Owning their own home is a dream for many Indians. Homes bring a sense of belonging and ownership. It is a space that you can call your own and decorate according to your tastes. Moreover, owning a house is also a measure of being ‘settled’ in the Indian society. Therefore, owning a home is as much a status symbol as it is about having a place to call your own.

However, homes aren’t cheap, and only a very small section of society would be able to pay for their dream home out of their own pocket. For the rest, a Home Loan would be their best bet. Many banks and NBFCs offer Home Loans to help people make their dream of an ‘own home’ come true. Though, before you apply for a loan you need to determine your Home Loan eligibility to know how much amount you can borrow.

Factors Affecting Eligibility

Your eligibility varies based on various factors. Banks and NBFCs consider the following before sanctioning a loan:

1. Income Details: The amount you receive as a salary/income is one of the most important factors affecting your eligibility. While a higher salary is considered better, it does not always guarantee a loan. Your debt to income ratio will also play a role here.

2. Employment Status: Your employment status is another factor that plays a big role in your Home Loan approval. If you are a salaried individual, you are more likely to be approved. On the other hand, if you are a self-employed individual, the amount you are eligible for will vary depending on how regular and substantial your income is. Additionally, you’ll need to show proof of having been in business for a few years continuously, as well.

3. Your Credit Score: Your credit score, profile, and history all play an important role in your Home Loan eligibility. Having a good credit score is essential to even be considered for a Home Loan. Banks, in particular, are quite strict about this. NBFCs, however, may be more flexible in providing a loan to individuals with poorer credit scores.

4. Existing Debt Obligations: If you have existing debt obligations, you are less likely to get approved for a Home Loan. This is because when you apply for a Home Loan, you will be required to pay EMIs for a long time. So, if you already have a lot of EMIs to pay, and your debt to income ratio is close to/more than 30%, you may be deemed unable to pay the Home Loan EMIs.

5. Home Project Details: Banks also check the details of your home project. They check whether the project is an approved one or not, before sanctioning a Home Loan. Additionally, you also have an option to choose your home project after applying for the loan.

However, different lenders have different eligibility criteria. For example, for a Bajaj Finserv Home Loan, as a salaried individual, you need to be between 25 and 58 years of age, with at least 3 years of work experience. If you are a self-employed individual though, you need to be between 28 and 70 years of age and an Indian resident. Additionally, you need to have been in your current business for at least 5 years.

How is Eligibility Calculated?

The eligibility is calculated based on the above-mentioned factors. Of them, your income/salary details may be the most important one. Your net disposable income is the amount that is considered during calculation. This is your salary after taxes, PPF, and deductible insurance premiums. Your lender will also probably deduct your current EMIs and LTA from your salary. The amount left after these deductions will be partly used to pay off your Home Loan EMIs. If you have a salaried spouse, you can add them as a co-applicant. This will also add to your chances of being approved for the loan.

There are many online Home Loan eligibility calculators to help you calculate the exact amount you will be eligible for. Doing so will also aid in choosing the right home for your budget. Lastly, remember to compare Home Loan interest rates and use a Home Loan EMI calculator to determine the EMI you will have to pay, before applying for a loan.