The amount of home loan a borrower can avail depends not only on the market price of the house but also on several other factors. For example, income, existing debts, credit score, etc.
Before knowing the LTV, borrowers must check the home loan amount they are eligible for. Most financial institutions and HFCs provide a housing loan eligibility calculator on their online portal.
By implementing the following steps, an individual can determine the amount of loan they can avail –
- Visit the respective HFC’s official website and navigate to the eligibility calculator.
- Provide accurate data regarding age and city as such details help to determine how much money an individual can avail.
- Enter other details like monthly income, preferred tenor, other income (if applicable) and other obligations (if they already avail other loans).
By taking into account each factor, the calculator will show an amount, which an individual can avail as their home loan.
Additionally, there are a few basic eligibility criteria that can affect an individual’s loan amount, EMI and interest rate. These home loan eligibility criteria differ for salaried individuals and self-employed borrowers.
These criteria are –
- Salaried individuals –
- A salaried-individual should be an Indian resident.
- They should have a minimum work experience of 3 years.
- An individual should be aged between 23 years and 62 years.
- Self-employed individuals –
- A self-employed borrower should be an Indian resident.
- They should have a minimum work experience of 5 years.
- They should be aged between 25 and 70 years.
Other than meeting a few specific criteria, an individual should also provide a set of documents required to avail a home loan in India.
These are –
- Identity proof like Aadhaar card, Voter ID card, Passport, PAN card, etc.
- Salaried individuals should produce their salary slip or Form 16.
- Self-employed individuals should produce their documents for proof of business.
- Bank account statement for the previous 6 months.
Other than the basic eligibility criteria, there are a few significant factors that can affect your home loan eligibility.
These are –
- CIBIL Score
A CIBIL score or credit score is a 3-digit number ranging from 300 to 900. This numeric expression is used to determine an individual’s credibility. The data accumulated from credit information reports help HFCs and financial institutions to determine which borrower can repay their debt and which borrower can be a defaulter.
The minimum CIBIL score required to avail a home loan is 750. An applicant possessing a score equal to or higher than 750 stands a chance to negotiate the interest rate on their loan. Contrarily, with a low credit score, a borrower might not enjoy the best possible rates.
It should be noted that a home loan eligibility calculator does not require incorporating an individual’s CIBIL score to determine the eligible loan amount.
Fixed Obligation to Income Ratio is a parameter that can also affect a borrower’s eligibility to avail a housing loan. FOIR is the ratio between an individual’s monthly obligations and their monthly income. Note that an online home loan eligibility calculator takes into account an individual’s FOIR while calculating the eligible amount.
This ratio is utilized by financial institutions to anticipate their customer’s credibility – An individual’s low FOIR reflects that he/she has less liability, and that makes them eligible to avail housing advances. Borrowers with a high FOIR ratio might fail to avail a home loan.
Most HFCs provide a home loan EMI as well as an eligibility calculator to their customers for their ease of availing a loan.
Complying with the above eligibility criteria will help applicants secure a home loan quickly and easily. Additionally, it will also enable them to avoid rejection, which can reduce their credit score.