While home loan eligibility criteria differs per bank, there are basic qualifications and requirements you must meet before applying for your home loan. This guide compares housing loan eligibility of major banks, including what factors determine your home loan eligibility and how you can increase it.
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What is Home Loan Eligibility?
Whether you're a first-time home buyer or need a housing loan for the construction of your new property, you must meet the home loan eligibility criteria of the lender you choose.
Since banks and loan lenders must ensure that you can pay off your loan amount with ease, they look at your home loan eligibility to calculate the maximum loan amount you can receive.
Home Loan Eligibility Criteria for Major Banks
It's important to understand each bank's home loan eligibility requirements before you apply. Otherwise, you could be rejected and get a negative mark on your CIBIL or credit score report. Your CIBIL score is extremely important for maximum home loan eligibility, so you should not apply until you are sure of your home loan eligibility.
We found that all four banks we researched offer the same maximum home loan tenure of 30 years. They also offer the same loan margins: a home loan below 30 lakhs covers 90% of the full property cost; a home loan of 30-75 lakhs covers 80% of property costs; and a home loan above 75 lakhs covers 75% of the property cost. However, other eligibility criteria vary by bank:
|Minimum Age||Maximum Age by Loan Maturity||Minimum Salary|
|HDFC Bank Home Loan||21||65||₹10,000 p.m|
|State Bank of India (SBI) Home Loan||18||70||~₹25,000 p.m.|
|ICICI Bank Home||21||65 or age of retirement if sooner.||~₹25,000 p.m.|
|AXIS Bank Home Loan||21||~₹25,000 p.m.|
Before you apply for your home loan, make sure that you are the minimum age by the date of loan commencement. Similarly, you can't be older than the maximum age by the date of home loan maturity. Some banks have different minimum and maximum ages for co-applicants.
Sometimes, the maximum age for a home loan applicant depends on your financial position. For example, the maximum age to be eligible for an Axis Home Loan is different if you are a salaried or non-salaried employee.
The minimum salary or your monthly income for each bank's home loan eligibility criteria is also different. To be eligible for an HDFC home loan, you have to make at least ₹10,000 per month. SBI, ICICI and Axis Bank home loan criteria have a higher monthly income minimum at ₹25,000.
In many cases, home loan eligibility works differently for non-salaried and self-employed professionals. Banks and home loan lenders will expect a higher monthly income, for instance.
If you are a woman, pensioner, NRI or government employee, you may be eligible for special rates and home loans.
For women, many home loan benefits are available to help finance your new home. Women are offered concessional interest rates on home loans and lending banks encourage women to sign on a home loan as a co-owner or co-applicant.
Even if you are retired, pensioners are still eligible for home loans to help you pay for your new property. Many banks offer home loans with a higher maximum age for government pensioners, defence pensioners and family pensioners.
If you're a government employee, you can find home loans designed just for you. SBI offers a Privilege Home Loan exclusively for government employees and pensioners. It allows a maximum age of 75.
Non-resident Indians can expect different criteria for home loan eligibility. Some banks have unique home loan options for NRIs. Documents required, minimum salary, and home loan eligibility calculations will vary depending on your country of residence.
Required Documents that Determine Your Home Loan Eligibility
Required documents include KYC (Know Your Customer) for proof of identity, property details for the home or land you wish to buy, and proof of income. You will need all required documents before choosing your home loan.
Your home loan eligibility will be calculated differently if you are a salaried or non-salaried employee. KYC and property documents are the same regardless of your financial position, but proof of income documents vary per bank.
Here, you can see which Proof of Income documents are required by your lending bank in order to determine your maximum home loan eligibility.
|Salary Slips||Bank Statements||Form 16||Income Tax Returns|
|HDFC Bank Home Loan||3 months||6 months||Latest form||Latest ITR|
|SBI Bank Home Loan||3 months||-||Last 2 years||Last 2 years|
|ICICI Bank Home Loan||3 months||-||Latest forms||Latest ITRs|
|Axis Bank Home Loan (Any one of the following)||6 months||2 years or employment continuity proof||-|
For self-employed eligibility, more Proof of Income documents are required to show that you have stable income and the ability to repay your home loan.
Some banks have different home loan eligibility criteria depending on if you're a non-professional or professional, too. For example, professionals like CAs and doctors may be required to show proof of their qualifications and education.
|Bank Statements||Balance Sheet and Profit & Loss Account Statements||Income Tax Returns||Proof of Business Existence|
|HDFC Bank Home Loan||6 months of individual and business||3 years with schedules for individual||3 years with computation of income for individual and business||-|
|SBI Bank Home Loan||-||3 years||3 years||Yes|
|ICICI Bank Home Loan||6 months||3 years||3 years with computation of income||Yes|
|Axis Bank Home Loan (Any one of the following)||6 months of individual and business accounts||2 years||2 years with computation of income. Without digital signature, CPC and tax paid challan.||3 years|
Factors That Determine Your Home Loan Eligibility
Your home loan eligibility is determined through a number of criteria: monthly income, current age and retirement age, credit score and history, and fixed monthly financial obligations, which are also called equated monthly installments (EMIs).
Your Salary and Monthly Income
Your job stability and salary will help banks and loan lenders calculate your home loan eligibility. Banks will look at your job position, present income, and calculate an estimate of your future income.
Your income influences your home loan eligibility through an EMI/NMI ratio. Your EMI/NMI ratio shows the equated monthly installment of the home loan as a percentage of your post-tax net monthly income.
Lending banks will offer a home loan amount between an EMI/NMI ratio of 20% to 70%. The higher your EMI/NMI ratio, the more home loan amount you are eligible for.
Age is also a significant factor in determining your home loan eligibility. Banks and loan lenders want to know how many working years you have remaining, since they base your home loan eligibility on your ability to pay back your loan with a steady income.
Here, we calculated the average home loan eligibility based on your age and salary. We found that the more time you have left until retirement, the longer tenure you have to repay your home loan which means you will be eligible for a larger home loan amount.
Home Loan Eligibility Goes Up With Income and Down With Age
|25||48.92 Lakhs||73.37 Lakhs||97.83 Lakhs|
|30||48.85 Lakhs||73.37 Lakhs||97.83 Lakhs|
|35||46.76 Lakhs||70.15 Lakhs||93.53 Lakhs|
|40||43.72 Lakhs||65.57 Lakhs||87.43 Lakhs|
|45||38.67 Lakhs||58.00 Lakhs||77.33 Lakhs|
|50||32.54 Lakhs||47.27 Lakhs||63.03 Lakhs|
Your Credit Score and History
Your credit score and credit history are the most important factors in deciding your home loan interest rate.
Your CIBIL credit score shows banks and home loan lenders a full picture of your repayment history. If you’ve missed a lot of payments, banks will consider you less eligible for a home loan or charge you a higher interest rate.
Most banks accept a minimum CIBIL score of 550-650. But if you want to be eligible for a lower interest rate, higher home loan amount and longer loan tenure, then you should aim for a credit score between 750 and 900.
Other Equated Monthly Installments (EMI)
Your other financial obligations also determine the maximum amount of home loan you are eligible for. If you are already paying off a car loan, credit card debt or other EMIs, banks will check if your repayment history is stable and on time.
The number of your financial obligations is not a big factor, but your history of repaying them is.
How is your home loan eligibility calculated?
Many banks and home loan lenders offer free home loan eligibility calculators that determine an estimate of the most affordable home loan for you.
While each home loan eligibility calculator follows different criteria, they generally ask you to input your monthly income, the loan tenure, loan interest rates (% per annum) and your other EMIs. The calculator will then give you an estimate of the total home loan amount you are eligible to borrow from the bank.
How to Increase Your Home Loan Eligibility
Your home loan eligibility is influenced by many factors that can each affect the amount you ultimately receive. Before you apply for a home loan, consider the following:
- Apply for a home loan with a co-applicant. Your co-applicant will need to have good home loan eligibility. It helps if your co-applicant is high-earning.
- Apply for your home loan application with a woman. If your co-owner is a woman, you will be eligible for lower interest rates on your home loan due to women-only concessional rates.
- Avail a structured repayment plan. A longer home loan tenure will enhance your maximum home loan eligibility.
- Ensure you have a steady income, regular savings and investments. Avoid frequent job changes otherwise banks may consider you financially unstable.
- Keep a record of all additional income. This includes variable salary components like bonuses, incentive pays and commission. Banks and home loan lenders will want to see this to estimate your future income.
- Keep track of your CIBIL score. Dispute any errors on your credit report. If your CIBIL score is low, consider investing time to raise it before applying for a home loan.
- Continue repaying your other financial obligations. A good track record will prove to your bank or home loan lender that you are trustworthy.
- Make sure to have all required documents before applying. This includes proof of income, property documents for the home or property you wish to buy, and KYC (Know Your Customer) documents.