home loan


TransUnion CIBIL claims in its report that home loans inquiries increased by a whopping 112% in July-August 2020 when compared to the same period in the previous year. Thus, it is safe to assume that housing loan applications have also spiked similarly in the last year.

However, before one applies for a loan, one of the first things to check is an individual’s home loan eligibility and the parameters assessed in approving the loan. Such an assessment indicates your ability to repay within the determined tenor.

Tips to increase your eligibility for a home loan

Housing loan eligibility pertains to the maximum amount of loan that may be sanctioned by a lender based on certain specific criteria like age, income source, CIBIL score etc. Following are some of the effective measures to enhance your eligibility –

  1. Opt for a longer home loan tenor

Home loans are big-ticket liabilities with considerable tenure, ranging almost up to 20 years. In such cases, borrowers have to service a greater number of EMIs to clear their dues. As a result, the monthly instalments are lower, assuring the lender of timely servicing of the loan.

  1. Repay all existing loans

Repayment of all outstanding loans before application improves one’s chances of home loan approval. With minimal or no credit outstanding, and individual’s disposable income rises, which allows him/her to avail of a housing loan and afford its EMIs easily. 

  1. Maintain a robust credit report

An applicant typically requires a CIBIL score of 750 or above to be eligible for a home loan. Acquiring such credit with lower scores can be difficult, and may result in unfavorable terms. The credit report is one of the important factors that can affect your home loan eligibility.

Individuals can improve their credit score by ensuring timely repayment of existing credits. Also, the maintenance of a balanced credit mix can improve home loan eligibility to a large extent. 

  1. Restrict FOIR at 40%

Another critical parameter for the determination of housing loan eligibility is the Fixed Obligation to Income Ratio (FOIR). This is a measure of one’s current liabilities against his/her total monthly earnings. High FOIR indicates significant liabilities and minimal disposable income for borrowers. Thus, it adversely impacts the chances of loan eligibility.

Limit the FOIR to 40% before the home loan application. There are two ways by which FOIR can be lowered. That is, either by repaying all your existing debts or increasing your income. Each of them results in an overall improvement in one’s creditworthiness.

  1. Apply for a joint home loan

Eligibility can be further improved by applying for a joint home loan. The monthly income of another applicant will also be considered in the determination of loan eligibility. The sanctioned loan amount can be higher as well making it beneficial to take a joint home loan. Moreover, joint home loans allow for double the tax savings from housing loan, even in cases where co-borrowers are spouses.

Many lenders facilitate the loan application process through pre-approved offers. Such offers are provided on a range of secured credits like loans against property, home loans, and others. You can check your pre-approved offer by entering your name and contact details. Before you apply for the loan, you must check the home loan eligibility criteria. While these aspects are most likely to ensure that you are considered eligible for a home loan, it is imperative that accurate information is mentioned in the loan application. Otherwise, such a loan application is liable to be rejected.

By admin

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