Home Loan Eligibility
Before you apply for a home loan, it is important to check your home loan eligibility. Housing loan eligibility calculation will help you know your chances of getting loan approval. It will also make the entire process of getting a house loan smooth and quick. Read to know home loan eligibility criteria of India’s top lenders, factors affecting it and different ways to improve it.
Home Loan Eligibility Criteria for Top Banks, NBFCs & HFCs
| Lenders | Loan Amount | Max. Tenure | Age Limit | Loan to Value (LTV) |
| Aditya Birla Housing Finance Ltd. | Based on credit profile | 30 years | 21-70 yrs. | Up to 90% of property value |
| Axis Bank | Rs. 3 L to Rs. 5 Cr. | 30 years | 21-65 yrs. | Up to 90% of property value |
| Bajaj Finserv | Up to Rs. 3.5 Cr. | 20 years | 23-70 yrs. | Up to 80% of property value |
| Bank of Baroda | Up to Rs. 10 Cr. | 30 years | 21-70 yrs. | Up to 90% of property value |
| Bank of India | Up to Rs. 5 Cr. | 30 years | 18-70 yrs. | Up to 85% of property value |
| Canara Bank | Based on credit profile | 30 years | 18-70 yrs. | Up to 90% of property value |
| Central Bank of India | Based on credit profile | 30 years | 18-75 yrs. | Up to 90% of property value |
| DHFL | Based on credit profile | 25 years | 21-70 yrs. | Up to 90% of property value |
| Federal Bank | Up to Rs. 15 Cr. | 30 years | 18-65 yrs. | Up to 85% of property value |
| HDFC Bank | Up to Rs. 10 Cr. | 30 years | 21-65 yrs. | Up to 90% of property value |
| ICICI Bank | Based on credit profile | 30 years | 21-65 yrs. | Up to 90% of property value |
| IDBI Bank | Based on credit profile | 30 years | 22-70 yrs. | Up to 90% of property value |
| IDFC First Bank | Up to Rs. 2 Cr. | 30 years | 21-73 yrs. | Up to 90% of property value |
| India Shelter Finance Corp. Ltd. | Rs. 8 L to Rs. 50 L | 20 years | 21-65 yrs. | Up to 90% of property value |
| Indiabulls Housing Finance | Based on credit profile | 30 years | 21-65 yrs. | Up to 90% of property value |
| Indian Overseas Bank | Based on credit profile | 30 years | 18-70 yrs. | Up to 90% of property value |
| Karnataka Bank | Up to Rs. 5 Cr. | 30 years | 18-70 yrs. | Up to 90% of property value |
| Kotak Mahindra Bank | Rs. 5 Cr. | 20 years | 18-65 yrs. | Up to 90% of property value |
| LIC Housing Finance | Based on credit profile | 30 years | 18-60 yrs. | Up to 90% of property value |
| PNB Housing Finance | Based on credit profile | 30 years | 18-70 yrs. | Up to 90% of property value |
| Punjab National Bank | Based on credit profile | 30 years | 18-70 yrs. | Up to 85% of property value |
| Standard Chartered Bank | Rs. 10 L to Rs. 35 Cr. | 25 years | 18-70 yrs. | Up to 80% of property value |
| State Bank of India | Based on credit profile | 30 years | 18-70 yrs. | Up to 90% of property value |
| Tata Capital Housing Finance | Rs. 3 L to Rs. 5 Cr. | 30 years | 24-65 yrs. | Up to 80% of property value |
| UCO Bank | Based on credit profile | 30 years | 21-75 yrs. | Up to 90% of property value |
| Union Bank of India | Based on credit profile | 30 years | 18-75 yrs. | Up to 90% of property value |
| YES Bank | Rs. 10 L to Rs. 5 Cr. | 35 years | 23-60 yrs. | Up to 90% of property value |
Note: The figures given in the table are indicative and are subject to periodic change at the banks /NBFCs’ discretion..
What is the Home Loan Eligibility Criteria for Salaried Applicants?
Salaried applicants, who either have permanent service in a government organization or reputed company, are eligible to apply for a housing loan. While the exact eligibility criteria for a home loan may vary across lenders, the following are some of the common eligibility criteria applicable to home loans for salaried individuals:
| Eligible Age Group | 21 to 60 years |
| Minimum Net Monthly Income | Rs. 25,000 |
| Minimum Total Work Experience | 2 years |
| Minimum Work Exp. with current organisation | 1 year |
| Credit Score | 750 or above |
What is the Home Loan Eligibility Criteria for Self-Employed Applicants?
Self-employed professionals (such as doctors, engineers, architects, chartered accountants), businessmen and other self-employed individuals who fill income tax returns are also eligible to apply for a housing loan. The following are the indicative home loan eligibility criteria for self-employed applicants:
| Eligible Age Group | 25 to 75 years |
| Minimum Annual Turnover | Rs. 15 lakh |
| Minimum Business Experience | 3 years in current business |
| Credit Score | 750 or above |
How is Home Loan Eligibility Calculated?
Your home loan application is subject to an approval and verification process. To get a home loan, you must meet your lender’s home loan eligibility criteria. These criteria are set to ensure home loan repayment. Thus, there are several factors that a lender considers when determining a prospective borrower’s eligibility for a housing loan. However, the weight assigned to these factors may differ from one lender to lender. The following factors affect your home loan eligibility:
- Credit Score/CIBIL Score: Credit score is the reflection of your creditworthiness and is a major factor in deciding home loan eligibility. A credit score above 750 and close to 900 is considered good for home loan eligibility. It increases the chance of loan approval. It also improves the chances of getting loans at better terms and rates. A credit score below 750 or close to 300 is considered poor. This score might lead to loan rejection or make you pay higher interest rates.
- Applicant’s Age: The minimum age eligibility to apply for a home loan is 18 years and the maximum age at the time of loan maturity should be 70 years. Home loans usually stretch up to 30 years; therefore, many lenders cap the age of retirement as the maximum age limit. A younger loan applicant can opt for longer loan tenure. This is because younger loan applicants have longer working years than the ones nearing their retirement age.
- Employment/Business Stability: For many lenders, salaried individuals should have at least two years of total working experience in order to be eligible for a home loan. In case of self-employed individuals, the business should run for at least 3 years.
- Debt-to-Income Ratio: To be eligible for a home loan, the percentage of current financial liabilities with respect to the income should not cross the 50% mark. This is so because a higher debt-to-income ratio would mean that a major proportion of the salary or income is going into paying off existing debts, thus increasing the risk of defaulting in future. Therefore, if the debt-to-income ratio is more than the mark, then lenders might not approve the loan.
- Property Details: Lenders also assess the age and location of the property. Your lender might reject your loan application if the remaining years of your property till the end of loan tenure is less than your lender’s standards. They might also reject the application if the location of the property does not fall within the geographical limits defined by the lender.
- LTV and Property Value: As per RBI’s guidelines, the LTV ratio for a home loan cannot exceed 90% of the property’s value. This implies that you will have to pay a certain amount as a down payment to buy the home. Contributing more towards down payment helps reduce the loan amount and the LTV ratio, thereby, increasing overall home loan eligibility. Also, the chances of getting a higher loan amount increases when the property’s market value rises.
How Lenders Calculate Eligible Home Loan Amount?
How much amount you are eligible to borrow from your lender is mainly dependant on your repayment capacity. Following are the two ways, which lenders use to calculate the eligible home loan amount:
- Fixed Obligations to Income Ratio (FOIR) – FOIR, also referred as ‘debt-to-income ratio’, tells your debt repayment capacity. This method considers your fixed monthly pay outs as a percentage of your net monthly income. FOIR calculation will also include EMIs of home loan for which you have applied with the lender. The ideal FOIR that lenders prefer when assessing a home loan application is between 40% and 50%. If your fixed monthly obligations exceed 50% of your net monthly income, your housing loan application may be rejected or the loan amount sanctioned will be lower than expected.
- Net Monthly Income (NMI) Ratio – Some lenders calculate eligible home loan amount using a multiplier applied on your net monthly income (NMI) after reducing taxes and other payroll deductions. In such cases, the eligible housing loan amount can go up to 30 times the NMI of the applicant. If the loan applied for exceeds this amount, the application may be rejected. So, higher the NMI, higher is the loan eligibility.
- Loan to Value (LTV) Ratio – The LTV ratio is the ratio of a loan amount against the value of an asset purchased. Lenders use this ratio to evaluate risk in lending a housing loan to a borrower. This ratio also helps in ensuring that a lender doesn’t lend amount higher than the actual value of the property. With the increase in the LTV ratio, the perceived risk of loan default decreases. Thus, higher LTV will get you lower home loan interest rates. It will give you the opportunity to negotiate with your lender for higher loan amount and better loan terms. As per RBI guidelines, the LTV ratio for home loans can range from 75% to 90% of the property value. This implies that up to 90% of the property value will be financed through home loans and the remaining 10% will have to be shelled out of your pocket as down payment.
Read Also: How is LTV ratio calculated?
What are the Documents Required by Lenders to Check Home Loan Eligibility?
Lenders require documents to ensure that all information provided by you in the home loan application is legit. Lenders also required documents in support of your income, assets and liabilities (if any) to assess your loan repayment ability before approving your home loan. The list of documents required to avail a housing loan may vary as per lenders, type of home loan, resident types and type of employment. The common set of documents required from salaried applicants and a self- employed individuals to apply for a home loan are:
For salaried applicants:
- Proof of Residence: Aadhaar Card / Voter’s ID Card / Rent Agreement / Utility Bills / Passport (any one)
- Proof of Identity: PAN Card / Aadhaar Card / Passport / Driving License / Voters ID (any one)
- Proof of Age: Birth Certificate / 10th Marksheet / PAN Card / Aadhaar Card / Passport / Driving License (any one)
- Form 16
- Certified letter from Employer
- Pay slip of last 2 months
- Increment or Promotion letter
- IT returns of past 3 years
- 2 passport size photographs
- Property Documents: NOC from society/builder, estimate of house construction, occupancy certificate, etc.
For self-employed applicants:
- Proof of Residence: Aadhaar Card / Voter’s ID Card / Rent Agreement / Utility Bills / Passport (any one)
- Proof of Identity: PAN Card / Aadhaar Card / Passport / Driving License / Voters ID (any one)
- Proof of Age: Birth Certificate / 10th Marksheet / PAN Card / Aadhaar Card / Passport / Driving License (any one)
- Income Tax Returns (ITR) of last 3 years
- Balance Sheet and Profit & Loss Account Statement of the Company/Firm (duly attested by a C.A.)
- Business License Details (or any other equivalent document)
- The license of Professional Practice (For Doctors, Consultants, etc.)
- Registration Certificate of Establishment (For Shops, Factories & Other Establishments)
- Proof of Business Address
- Property Documents: NOC from society/builder, estimate of house construction, occupancy certificate, etc.
You can also check the complete list of home loan documents for different types of applicants.
What is Home Loan Eligibility Calculator?
Home loan eligibility calculator is an online calculator that helps you determine your eligibility for a home loan. The house loan calculator is easy for anyone to use and gives accurate results on the basis of a few home loan details, which are as follows:
- Monthly Income
- Loan Tenure
- Interest Rate
- Existing loan EMIs
When using a housing loan eligibility calculator, remember that the results are indicative and lenders may require you to meet additional eligibility criteria to actually qualify for a housing loan.
Read Also: How to Calculate Home Loan EMI
How to Enhance Home Loan Eligibility?
Some of the ways to improve home loan eligibility are as follows:
- Improve credit score: Credit score is the reflection of how well the debt has been handled. Maintaining credit utilisation ratio below 40% and paying credit card bills and loan EMIs in time show responsible credit behaviour. Such behaviour, when practised regularly, leads to a good credit score, which further improves the chance of loan approval and of getting better loan rates. A poor credit score, on the other hand, might make you pay higher home loan interest rates or lead to loan rejection. Therefore, the higher the score, the better it is. Adopting regular and disciplined usage of credit cards can help to build a strong credit score.
- Pay higher down payments: You might have to contribute 10-25% as down payment, as lenders can finance only up to 90% of the property’s value. Instead of giving a bare minimum down payment, make a higher contribution. Higher contribution as down payment will lower LTV ratio, which will improve home loan eligibility.
- Add a co-applicant: Due to inadequate income, low credit score or high debt-to-income ratio, your lender might reject your home loan application. If not eligible for a home loan, add a co-applicant to the home loan application and go for joint home loan. But that co-applicant must be an earning family member with good credit history and satisfactory repayment capacity. Doing so will increase home loan eligibility and help get higher loan amount. If the co-applicant or primary loan applicant is a woman, then you might get home loan at concessional interest rates.
Home Loan Eligibility FAQs
What is home loan eligibility?
Home loan eligibility refers to a criteria based on which lenders accept or reject a home loan application. If you fulfil the eligibility criteria, you get the home loan; else your home loan application gets rejected. Since multiple home loan rejections can impact your credit score, you must always check eligibility before applying for a home loan. It not only helps in knowing your chances of loan approval but also makes the entire process of getting a house loan smooth. A few factors that affect your home loan eligibility include your credit score, age, employment or business stability, income, outstanding loans and property details.
How do lenders determine home loan eligibility?
Lenders determine your home loan eligibility primarily on the basis of your income and repayment capacity. Others parameters that lenders consider when assessing your housing loan eligibility includes your age, qualification, assets and liabilities, number of dependants, credit history, stability and continuation of your occupation and savings history.
How adding a co-applicant helps in increasing home loan eligibility?
Availing a housing loan with a co-applicant increases your chances of loan approval. This because when you add a co-applicant, both you and the co-applicant becomes liable to repay the home loan; thus, decreasing the lending risk for your lender. Therefore, when assessing such home loan applications, lenders require documents of both the primary applicant and co-applicant(s). When deciding on the eligible loan amount, they consider both primary applicant’s and co-applicant’s credit score and repayment capacity.
What are the home loan eligibility requirements for an NRI?
Usually, the home loan eligibility criteria for NRIs are similar to that of the resident Indians. To get an NRI home loan, an applicant should be a salaried or self-employed with a good credit score and repayment history. He or she should be within the age bracket of 18 years to 70 years.
What does ‘market value of a property’ mean?
Market value of a property is the appropriate selling price of an asset that lenders, buyers and sellers estimate as per the given market conditions.
How much home loan can I get based on my salary?
Your disposable income or in-hand salary plays an important role in determining how much amount you can borrow from a lender. It will determine the EMI you can afford and thus the amount you can borrow. But your eligible home loan amount based on your salary may vary from one lender to another. Also, your salary is not a sole factors that lenders consider when assessing your home loan application. For instance, if your in-hand salary is Rs. 20,000, you can avail as much as Rs. 14.91 lakh as a loan, provided you have no existing financial obligations. But if your take home is Rs. 40,000, you can avail a loan amount of Rs. 30 lakh for the same property. Subsequently, if your income is Rs. 50,000, you home loan eligibility will increase and will get you home loan amount of about Rs. 37.28 lakh.
What is the maximum home loan amount that I can get?
Most lenders have no limit on how much they can finance as a home loan. The maximum home loan amount that many banks offer is of Rs. 35 crore, subject to various terms and conditions. Moreover, the maximum housing loan amount that you get varies from one lender to another. Other factors that these financial institutions take into consideration when determining your home loan amount includes your income, age, credit score, repayment history, existing liabilities, property features, occupation and loan to value (LTV) ratio.
What is the minimum salary required to be eligible for a HDFC home loan?
Currently the minimum salary to be eligible for a HDFC housing personal loan is Rs. 25,000. However, meeting the minimum salary criteria doesn’t guarantee that your housing loan application will be approved.
How much home loan can I get on Rs. 40,000 salary?
Lenders will decide your eligible home loan amount on the basis of FOIR (Fixed obligation ratio) or LTV (Loan to value ratio) of property. The lower of these two ratios will be your housing loan amount. Let’s say, your FOIR is 50% and LTV is 90% for a property, which amounts to Rs. 66 lakh. Now, considering you have no other financial liabilities, the maximum amount you can pay every month is Rs. 40,000*50% = Rs. 20,000.
If you choose the tenure to be 30 years, then as per FOIR, your eligible housing loan amount will be = Rs. 20,000*12*30 = Rs. 72 lakh. But, the LTV ratio of 90% of the property value, which will be Rs. 66 lakh*85% = Rs. 56.10 lakh. So, the loan you can get on Rs. 20,000 salary is of Rs. 56.10 lakh.
How much home loan can I get on Rs. 20,000 salary?
The eligible home loan amount is calculated on the basis of either FOIR (Fixed obligation ratio) or LTV (Loan to value) of property. The lower of these two parameters will determine the housing loan amount. So, for instance your FOIR is 50% and LTV is 85% for the property, which is of Rs. 30 lakh. Now, let’s say there are no ongoing outstanding debt that you have to repay, then the maximum amount you can pay each month is Rs. 20,000*50% = Rs. 10,000.
If the tenure for home loan is 30 years, then as per FOIR, your loan amount = Rs. 10,000*12*30 = Rs. 36 lakh. However, the LTV ratio of 85% of the property value, which will be Rs. 30 lakh*85% = Rs. 25.50 lakh. So, the loan you can get on Rs. 20,000 salary is of Rs. 25.50 lakh.
