What is home loan eligibility? How banks rate your loan eligibility before lending you home loan? How much amount you are eligible for? These are the few basic questions, which comes to your mind when you start your search for a home loan. But, before going further, let's understand what eligibility actually means. In a layman's term eligibility is all about how much amount you can get from a lender to buy your dream home. There are various parameters, depending upon which your eligibility is calculated by lenders. Though different lenders have different eligibility criteria, and if somehow you fall short of the eligibility, your loan application can be rejected. So, it is important to know your eligibility as it can help in taking you closer towards your dream home wish.
Depending upon your age, income and repayment capacity, home loan eligibility varies from individual to individual. For your reference, below is the table showing home loan eligibility for home loan.
|Minimum age to apply for home loan||21 Years||21 Years|
|Maximum age at the time of loan||60 Years||65 Years|
|Net Income Criteria||A minimum annual income of ₹1,20,000 is required||A minimum annual income of ₹1,50,000 is required|
|Current Experience||2-3 years of current job stability||3 years of current business stability|
|Loan Value Ratio||85% of Agreement Value||85% of Agreement Value|
Monthly income is one of the most important factors in deciding your eligibility for home loan . If your monthly income is high, and you are meeting the eligibility criteria, there are chances that you will get higher home loan. Higher income is helpful in getting the higher amount whether you are salaried or self-employed.
This is also an important factor to decide your home loan eligibility. If you are applying for a home loan at early age, there are chances that you will get a higher loan amount as compared to those who will apply for a loan in their mid 40 or in their 50s. As the time for repayment of loan will be shorter, it will also decrease your home loan eligibility. Most of the banks ask for your retirement age before lending you home loan. The maximum age to avail the loan or loan repayment is 60 years to 65 years. So the early you apply, the more your eligibility will be for home loan.
If you have chosen a right property in any approved society, colony or area, it will help you to get your desired loan amount approved easily. The bank checks the property's market value at their level and disburse you the loan amount only when your property is located in an approved area without any legal disputes. If the property is meeting the technical and legal terms and norms of the bank then only your loan amount will be cleared.
A good credit history or record is also important to become eligible for a loan. If you are ranked among the defaulters list or your credit score is lower, it will badly impact your home loan eligibility and increase the chances of loan application rejection. So, it's important to maintain a good credit history in order to become eligible for a home loan.
Employment Status for Salaried
To become eligible for a loan, you must have a minimum work experience as most of the lenders look for the same. Generally lenders ask for a minimum 3 years work experience for salaried people to avail the home loan.
As a self-employed professional or a businessman, you must submit your professional details, business status record and bank statements as proof of your financial stability in order to be eligible for a home loan. Once you meet this criteria, your loan eligibility automatically increases, and your loan approval chances will also increase.
Relationship with Lender
A good understanding with the bank can go a long way in negotiating a good loan amount at lower rates. Through this way, you can easily avail a high loan amount and that too at competitive rate of interest without any hassle.
Your Employer Category
Working at a well-regarded company not only adds to your reputation, but also your loan eligibility. A Fortune 500 Company on your visiting card helps in enhancing your eligibility among various lenders. If you do not fall into the same eligibility criteria, you may get a home loan at higher rate of interest.
Being one of the biggest public lenders in home loan segment in India, SBI is no doubt one of the renowned names in the market today. When it comes to home loan, the bank is known for offering the same, once you meet the eligibility criteria. You can go through the table below to know the home loan eligibility of SBI.
|Age||18- 70 Years||18- 70 Years|
|Income||₹1,20,000 (p.a.)||₹2,00,000 (p.a.)|
|Loan Amount Offered||₹ 5,00,000 - 1,00,00000||₹ 5,00,000 - 2,00,00000|
|Tenure||5 Years-20 Years||5 Years-20 Years|
|Current Experience||2 Years||3 Years|
Followed by SBI, in home loan, HDFC stands second. The bank is known for catering the needs of all home loan borrowers by offering them loan at competitive rate of interest, meeting the eligibility criteria. So, before you avail the home loan from HDFC, ensure you meet the below eligibility criteria.
|Age||21-60 Years||21-65 Years|
|Income||Salaried with Regular Source of Income||Earn more than Minimum Income Required|
Next in line is LIC Housing Finance, sharing the 3rd position in home loan market share. This housing finance company needs no introduction as it has already won the hearts of many by offering them loans without any hassle. But, to avail the same, you have to fit into the below eligibility criteria of LIC.
|Age||18-60 Years||18-60 Years|
|Income||₹15,000 per month||₹2,00,000 per annum|
|Loan Amount Offered||₹10,00,000||₹10,00,000|
|Tenure||30 Years||25 Years|
|Current Experience||2 Years||3 Years|
ICICI Bank is also one of the leading players in home loan market, known for offering best home loans to all the borrowers. The bank has also set its eligibility criteria for home loan, hence to avail the same you need to fit into the criteria mentioned below.
|Age||21 Years-65 Years|
|Income||Regular Source of Income|
|Employment Type||Salaried and Self-employed|
Despite sharing the last rank in home loan market share,Axis Bank can also be a great option to avail home loan in India. The bank offers home loan to you at attractive interest rates, fees and charges, hence allows you to fulfill your dream without any hassle. But, before you avail the same, it is highly crucial for you to meet the below eligibility criteria of Axis Bank.
|Name of Schemes||Eligibility||Loan Amount||Interest Rate||Tenure|
|Axis Bank Home Loan||Age: 21-65 Years Employment
Type: Salaried, Self-employed, Professionals
|₹ 3 Lakh-Depends on combined income||9.15% - 9.35%(floating)||30 Years|
|Asha Home Loan||Income: ₹8,000-10,000 per month Employment Type: Salaried, Self-employed||₹ 1 Lakh-28 Lakhs||10.25%-11.00%(floating)||30 Years|
|Empower Home Loan||Employment Type: Self-employed Professionals, Self-employed Non-Professionals||₹ 10 Lakh-150 Lakhs||10.00% p.a.(floating)||15 Years|
|Happy Ending||Employment Type: Salaried, Professional, Self-employed Individuals
Age: 21-65 Years
|₹ 3 Lakh-Depends on Combined Income||9.15%-9.35% p.a.(floating)||20 Years|
|Super Saver Home Loan||Employment Type:Salaried, Self-employed||₹ 1Cr-Depends on Combined Income||9.60% p.a. (floating)||22 Years|
Let's assume you are working in a multinational company and your salary is ₹ 80,000. After meeting your monthly expenses and other financial liabilities, you can save a maximum of up to 40% to 50% of your monthly income every month. Let's say that you are saving 50% of your income every month, so what will be your loan eligibility.
Here, the bank will assume that the savings can be used to repay the loan EMIs. Firstly, the bank will calculate per lakh EMI based on the longest tenure at prevailing interest rates. Let's say, the interest rate currently stands at 8.75% p.a. and the maximum tenure is 30 years.
Amount: ₹1 lakh
Loan Tenure: 20 years
Rate of Interest: 9.50%
Your per lakh EMI will be: ₹932
Now let’s take a reverse calculation if you pay ₹ 40,000 EMI per month, considering ₹787 as per lakh EMI. So your calculation for home loan would be:
₹1 Lakh* 40,000/932= ₹ 42 lakhs
So, this way your loan eligibility is ₹42 Lakhs (approx).
This is the most simple and convenient way to check your eligibility of loan amount. Although, the loan amount and eligibility may differ from bank to bank, but almost all the banks will use the same formula to calculate your loan eligibility.
Apart from calculating your monthly salary with the formula to find of your home loan eligibility, you need to focus on other parameters that generally all banks consider before lending you home loan.