individuals
- Monthly income: Depends on the city of residence and changes from one lender to another
- Work experience: Varies as per the lender’s requirements
Along with these, financial institutions may have specific requirements, which individuals need to meet to qualify for a home loan.
Along with this, housing loan aspirants need to submit the required documents to complete this process. Here are the details –
- KYC details
- Address proof
- Income proof (form 16/salary slip/ITR documents)
- Business proof for self-employed individuals
- Bank account statement
- Property papers
Keeping these documents handy will help debtors to complete this process quickly and without fail.
Furthermore, meeting the housing loan eligibility criteria is essential to keep the home loan EMIs in check. However, before moving on to the points of improving eligibility, one should know the eligibility calculators that can be helpful in this application process.
Home loan eligibility calculators
These are online devices that allow individuals to find the loan amount they are eligible for within a few seconds. Typically, they have various tabs like monthly income, loan tenor, etc., where borrowers need to enter respective values to find the result.
Moreover, applicants can alter the numbers in these tabs as many times as they want to find a home loan amount that meets their requirements. Online devices like these are free to use, and leading financial institutions provide this facility to help their customers to find their perfect financing solution.
Furthermore, to increase customer convenience, lenders have also introduced pre-approved offers. These offers streamline the loan application process and save time. It is available with financial products like home loans, loan against property, etc. Borrowers can check their pre-approved offers by submitting their essential contact details.
Home loan eligibility calculator can be effective only if one can meet the required criteria without any hiccups. Nevertheless, individuals who are struggling here can work their way to improve upon these pointers by following some simple tips.
Top 4 tips to improve home loan eligibility
- Increase the FOIR
FOIR or fixed obligation to income ratio represents the proportion of an individual’s monthly income and his/her fixed obligations. Therefore, the higher the FOIR, the lower the chances of securing a home loan. Hence, it is ideal to keep it as low as possible, preferably under 40%, to increase the chances of getting credit.
- Include additional income sources
Repayment capacity plays a major role in home loan eligibility, and to improve on this pointer, individuals can include their different income source in their application. Borrowers can mention their rental income, interest income, etc., alongside their fixed monthly earnings to bolster their repayment capacity.
- Add a co-applicant
Adding a co-applicant can be a great idea to improve housing loan eligibility. In such cases, the financial institution will consider the repayment ability, credit history, and other factors of both the applicants. Hence, if one lags behind and the other has excellent credentials, debtors can negotiate a good deal.
- Opt for a longer tenor
Switching to a longer tenor can always help to improve the eligibility pointers. It will lower the home loan EMIs and, in turn, match the desired repayment capacity.
Home loan eligibility parameters bring standardisation to the application process. It allows individuals to judge their capabilities and then prepare accordingly to take up a significant financial commitment, such as a home loan.