Before an individual considers applying for a home loan, it is important to gain a clear idea about the minimum eligibility criteria for a housing loan asserted by a financial institution. It is only then that one can determine the loan amount, repayment terms, etc. and apply for the advance required to purchase a residential property.
There are a host of factors that go on in determining the eligibility of an applicant. The documentation process for the loan application is also fairly inclusive, making it essential for borrowers to be aware of the requirements in advance.
Eligibility criteria for home loans
Below-mentioned are a few essential housing loan eligibility criteria one must meet before applying for the advance.
- Age criteria
Approval of loan becomes markedly easier if the applicant is in the beginning of his/her career as the lender can rely on such applicant’s income earning capacity for the remaining period. While salaried individuals are most likely to be within the age of 23 to 60 years, self-employed individuals can apply up to a little higher age limit.
- Stability of employment or business continuity
Employment stability or duration of business is also important. It is due to this reason that the period of employment should be at least 2 years, and business continuity should be more than 5 years.
- Credit rating
Processing of the loan also depends on the CIBIL score of an applicant. Ideally, this score should be 700 or higher.
Some standard home loan criteria one must meet are indicated below –
- Nationality: Resident Indian (for both salaried and self-employed).
- Age: 23 to 62 years (for salaried), 25 to 70 years (for self-employed).
- Work experience/Business vintage: 3 years or more (for salaried), 5 years or more (for self-employed).
- Maximum amount: Rs.3.5 crore (for salaried), Rs.5 crore (for self-employed)
Here is a list of documents needed for a home loan –
- Address proof
The address proof may include utility bill such as water bill, telephone bill, electricity bill, etc. Other valid documents would be passport, driving license, Aadhaar card, voter ID.
- Identity proof
The documents that will be held valid as identity proof are passport, voter ID, driving license, PAN card, etc.
- Form 16/Latest salary slips
Form 16 is issued pursuant to section 203 of the Income Tax Act, 1961 that indicates tax, which is deducted at source under salary head. It is proof of income tax return, thereby establishing an applicant’s income. Form 16 and salary slips are submitted as income documents for salaried individuals. Income is one of the major housing loan eligibility criteria. Other documents which would be held as proofs of income include certified letter from the employer, promotion or increment letter, etc.
- Bank account statement
Bank account statements mainly acts as income proof for self-employed individuals. From the account’s statements, lenders will be able to verify business activities (such as sales)and run comparisons among them. It can also be used to determine whether there is any other loan which is being serviced.
- Property documents
The status of property is also among the crucial housing loan eligibility criteria. There are different property documents which are required for a home loan. Some of those are –registered sale deed, NOC from builder, occupancy certificate, property tax receipt, advance payment receipt, building plan approved copy, receipt of land tax etc.
Preparing all the necessary documents before application can eliminate the hassle and chances of application rejection due to missing paperwork.
Other than that, pre-approved offers also help streamline the application process. Such offers are extended by leading financial institutions on various financial products, including home loans and loans against property. Check your pre-approved offer online by providing few basic details such as name and contact number.
While the aforementioned criteria are largely applicable, along with the mentioned documents, they are only indicative. It should be noted that during processing of a loan application, additional documents may be required. Also, before the loan application, home loan eligibility calculator can be used to know more about the EMIs.