Home Loan Eligibility for Salaried Person: All You Need to Know

A new home is a major financial investment. Among many aspirations of the salaried class people, buying a home of is one of the major milestones. But you can afford it only when you have a home loan. All banks and financial institutions offer housing loan to both salaried and self-employed individuals at attractive and competitive interest rates.However, when it comes to evaluating your eligibility for the home, lenders have to take into account many factors. Below we have listed the top 5 factors that determine home loan eligibility for salaried people.

1. Your credit history: When you apply for a home loan , your chance of getting approval are quite high if you have a credit score of 750 or more. CIBL score enables banks to make an informed decision as it the score advises your preferred bank on you loan repayment track record. The higher the credit score , the more chances of enhancing your home loan eligibility.
2. Your Income Source: Banks give equal importance to income, whether you're a salaried individual or self-employed. Home loan eligibility based on salary is a primary criterion for lenders to assess your eligibility. A higher monthly income increases loan approval, as well as lenders, are happy to extend financial assistance. Salaries individuals who have a well-paid job in MNC have fixed monthly income which is also one of the main reasons for home loan eligibility.
3. Your age: For a salaried individual, the minimum age is 21 years, and the maximum age is 60 years. If you avail home loan at an early age, banks usually sanction the loan amount quickly as you're charged a lower interest rate, which in turn reduces your EMI. The loan tenure is also flexible.
4. Your LTV ratio: The Loan-To-Value or LTV is a ratio of the loan amount that is approved to the total value of the property. The ratio ranges from 75% to 90% of the property value. If the value is high, your LTV will also increase and hence it means you have to pay the lesser down payment. A good credit history would increase your LTV ratio.For instance, if you're buying a home of Rs. 1 crore and your bank's loan to value ratio is 70%, then you will get a maximum loan amount of Rs. 70 lakh.
5. Existing Debt: Salaried individuals tend to take more than one loan, be it for car, higher education or for any other purpose. If you're an existing loan, banks examine the ratio of your total current debt to your total income as it helps them to calculate your repayment capacity. Post this analysis; if banks come to know that you're burdened with too much loan, then it will sanction a lower loan amount.

Salaried people are at an advantage when it comes to getting approval for a home loan. You only need to satisfy these above factors to increase your chances of eligibility

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.