Own your own home in India? That’s big. In a country where people toil for years to have a roof over their heads, owning a home is at the top of their priorities. But, buying a home in India can be a far possibility considering the rising real estate prices. A home loan is the best option.
Getting a home loan requires certain checks and ticks on boxes that you must know.
You don’t need to be a finance expert — just a little clarity, some prep, and a few questions in mind. So, here’s a guide to explain what determines your home loan eligibility in India.
1. How much do you earn — and how regularly?
Your income is the starting point. Salaried individuals usually have it simpler — banks ask for your salary slips, Form 16, or even just your bank statement. But if you run a business or freelance, the lender wants to see steady earnings, usually through two years of ITRs.
If your income varies (say, bonuses or freelance gigs), only count what’s been consistent. Otherwise, you’ll raise more questions than confidence.
2. Is your credit score in shape?
Credit scores are like your financial report card and very important in deciding your home loan eligibility in India. Anything above 750 is usually seen as “good.” Below that? You’re still in the game, but might get a slightly higher interest rate or need to offer a bigger down payment.
3. What’s your EMI comfort zone?
Don’t go by just what the bank says you can borrow — ask yourself what you can repay. Most lenders are okay if your total EMIs (across all loans) are under 50–60% of your monthly income.
For instance, if you earn 70,000 a month, your total EMIs should stay below 35,000–42,000.
4. Got your down payment sorted?
Banks won’t cover the entire cost of your house. They usually offer 80–90% of the property’s value. The rest, plus registration, stamp duty, and other one-time expenses, come from you.
So if your flat costs 60 lakh, and the bank gives 85%, you’ll still need around 9–10 lakh upfront. Keep that in mind early on to improve your home loan eligibility in India.
5. Are the property papers clean?
This part is often skipped and often regretted. Before the loan, banks will check for clear titles, approved layouts, and no legal complications. Especially for under-construction flats, make sure your builder has the right approvals.
6. What will be your loan tenure?
Longer tenures (20–30 years) = smaller EMIs but more total interest. Shorter terms = quicker repayment but heavier monthly burden. Pick what suits your stage of life and cash flow.
If you’re a young professional, a 20-year tenure gives flexibility, while for those nearing retirement, shorter tenures work better as banks prefer loans ending before you turn 60–65.
7. Fixed or floating interest — which works for you?
Fixed rate = stable EMIs.
Floating rate = changes with market trends (could drop or rise).
If you need predictability (say, you’re on a tight budget), fixed might help. But if the market is falling or stable, floating could save lakhs.
8. Joint loan — good idea?
If your spouse or parent is earning, you can add them as a co-applicant. Their income bumps up your eligibility. Just remember: their name goes on the loan — and the responsibility too.
9. Already have loans?
Banks don’t like it when you’re juggling too many repayments. Clear off smaller debts (like personal loans or credit card EMIs) before applying — it strengthens your case.
10. Do you have a cushion?
Having 3–6 months of expenses saved shows you’re prepared. If you spend everything on the down payment and leave nothing for emergencies, it could raise eyebrows at the bank.
11. Is your job stable?
Switching jobs frequently or working short-term? You might have to work a little harder to prove stability. Banks prefer applicants who’ve been in the same field for at least two years.
12. What type of property are you buying?
Ready-to-move homes are preferred — faster disbursals.
Under-construction? Banks check builder approvals.
Plot + construction loans come in parts — slab-wise.
Each has its own paperwork and pace. Know what to expect.
13. Are there hidden charges?
Besides interest, check for processing fees (often 0.5–1% of the loan), prepayment penalties, or compulsory insurance. Some banks waive these if you have an account or salary credit with them.
14. Insurance and top-up traps?
Some lenders add EMI protection insurance or offer top-ups. Read the fine print. If you already have term insurance, you might not need it again.
15. Ask these before signing anything:
- What’s the minimum credit score you accept?
- How long does disbursal usually take?
- Is the rate different for salaried vs. self-employed?
- What’s the penalty for early closure?
These questions often save money and headaches later.
16. Double-check all paperwork
Before submitting your application, have these prepared:
- PAN & Aadhaar
- Salary slips / ITRs
- Bank statements
- Property papers
Even one missing document can delay your loan by weeks.
Understanding home loan eligibility in India isn’t just about ticking boxes — it’s about planning smart. When you know what banks look for, you’ll walk in more prepared, more confident, and far less likely to get stuck mid-way.
And when you finally walk through the doors of your new home, it won’t just feel like a place – it’ll feel like a victory you earned, one form and one EMI at a time.
FAQs
1. My credit score is around 680 — is that okay?
Not the worst, but not ideal either. A score above 750 is preferred — you’ll get better interest rates. With 680, you might still get a loan, but maybe at a slightly higher rate. If you’ve missed EMIs or overused your credit card, fix that first. Pay off small debts and wait a couple of months — your score improves faster than most people think.
2. I’m self-employed. Will banks even consider me?
Yes, but they’ll make you work a bit harder. You’ll need to show two years of ITRs, a balance sheet if you run a business, and steady bank transactions. No random deposits or patchy income. They just want to see that you earn regularly, not how much cash you keep under the mattress.
4. How much home loan can I expect on a ₹50,000 monthly salary?
Rough ballpark? If you’ve got no other loans, you might get around ₹20–25 lakh, depending on tenure and interest. But if you’ve got a car EMI or credit card bills, that number drops. Banks usually allow EMIs up to 50–60% of your monthly income, not more.
5. Do I need to pay everything from my pocket for stamp duty and registration?
Yup. Banks won’t cover those. Your loan is only for the flat value (not even the full value — usually 80–90% of it). So for a ₹40 lakh flat, you might get ₹32–36 lakh as a loan. The rest — ₹4–8 lakh down payment, plus stamp duty, GST (if under construction), registration — comes from your own savings.
6. Can I take the loan with my wife to increase the amount?
Definitely. If she’s earning, you can apply as co-applicants. The bank will count both incomes, which means you may qualify for a larger loan. Just remember — if one of you loses the job or steps away later, you’re both still responsible. No backing out halfway.
7. Will my existing personal loan reduce my eligibility?
Yes. Every EMI you pay already eats into what you can borrow for a home. If your current EMIs are too high, your home loan eligibility in India will drop. Try clearing off smaller loans before applying. Also, don’t apply for multiple loans or credit cards right before your home loan — it looks risky to banks.
