Know Your Eligibility and Documentation Required For a Home Loan

Mar 08, 2017

Home Loans are sanctioned subject to the applicant fulfilling the eligibility criteria and submitting the required documents. Though there might be slight variation between financial institutions regarding the home loan eligibility criteria and the documents required to get a home loan, but broadly the basic guidelines are same.

Home Loan Eligibility

When a prospective applicant applies for a home loan the lender assesses him/her as per their eligibility criteria. Based on the applicant complying with the eligibility criteria the loan application is considered for processing. The rules vary for salaried, self employed and professionals; the main aspects that determine the eligibility criteria are:

  • Age:
    Both the minimum age at the time of loan application and maximum age when the loan period ends is fixed by the FI. This varies as per the bank rules and the employment status.
  • Employment Status:
    How long the employee has been working and how many he/she has put in with the current organization. The organization one is working for also has a bearing upon the decision.
  • Income and Expenditure:
    The bank looks at the monthly inflow to determine whether the person can service a new loan or not; for this the existing EMI burden (if any) will also be considered.
  • Credit Score:
    Apart from this the lender accesses the credit report of the applicant to assess his /her repayment behavior in the past which helps them in deciding whether the applicant is a high or a low risk potential candidate. Most FIs have an online home loan calculator on their websites, which allows an applicant to check his/her eligibility before actually applying for a loan.

Documentation for Home Loan:

FIs have a specified list of documents that need to be submitted along with the application form, processing fee and the required number of photographs for the application to be processed. The documents required are:

  • KYC documents for applicant/s
  • Salary Slip for last three months in case of a salaried individual
  • Form 16 or IT returns
  • For self employed the requirements are: educational qualification certificate, proof of business, last three year IT returns, last 3 years CA certified or audited balance sheet and profit and loss account statement.
  • Last six months bank statement

The above list is just indicative and FIs may require some additional documents too. Each type of loan whether it is a car loan, education loan or a property loan has its own eligibility and documentation requirements but the good news is each FI lists out their requirements on their website so one can check before applying.