Federal Bank Home Loan Eligibility Criteria
The bank offers home loans to eligible borrowers for financing home construction and plot purchase. Prospective home loan applicants also opt for Federal Bank Home Loan for financing their home renovation or home extension. Here is the list of eligibility criteria set by Federal Bank for its home loans.
- Indian residents and NRIs are eligible to apply for Federal Bank home loans
- NRIs can avail home loans provided they fulfil the below conditions:
- The borrower’s age should not exceed 55 years at the end of loan tenure
- Monthly income of the home loan borrower should not be below Rs. 55,000
- Persons of Indian Origin (PIO) are also eligible subject to the following conditions:
- The loan is covered by a primary/collateral security of immovable property in India in the PIO’s name.
- He/she should have a valid PIO card accompanied by a valid foreign passport
- A close relative of the PIO (as defined in the Companies Act) living in India should be a co-obligant.
Tips to Improve Eligibility for Federal Bank Home Loans
Improve your Credit Score
While Federal Bank has not stated the cut-off credit score for their home loan applicants, credit score is usually one of the most important filters used by banks and housing finance companies (HFCs) for determining the eligibility of their home loan applicants. Lenders consider loan applicants having credit scores of 750 and above as creditworthy and hence, they stand a higher chance of getting their home loan applications approved. As many lenders have started setting their home loan interest rates based on their applicants’ credit score, having a higher credit score can also help the home loan applicants in availing home loans at lower interest rates.
Home loan applicants can maintain or improve their credit scores by following healthy credit behaviour including repaying their EMIs/credit card dues by the due date, avoiding multiple loan or credit card applications within short durations, regularly monitoring any loans guaranteed/co-signed by them, etc
Furthermore, home loan applicants should regularly review their credit reports to identify any errors or incorrect information present in these reports. They can highlight the mistakes in their credit report to their respective lenders/credit bureaus for correction. Rectified credit reports enhance the loan applicant’s credit score and help improve their home loan eligibility.
Those having low or no credit score can also avail Paisabazaar Step UP Credit Card, a secured credit card issued by Paisabazaar.com against fixed deposits issued by SBM Bank, to improve/build their credit score.
Opt for Longer Home Loan Tenure
Federal Bank provides home loans for loan tenures of up to 30 years for resident Indians and up to 20 years for NRI borrowers. The home loan tenure also depends on the loan applicant’s age. Banks and HFCs usually approve the home loan applications of individuals whose total EMI obligations, including the EMI of the proposed home loan, does not exceed 50% – 60% of their total gross/net monthly income. As a longer tenure can lower the EMI burden for home loan borrowers, Federal Bank home loan applicants can opt for longer loan tenures to improve their repayment capacity and increase chances of home loan approval. Prospective home loan applicants can use Paisabazaar home loan EMI calculator to find their optimum home loan tenures and EMIs based on their repayment capacity.
Adding a Co-Applicant
Home Loan applicants of Federal Bank having low credit scores or insufficient monthly income can improve their chances of home loan approval by adding any earning family member as a co-applicant. Doing so makes the co-applicant equally responsible for timely loan repayment and it also reduces the credit risk for the lender.
Adequate Funds for Down Payment
Federal Bank can finance up to 85% of a property’s value through their home loan. The home loan applicant has to arrange the remaining component via down payment or margin contribution. As a higher down payment reduces the credit risk for the home loan lenders, making higher down payment can increase the chances of loan approval.