Are you planning to buy your dream home? Given the rising prices of building materials and land, buying a home on your own funds can be difficult. To remove your worries, a home loan gives you access to funds at a much lower cost. You can repay them over a long tenure. But how to qualify for a home loan? Here’s a look.
Build a High Credit Score
Try to pay all your credit card bills and loan EMIs regularly in full. This can help you build a good CIBIL score.
What is this score? The Reserve Bank of India authorises the Credit Information Bureau India Ltd. (CIBIL) to generate a comprehensive credit record of a person. This CIBIL report shows your creditworthiness based on a three-digit score on a scale of 300 to 900. The score is calculated as per your credit and loan repayment history and taken into account when you apply for a home loan.
A credit score between 700 and 900 is good and can help you qualify for the loan faster. Plus you can enjoy low interest rates on home loans.
Meet the Eligibility Criteria
The eligibility criteria to apply and qualify for a home loan decides your qualification for it. See whether you meet the criteria.
As a self-employed individual, you are usually expected to be:
- A resident Indian
- Aged 23-70
- Running a business for at least 4 years now
- Earning the specified minimum amount per annum
As a salaried individual, you can be a resident or non-resident of India. You must be:
- Aged 21-60
- Having a minimum of 3 years of experience
- Having the specified minimum annual income
Add a Co-applicant if Needed
Is your credit score low still you want to improve your eligibility for a home loan? You can do so by adding an earning family member as a co-applicant who has a high CIBIL score. This can also help increase the minimum amount of loan you can borrow since your affordability of the EMIs goes high. Thanks to some lenders who add the income of family members to grant your loan request.
Get the Necessary Documents
Check out the specified documents required for a home loan and keep them handy. These usually include:
- Valid identity, address and business proofs as specified
- Valid income proof
- For salaried individuals: Last 6 months’ bank statement/ Form 16 or the latest ITR/ last 2 months’ salary slip
- For non-salaried individuals: CC statements or bank statements of the last 6 months/ GST returns/ P&L statement or balance sheet/ latest ITR
- Property Proof
- No objection certificate from the society
- Possession/Allotment letter
- Photocopy of chain title documents and draft sale deed
- Any other documents according to the legal report
See if the lender offers a home loan calculator to check the eligibility of salaried and self-employed borrowers separately. Such a calculator can help you learn the amount you can borrow as per your tenure, income, EMIs and interest rate. Once you qualify for the loan, apply for it right away!