“Home is where the heart is.” Be it a salaried employee, a business owner, or a self-employed professional, everyone aspires to be a proud homeowner and wants to have a place that’s truly theirs.
Of the three, there’s often confusion about the eligibility criteria and application process for the self-employed category. Self-employed individuals may include medical practitioners, chartered accountants, artists, musicians, lawyers, and other professionals who practice their profession under their own name.
The three most common questions they have around housing finance are:
What is the home loan eligibility for self-employed?
What documents are required?
How to apply for a home loan for self-employed?
To find answers to all these questions, keep reading.
Home Loan Eligibility for Self-Employed
As a self-employed professional, you cannot produce salary slips, P&L accounts, or even a slew of steady earnings pouring into your bank account each month. This may make you feel less eligible as lending institutions pour over financial documents before granting a loan.
It's true they do, but nowhere do they want your paperwork to match that of a salaried employee or a business professional. In fact, a legit lending institution will have fleshed-out eligibility criteria designed specifically for home loan for self-employed.
Refer to the table below to understand what we are trying to say in detail.
Home loan eligibility for self-employed
Remarks
Age
All lending institutions offer home loans for self-employed individuals that fall within an age range. Do check the age range of your lender before applying.
Number of dependents
Your lender might ask you about the total number of dependents you support on your income. They may not have any official cap, but it can be a marker to gaugethe eligibility forhome loan for self-employed.
CIBIL score
A healthy CIBIL score might be a prerequisite for certain lending institutions. This score ranges between 300 to 700 points. However, having a lower score does not mean you cannot apply for home loan for self-employed. You can, except you may qualify for a relatively higher ROI in return.
Financial profile
One of the key home loan eligibility criteria for salaried employees is their financials. The same goes for self-employed individuals. To boost your chances, you must reveal your income sources. Here, you can also include any.
Debt profile
Same as the home loan eligibility criteria for salaried employees, self-employed individuals must also inform the lender about ongoing loan EMIs, if any. Although a high or low CIBIL score will indeed act as a reflection of your repayment history and creditworthiness, you transparently talking about it will only boost your chances of getting a loan approved at affordable ROIs.
Educational history
Not all, but a handful of lending institutions might request your educational documents in addition to your personal details. Now, this is not a mandatory home loan eligibility criterion for self-employed, but it might happen in special cases when lenders are unable to make up their minds.
Typical Home Loan Documentation Requested by Several Lenders
You can divide home loan paperwork for self-employed individuals into three broad categories. These include:
Identity proof (Any 1)
PAN card
Aadhaar Card
Passport
Driving license
Voter ID card
Address proof (Any 1)
Aadhaar Card
Driving License
Passport
Utility bills
Post-paid mobile bill
Income Proof
Last 3 years’ IT returns
Last 2 years' audited P&L account, if available
Latest balance sheet
Practice license or letter of incorporation, in case of a partnership
Last 6 months’ bank statements
Property papers (depending on what the lender asks for)
Sales deed or stamped agreement
Possession certificate
Occupancy certificate
NOC of developer or the housing society
How to Apply for a Home Loan as a Self-Employed Individual?
Once you’ve checked the home loan eligibility criteria for self-employed on the desired lender site and compiled the right paperwork, it’s time to apply for the loan. Thanks to rapid digitalization, most renowned lending institutions allow potential borrowers to start their application process online. This quickens the process of verification and sanctioning.
Visit your preferred lender’s website to access the online home loan application portal.
You will most likely be asked to fill out a digital application form. Make sure to fill it out accurately. At this point, you might also have to upload certain documents. So, keep all your home loan document ready.
Click on submit once you’re done with the form.
Wait for verification and approval letter. Before this happens, your lender might contact you personally or send a small team to surveil the property.
After verification and approval, you will receive funds in your chosen account, and you will set up standing instructions to pay timely EMIs.
As you can see, the home loan application process for self-employed individuals doesn't vastly vary from salaried employees or business owners, except the financial requirements might be different.
You can also approach your lender by visiting their branch and applying offline by filling out a home loan application. Alternatively, the loan officer can fill up an online home loan form on your behalf as you wait at the branch.
Summing Up
Are you a self-employed professional looking for an affordable home loan? Well, then, partner with Tata Capital. We extend housing finance to self-employed individuals at attractive rates. You’ll also find our repayment tenures and terms flexible, and our eligibility criteria relaxed.
Head over to our website to start your application with us today!
19 September 2022
5 mins read
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