How to apply for a subsidy on my home loan?

The Government of India has launched a housing scheme with the view of building a pucca house for every Indian household by the end of 2022. As per the scheme, known as the ‘ Pradhan Mantri Awas Yojana ’, if an individual meets the prescribed criteria, he or she will be eligible for a subsidy on the home loan interest rate.

Is it mandatory to have a co-applicant while applying for a home loan?

Although there is no mandate for having a co-applicant for a home loan in India, most of the lenders (both public and private) insist on having one to ensure the guarantee in regard to the repayment of the loan amount. In addition to that, having a co-applicant while applying for a home loan will also boost your eligibility. Nevertheless, it should be kept in mind that there is no legal requirement for having a co-applicant when applying for a home loan.

What is meant by the market value of a property?

The price of a property which is agreed upon by both the seller and a buyer for a transaction is called the market value of that property. In easier terms, the price of the property at which the seller is ready to sell the property and a buyer is ready to purchase the property is the market value of the property.

What is the process of disbursement in case of home loan for the purchase of an under-construction property?

In the case of under construction property, the loan amount is disbursed by the lender in instalments and is based on the assessment of the lender and not the developer. The loan amount is disbursed on the basis of the progress of the construction of the property.

What are the eligibility requirements for NRI applying for a home loan?

The eligibility criteria for NRI home loans might vary from lender to lender. However, some of the basic requirements can be summed up as follows - In general, the applicant should be within the age bracket of 18 years to 60 years. However, there are lenders who require the minimum age to be 24 years or more. The income requirement also varies from lender to lender. The loan should be taken for a minimum tenure of 5 years to 15 years. The applicant should provide a down payment of 15% to 20% of the value of the property.

What does own contribution mean?

Most of the lenders in India (both public and private) require you to provide an amount equivalent to 10% to 20% of the home loan amount as a down payment. This initial amount which is to be provided by you is called the own contribution.

What security needs to be provided when applying for a home loan?

Your lender might ask for security when you apply for a home loan. You can provide one of the following as collateral security for your home loan: NSS or National Savings Certificates Assignment of life insurance policies Bank deposits Mutual fund units Other investments

What is an agreement of sale?

A legal document which is used to compile the outlines of the transaction in relation to a property is called an agreement of sale. The agreement of sale usually lists the details of the transaction such as the price of the property and is signed by the buyer as well as the seller.

Can I get a higher loan through my existing loan account to buy a new property?

Yes, you can use your existing loan account to purchase a new property. However, this benefit will be offered as per the discretion of your lender. For example, HDFC Bank offers the ‘Home Conversion Loan’ feature which can be used to transfer the existing loan to buy a new property. In addition to that, you can also get additional fund for the new property as per your eligibility.

Can I get a top up loan in addition to my existing home loan?

Yes, you can get a top up loan in addition to your existing home loan. However, in order to be eligible for the same, you will be required to make regular repayments for your existing loan.

Can I borrow loan for under construction property?

Yes, you can avail housing loans for under construction properties. However, it should be kept in mind that the amount will be disbursed in instalments as per the assessment of the lender.

Who are eligible for a joint home loan?

The eligibility for a joint home loan is dependent on the relationship of the co-applicants. The co-applicants have to be related in order to be eligible for a joint home loan.

What factors are considered by a lender/bank while approving a loan?

There are several factors that are considered by banks or lenders to determine if you are eligible for a loan. These factors are mentioned below: Applicants age. Applicants income level. Qualification of the applicant. Income level of spouse. Resident status. Existing loan status. Credit score and credit history.

Are my children eligible to be co-applicants for my home loan?

Yes, your parents, children and spouse are considered eligible for being co-applicants for the home loan.

Am I eligible for tax benefits if I take a home loan?

Yes, you can avail tax benefits when you take home loan from a bank or a financial institution under Section 80C and Section 24 under the IT Act.

Will I be eligible for a home loan if I have a bad credit score?

In case you have a poor credit score, it will be difficult for you to get a home loan. Banks or financial institutions consider your credit report to be of great value while determining your eligibility towards a loan. If you have a good score, banks will be happy to offer you a home loan with attractive rates of interest. However, with a bad score lenders will doubt your repayment capability and might not consider you to eligible for a home loan.

Home Loan Eligibility Calculator

Click here to
Check your Eligibility!

In today’s world, almost everyone opts for a home loan when it comes to buying a house. Bankbazaar allows you to calculate the home loan eligibility online at ease, by simply entering a few basic details about yourself like salary, city of residence, employment type, etc. Here are the minimum eligibility requirement for home loan.

Age Limit	18 – 70 years
Annual Income	Depending on the type of employment
Employment Status	Salaried or Non-Salaried
Residence Type	Permanent resident or Non-resident Indian (NRI)
Credit Score	Above 750
Property Type	Completed Project, Under Construction Project, Land/Plot, build on own Land, Buy Land and Build Home

Note:Loan eligibility criteria differ depending on a bank/lender. Approvals are based on borrowers' incomes, credit profile and existing relationship with the bank.

Check Home Loan Eligibility Criteria 2020

Home Loan Providers	Max Eligible Loan Amount	Loan Tenure	Age Limit
SBI Home Loan	No fixed amount specified	Up to 30 years	18 – 70 years
HDFC Home Loan	Up to Rs.10 crore	Up to 30 years	24 to 60 years
ICICI Home Loan	Up to Rs.10 crore	Up to 30 years	21 to 60 years
Axis Home Loan	Starts at Rs.3 crore	Up to 30 years	21 to 60 years
Indiabulls Housing Finance	Up to Rs.3 crore	Up to 30 years	21 to 65 years
DHFL Home Loan	Up 90% of the market value	Up to 30 years	18 to 70 years
PNB Housing Finance	Up 90% of the market value	Up to 30 years	18 to 70 years
Kotak Mahindra Home Loan	Up to Rs.5 crore	Up to 20 years	18 to 65 years
Karnataka Home Loan	Up to Rs.5 crore	Up to 30 years	18 to 65 years
Yes Bank Home Loan	Up to Rs.5 crore	Up to 35 years	21 to 60 years
LIC Housing Finance	Starts at Rs.1 lakh	Up to 30 years	21 to 60 years
Sundaram Home Finance Limited	Up to Rs.5 crore	Up to 20 years	18 to 65 years
DBS Home Loan	Up to Rs.5 crore	Up to 20 years	21 to 60 years
Aditya Birla Capital Housing Finance	Up to 75% of the property value	Up to 30 years	21 to 70 years
IDFC Home Loan	Up to Rs.10 crore	Up to 30 years	21 years and above
Federal Home Loan	Up to 15 crore	Up to 30 years	21 to 60 years
Andhra Home Loan	Based on repayment capacity	Up to 30 years	21 to 65 years
Dhanlakshmi Home Loan	Up to 80% of the property value, subject to your income eligibility.	Up to 30 years	21 to 60 years
BoB Home Loan	Up to Rs.10 crore	Up to 30 years	21 to 70 years
BoI Home Loan	Up to Rs.3 crore	Up to 30 years	21 to 60 years
Bank of Maharashtra Home Loan	Up to Rs.30 lakh	Up to 30 years	21 to 60 years
Canara Home Loan	Up to Rs.10 crore	Up to 30 years	21 to 55 years
IDBI Home Loan	Up to Rs.10 crore	Up to 30 years	22 to 70 years
Indian Overseas Home Loan	Depends on the applicant’s age and repayment capacity.	Up to 30 years	21 to 60 years
Karur Vysya Home Loan	Up to Rs.5 crore	Up to 25 years	21 to 60 years
South Indian Home Loan	Rs.2 lakh to Rs.15 crore	Up to 30 years	21 to 75 years
Tamilnad Mercantile Home Loan	Up to Rs.5 crore	Up to 30 years	18 to 50 years
CBI Home Loan	Depending on repayment capacity of borrower and value of property.	Up to 30 years	18 to 60 years
India Shelter Finance Corporation	Starts at Rs.5 lakhs	Up to 20 years	21 to 65 years
Aavas Financiers Home Loan	Starts at 1 lakh	Up to 30 years	18 to 65 years
Reliance Home Finance Limited	Starts at Rs.35 lakh	Up to 20 years	21 to 60 years
Tata Capital Home Loan	Rs.2 lakh to Rs.5 crore	Up to 30 years	24 to 65 years
Jammu and Kashmir Bank Home Loan	Depending on factors like income, repaying capacity, age, assets and liabilities, cost of the proposed house/flat etc.	Up to 30 years	21 to 60 years

Home Loan Eligibility Calculator Online

Use the home loan eligibility calculator to check which are the banks you are eligible for a home loan. You can easily compare and choose the best home loans with the help of the home loan eligibility calculator available on BankBazaar.
The process is simple and only basic details will need to be entered. The step-by-step procedure to check your eligibility via BankBazaar.com is mentioned below:

Visit www.bankbazaar.com.
Click on ‘Home Loan’, which can be found under the ‘Loans’ tab.
Next, click on the city you live in.
Next, choose your gender.
On the next page, select the city where the property is based.
Next, choose your type of employment from the options that are provided.
On the next page, enter your gross fixed monthly income and click on ‘Continue’.
Next, enter your total annual bonus (if any) and click on ‘Continue’.
Next, enter your average monthly incentives (if any) and click on ‘Continue’.
On the next page, enter the total amount of EMIs you are currently paying.
Next, enter your date of birth and click on ‘Continue’.
Next, choose the purpose of the home loan from the options that are provided.
Next, choose the details of the property.
Choose where the land is located from the options that are provided.
Next, choose the type of transaction and select seller.
On the next page, enter the price of the land and click on ‘Continue’.
Next, enter the cost of construction and click on ‘Continue’.
On the next page, you must select whether a co-applicant is being added. In case a co-applicant is added, enter the details of the co-applicant such as his/her relationship with you and date of birth.
On the next page, enter your name, mobile number, and email ID. Accept the terms and click on ‘View Free Offers’.
Enter OTP and enjoy various home loan offers that you are eligible at BankBazaar.

Using the eligibility calculator provided by BankBazaar.com simplifies the application process as you can check for the home loans you are eligible for. It is easy to compare home loan rates for all banks and apply the one that suits your requirements.

Top 6 Factors Affect Home Loan Eligibility in 2020

Age Limit: It is the first and foremost factor a lender/ financier considers when one applies for a housing loan. Normally, financial institutions attempt to limit the house loan term to the primary applicant's age of superannuation. This means young professionals (20s and early 30s) can avail a loan with a term of up to 25 years with no trouble. But older applicants especially those beyond 40 can find it a tad tough to be eligible for an extended tenure. Many a time, single applicant aged 50 and above were denied home loans purely on this basis.
Income: Let us categorize this into salaried, professional and self-employed. Whichever category the applicant falls into, a steady and regular source of income is must. Basically, there are fewer risks in loaning money if the applicant is an earning individual.
- Salaried Individual: If you are working for any government department or at any registered private company, you belong to this group. Most banks insists that the applicant should have completed at least one year in the present firm at the time of application. Pay slips, Form 16, bank statements and employer reference letter are the documents almost all lenders demand. Proofs for the same is needed for co-applicant and guarantor too (if applicable).
- Independent Professionals: Doctors, dentists, architects, engineers, management consultants, chartered accountants, freelance workers etc. belong to this category. Bank statements and ITR papers have to be submitted.
- Self Employed: Do you have your own company/ business? Or do you have other source of income like rented properties or hold shares? Then you belong to this category. If you have bank statements and tax-related papers to show, you can certainly apply for a home loan.
Rate of Interest: Home finance eligibility is always inversely proportional to the rate of interest. If the rate is more, eligibility will be less and vice-versa.
Loan Term: If you opt for a longer tenure, your eligibility will improve. EMIs too will lesser and manageable. But the downside to this is, you will end paying more interest.
Outstanding Loan(s): Indian banks and financial institutions always recommend keeping the EMI to Income Ratio between 50 or 60 percent. This is to leave window for future loans or to pay of existing loans if any. But unsettled loans could be a great damper on your eligibility.
CIBIL Score Report: Banks also scrutinize your credit repayment history from CIBIL (Credit Information Bureau India Limited), which is country's regulator and first credit information bureau. They keep detailed records of every info regarding credit history relation between you and lenders/ creditors. A negative entry can bring down your eligibility significantly.

7 Tips To Increase Your Home Loan Eligibility

Eligibility is not an easy thing to assess. The banks and lenders will be considering your present liabilities, income, assets, etc. while calculating your home loan eligibility. In case the mortgage requirement is slightly higher that the eligible loan amount, some changes in the way you present yourself can help in increasing the eligibility factor. Tips to increase your eligibility for a home loan are mentioned below:

Clearing Existing Loans: Ensure that you pay diligently towards your credit card outstanding or personal loan installments. These can make the lender reject your application. The ideal thing to do is clear all dues and collect a no-due certificate before applying for a home loan. Ensure that your CIBIL report reflects these payments when you apply for home loan.
Variable Pay: Ensure that you keep track of the variable pay that you get with your salary package. Calculation of eligibility towards a home loan also depends on this factor.
Rental Income: If you have a house that is not being used by you, lease it out. The money that you earn as rental from this property can be used by you to show additional income source when you apply for a home loan. Your loan value can easily be enhanced by adding the rental income with our regular earnings.
Increase in Tenure: The tenure of the home loan and the eligibility factor are directly proportional to each other. The eligibility increases upon increasing the tenure of the home loan. However, the maximum tenure that can be availed at present stands at 30 years.
Income of the Spouse: In case your spouse has a regular source of income, then applying for a joint home loan can prove to be advantageous. The home loan eligibility goes up dramatically if you apply for a home loan with your spouse. This also suggests that both of you will have to repay the loan together
Take the Time You Need: Before making an application for a home loan, it is advisable that you take a look at your credit score. Look for errors on your report. In case, you find an error, ensure that it gets cleared by CIBIL. In order to get a loan quickly, do not apply with multiple lenders. Instead, find out the offers that you can get from different lenders. If the CIBIL score that you have is good, different lenders will be more than satisfied to offer the loan amount to you. Before you choose your lender, speak to an existing customer of that lender. Easy schedule of repayment, competent rates of interest and good services are the things to look at while choosing a lender.
Step up Loans: Step up loans can be considered by you if you wish to increase your home loan eligibility factor. This is a great option for people face a lot of struggle initially, but get rewarded as they get established. Example – Chartered Accountants and Doctors. Under step up loans, lower EMIs will be offered with the loans. The installments will go up gradually in the future.

How Home Loan Eligibility is Calculated?

Chandra Patra is an employee of a leading company in India. His salary break up is mentioned below:

Income	Amount	Deductions	Amount
Basic	32,000	Income Tax	3,300
HRA	900	Provident Fund	2,200
Conveyance	10,000
LTA	9,000
Special Allowance	55,000
Medical expenses	2,000
Total	1,08,900	Net Income	1,03,400

Let us consider that Chandra has no loans or liabilities at present and his net available income is Rs.1,03,400. However, you one must always remember that Leave Travel Allowance is not taken into consideration by the bank while calculating the salary. The medical allowance is also excluded from the calculation. This is because, these expenses are not derived by an individual with his/her salary. In this case, Chandra will only get these amounts as reimbursements, in case he spends on medical needs or travel requirements.

Thus, the bank or the lender will deduct that LTA and medical expenses from the net income. Chandra’s net income now stands at Rs.1,03,400 – Rs.(9,000 + 2,000), which is equal to Rs.92,400. Thus, the loan eligibility for Chandra Patra stands at Rs.92,400 x 60 = Rs.55,44,000. In case of a home loan, EMI is restricted to a maximum of 40% to 50% of the net income (monthly) by most banks. This suggests that you are eligible for a home loan where the equated monthly instalment is not more than 50% of your monthly income.

Home Loan Eligibility by Banks

FAQs on Home Loan Eligibility:

How to apply for a subsidy on my home loan?
The Government of India has launched a housing scheme with the view of building a pucca house for every Indian household by the end of 2022. As per the scheme, known as the ‘Pradhan Mantri Awas Yojana’, if an individual meets the prescribed criteria, he or she will be eligible for a subsidy on the home loan interest rate.
Is it mandatory to have a co-applicant while applying for a home loan?
Although there is no mandate for having a co-applicant for a home loan in India, most of the lenders (both public and private) insist on having one to ensure the guarantee in regard to the repayment of the loan amount. In addition to that, having a co-applicant while applying for a home loan will also boost your eligibility. Nevertheless, it should be kept in mind that there is no legal requirement for having a co-applicant when applying for a home loan.
What is meant by the market value of a property?
The price of a property which is agreed upon by both the seller and a buyer for a transaction is called the market value of that property. In easier terms, the price of the property at which the seller is ready to sell the property and a buyer is ready to purchase the property is the market value of the property.
What is the process of disbursement in case of home loan for the purchase of an under-construction property?
In the case of under construction property, the loan amount is disbursed by the lender in instalments and is based on the assessment of the lender and not the developer. The loan amount is disbursed on the basis of the progress of the construction of the property.
What are the eligibility requirements for NRI applying for a home loan?
The eligibility criteria for NRI home loans might vary from lender to lender. However, some of the basic requirements can be summed up as follows -
- In general, the applicant should be within the age bracket of 18 years to 60 years. However, there are lenders who require the minimum age to be 24 years or more.
- The income requirement also varies from lender to lender.
- The loan should be taken for a minimum tenure of 5 years to 15 years.
- The applicant should provide a down payment of 15% to 20% of the value of the property.
What does own contribution mean?
Most of the lenders in India (both public and private) require you to provide an amount equivalent to 10% to 20% of the home loan amount as a down payment. This initial amount which is to be provided by you is called the own contribution.
What security needs to be provided when applying for a home loan?
Your lender might ask for security when you apply for a home loan. You can provide one of the following as collateral security for your home loan:
- NSS or National Savings Certificates
- Assignment of life insurance policies
- Bank deposits
- Mutual fund units
- Other investments
What is an agreement of sale?
A legal document which is used to compile the outlines of the transaction in relation to a property is called an agreement of sale. The agreement of sale usually lists the details of the transaction such as the price of the property and is signed by the buyer as well as the seller.
Can I get a higher loan through my existing loan account to buy a new property?
Yes, you can use your existing loan account to purchase a new property. However, this benefit will be offered as per the discretion of your lender. For example, HDFC Bank offers the ‘Home Conversion Loan’ feature which can be used to transfer the existing loan to buy a new property. In addition to that, you can also get additional fund for the new property as per your eligibility.
Can I get a top up loan in addition to my existing home loan?
Yes, you can get a top up loan in addition to your existing home loan. However, in order to be eligible for the same, you will be required to make regular repayments for your existing loan.
Can I borrow loan for under construction property?
Yes, you can avail housing loans for under construction properties. However, it should be kept in mind that the amount will be disbursed in instalments as per the assessment of the lender.
Who are eligible for a joint home loan?
The eligibility for a joint home loan is dependent on the relationship of the co-applicants. The co-applicants have to be related in order to be eligible for a joint home loan.
What factors are considered by a lender/bank while approving a loan?
There are several factors that are considered by banks or lenders to determine if you are eligible for a loan. These factors are mentioned below:
- Applicants age.
- Applicants income level.
- Qualification of the applicant.
- Income level of spouse.
- Resident status.
- Existing loan status.
- Credit score and credit history.
Are my children eligible to be co-applicants for my home loan?
Yes, your parents, children and spouse are considered eligible for being co-applicants for the home loan.
Am I eligible for tax benefits if I take a home loan?
Yes, you can avail tax benefits when you take home loan from a bank or a financial institution under Section 80C and Section 24 under the IT Act.
Will I be eligible for a home loan if I have a bad credit score?
In case you have a poor credit score, it will be difficult for you to get a home loan. Banks or financial institutions consider your credit report to be of great value while determining your eligibility towards a loan. If you have a good score, banks will be happy to offer you a home loan with attractive rates of interest. However, with a bad score lenders will doubt your repayment capability and might not consider you to eligible for a home loan.

News About Home Loan Eligibility

Housing finance given new lending rules

The Reserve Bank of India (RBI) has given housing finance companies the qualifying assets that the can finance. 11 proposals have been put forward by the RBI that will come under housing finance.

Some of the activities that have been proposed are loans for individuals for the purpose of renovation of an existing dwelling unit and loans to individuals for purchasing new or old dwelling units. Under the new rules, loans will also be provided to builders to construct residential dwelling units and to improve slum schemes. At least 50% of the available net assets excluding money marketing instruments, bank balances, and cash will be provided as qualifying assets. Out of the provided funds, 75% must be given for individual housing loans. Under the new 50% rule, the criteria have to be met by 31 March 2022. Under the 75% rule, the criteria has to be met by 31 March 2024. The HFCs who do not meet the criteria will be treated as NBFC-ICCs and must convert their registration certificates by approaching the RBI. A proposal has also been put forward by the RBI for non-systematically important HFCs and systematically important HFCs.

19 June 2020

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