Is it essential to file an ITR to avail a home loan?

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To purchase your dream home, you will need to make a substantial financial investment. If you do not have the funds available, getting a home loan is the best option. A home loan provides you with the necessary funds and gives you a longer tenure to repay the amount. However, getting a home loan has some prerequisites on which the loan approval depends. You will need to provide your vendor with the documents to prove your eligibility as well as creditworthiness.  Some of the documents that your vendor may require include banking statements, income tax returns (last three years), salary slips, KYC documents, Form 26 AS and more. The documents may also vary for salaried and self-employed individuals and also on the lender’s requirement.

If you cannot provide any documents deemed necessary by the lender, your home loan application might get rejected. ITR is one such document that a lot of potential home loan applicants remain confused about. Therefore, whether or not ITR is vital for getting a home loan is a question that needs to be addressed.

Check: Home Loan Documents Required

In this article, we have compiled all the information related to the importance of filing an ITR to avail a home loan. Read below to know more:

ITR or Income Tax Returns is a form in which the taxpayers file information regarding their earned income and applicable taxes to the Income Tax Department. Depending on the amount and source of income, there are 7 types of ITR forms that must be filled as per your eligibility.

ITR 1: For individuals with income less than Rs. 50 lakhs from salary, pension or house property (one).

ITR 2:  For individuals with an income of more than Rs. 50 lakhs from salary, capital gains, property (one or more), holding directorship of the company or share of an unlisted company, foreign income/asset.

ITR 3: For individuals earning more than Rs. 50 lakhs from salary, property (one or more), capital gains, foreign income/asset, holding directorship of the company or share of an unlisted company, business/partnership firm.

ITR 4: For individuals with income from ITR 1 and other income of more than Rs 50 lakhs.

ITR 5: This form applies only to LLPs, firms, associations and bodies.

ITR 6: This form applies to companies not claiming exemption under Section 11.

ITR 7:  This form applies to individuals/companies falling under Section 139 (4A), (4B), (4C), (4D).

Importance of ITR for Availing Home Loan

ITR is important for availing a home loan because:

  • The lenders consider ITR as a crucial document to assess your level of income. Most lenders require ITR (last 3 years) to process your home loan application. If you are unable to provide ITR returns, your application may not be accepted.
  • ITR is important to assess your creditworthiness and ensure if you will be able to pay your EMIs on time.
  • Some lenders ask applicants to furnish their net worth along with the home loan application. In such cases, a chartered accountant is needed to prepare your net worth statement, for which an ITR is a must. Without an ITR, you will be unable to get your financial documents ready
  • If you own a business or are a salaried employee, banking institutions will want audited financials before processing your application. To have your financials audited by the Auditor, your ITR must have been filed on time, and your taxes must have been paid on time.

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Is It Possible To Get A Home Loan Without Filing An ITR?

Providing details about IT returns is an important element of the home loan documentation procedure. However, if your requirement is not too high, several private lenders and NBFCs (Non-Banking Financial Companies) now offer loans without ITR.

Check: Home Loan Process

Even though income is considered as one of the significant factors to determine the loan amount, it is not the only factor that matters. Approval of your home loan application also depends upon several factors such as age, duration of the loan, credit score, credit history, and more. Therefore, some lending institutions have started offering home loans that may not require an ITR.

Check: Current Home Loan Rates

Final Words

When applying for a house loan, you must examine numerous factors, one of which is your ITR record.  Make sure to ask your lender if an ITR is required for your home loan application process.

Charu Sood: Charu is a content writer who majorly writes about home loans at With her write-ups, Charu tries to help readers gain better insights into home loans.
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