Eligibility criteria for getting home loan

There are number of factors that count for the eligibility for a housing loan. Though RBI has drafted guidelines for the eligibility for the loan but the banks have their own criteria to determine the eligibility and quantum of housing loan. The borrower’s should be aware of the factors before applying for the loan.

1. Information on the application form. The information filled by the customer in the application form is verified from various primary and secondary sources - through interviews, calling up the employer, verifying from the database etc. In case of wrong information or discrepancy, the loan application is liable to be canceled.

2. The financial status of an individual is an important factor for determining the eligibility because the repayment capacity of the borrower depends on the financial position. The income level, net income, liabilities etc determine the amount of loan.

The requirements include a particular minimum income or a fixed and certain source of income. The credit history of the borrower has an important role in determining the loan eligibility. Usually, the lenders maintain a database of borrowers and verify the credit history to check for previous repayment defaults, even from other lenders.

3. The personal profile of the individual is also important. These include factors like educational qualification, profession, number of dependents, assets owned, liabilities owed, savings history etc. A higher number of Dependants or existing liabilities implies lower repayment capacity.

4. The individual's age give an idea about the earning life, and the life cycle stage at which the individual is. In case the property is co-owned, the co-owner cannot be a minor. Moreover there is a fixed age limit of the co-owner. The age limits are set to minimize ownership disputes. The age limit is taken into consideration while fixing the tenure of the home loan and EMIs.

The applicant's retirement age is also considered. For example, if the applicant is 45 years of age and is set to retire at 60 years, the maximum loan tenure available will be 15 years.

Also, in case the bank has a 75-year age limit for a co-applicant, if the applicant is 40 years old and the co-applicant is 60 years old, then the home loan will be sanctioned for a maximum period of 15 years only.

5. The reputation of the builder also counts. List of pre-approved builders is available with each bank. Their credentials are already verified by the bank and as such loans are easily available for their properties.

6. Location of property also matters for the eligibility. Banks have specific norms with respect to a minimum area of a flat too. This may be built-up area or carpet area.

7. The age of the property is also an important consideration in case of purchase of existing properties.

If the resale property is less than 50 years old then only home loans are sanctioned. Banks conduct legal and technical appraisal of the property to see whether the title of the property is clear, there are no ownership disputes, the property is free from any encumbrances etc.

In case there are any objections in these appraisals loan application is liable to be turned down.