Home Loan Guide

A Comprehensive Home Loan Guide For First Time Home Buyers In India.

Home Loan Guide

Eligibility Criteria, Credit Score and Documents Required

Home Loan Eligibility

Home Loan Eligibility

Buying your own house through a home loan comes with tax benefits. This helps you to manage cash flow along with reduction of taxes. You can decide the type of home loan you want. However, it pays to be in the know of your home loan eligibility and the criteria to be satisfied prior to applying for one. You can use the home loan funds for purposes such as new house construction, purchase of a new/used house, or renovation. Irrespective of your occupation/profession, it is important that you check your home loan eligibility through the online calculator available in this home loan guide prior to approaching a bank or other financial institution.

Home Loan Eligibility Criteria

Banks and financial institutions that offer home loans will look at several criteria before sanctioning the loan. Some of the common and important ones are listed below for your ready reference:

  • Salaried, self-employed, and business people are eligible for applying for a home loan in India.
  • You must have completed at least 18 years of age. The probability of getting a loan decreases with age. Most banks and financial institutions offer home loans to salaried employees in the age group of 18 years to 70 years. When it comes to the self-employed people, the range applicable is 21 years to 70 years.
  • You should be earning a regular income to prove your ability to repay the loan on time.
  • Your savings history and professional stability will also be taken into consideration. If they are good, the loan will be approved quickly.
  • You should not have a bad credit history at least for the three months prior to the month in which you are applying for a home loan.
  • Your minimum net annual income should be in the range of Rs. 120,000 for salaried and Rs. 200,000 for self-employed.
  • The type of residence you are in – owned or rented – will be taken into account
  • Status of residence (minimum one year at the current place) is also an important aspect.
  • The type of property you are buying affects the loan amount eligibility.

Apart from the above, some of the other criteria that the lenders often take into consideration are:

Stability of Employment

Home Loan Eligibility Citeria - stability of Employment

This is one of the crucial aspects that lenders take into consideration. If you belong to the salaried class, you should be employed for a period of two years in the present organization. If you are self-employed, then you should have been earning an income for a minimum of five years. If you do not satisfy this criterion, your loan application will not be considered at all.


If you are employed in a company that has a high reputation and market standing, your credibility will be much better.

Credit Rating

Apart from your company’s performance, your credit score is also important. The higher your credit score, the higher the chances of you obtaining a loan with better terms. Defaults in payment history, not-so-good payment track record, and outstanding loans can all negatively impact your credit score. The bank may even cancel the loan request or charge a higher rate of interest.

What is Credit Score?

If you are wondering as to “what is a credit score”, it is a statistical number. It evaluates an individual’s creditworthiness. It is based on a person’s credit history. Lenders often make use of credit scores for evaluating the probability of an individual repaying his/her debts. The credit score of an individual can range from 300 to 850. The higher you score, the more trustworthy you are.

In India, lenders check your CIBIL score prior to approving a loan. TransUnion CIBIL Limited, the credit information provider in India, maintains credit records of 32 million businesses and 600 million individuals. It is one of the four credit bureaus that operates in India and belongs to the American multinational group TansUnion.

what is credit score

Financial Situation

When it comes to assessing your financial situation, the lenders take into consideration your present status and your track record with respect to financial stability.

  • Tips:
  • The eligibility criteria often vary from one lender to another.
  • Obtaining a home loan becomes much easier if you have a very good financial track record. You will be able to avail a higher loan amount at a lower interest rate and longer tenure.

Home Loan Eligibility Calculator

When you are applying for a home loan, the first question that comes to your mind is “how much home loan can I get on my salary?” The home loan eligibility calculator that is included in this guide will help you to get a fair idea as regards how much you can get. The calculator determines the amount by considering the following factors:

  • Your Gross Monthly Income
  • Gross Monthly Income of the Co-Applicant, if any
  • Other Loans
  • Other Deductions
  • Interest Rate (in percentage)
  • Loan Tenure (in months)

Calculate your Home Loan Eligibility

Use our easy to access Home Loan Eligibility calculator to help you plan for your dream faster and more efficiently.

Documents Required for Home Loan

When applying for a home loan, you are required to submit a host of documents as listed below:

Document Checklist

1.0   Completed loan application form affixed with photos
2.0   Proof of identification (any one of the listed documents)
  • Driving licence
  • Ration card
  • Passport
  • PAN card
  • Voter’s ID card
  • Employee ID
  • Bank passbook
3.0   Proof of age (any one of the listed documents)
  • PAN card
  • Birth certificate
  • 10th standard mark sheet,
  • Bank passbook
  • Passport
  • Driving licence
4.0   Proof of address (any one of the listed documents)
  • Bank passbook
  • Bank account statement
  • Voter’s ID card
  • Ration card
  • Passport
  • Utility bill (electricity, water, gas, or telephone less than two months old)
  • LIC policy/premium payment receipt
  • Letter verifying customer’s residential address from a recognized government authority
5.0   Income Proof

Salaried individuals (any one of the documents listed below)

  • Form 16
  • Letter from employer (Appointment letter also required if you have been with the current employer for less than a year)
  • Last three months’ pay slip
  • Increment/promotion letter
  • Three years’ IT returns
  • Six months’ bank statement

In addition, salaried individuals are required to furnish investment proofs such as fixed deposits, share certificates, etc., and passport-size photographs.

6.0   Self-employed individuals/businessman (any one of the documents listed below)
  • Last three years’ income tax returns along with income computation and attestation by a Chartered Accountant
  • Last two years’ Balance Sheet and Profit and Loss Account of their firm attested by a Chartered Accountant

In addition to the above, self-employed individuals/businessmen are also required to submit:

  • A brief write up about profession/business
  • Passport size photographs
  • Photocopy of Certificate of Registration of the firm under Factories Act/Shops and Establishments Act
  • Photocopy of Profession Tax Registration Certificate t
  • Certificate of Practice
  • Proof of investments
  • Advance tax payment receipts, if any
7.0   Property documents required for home loan
  • Sale deed
  • Original copy of the sale agreement with the builder
  • Land and building tax payment receipts
  • Certified location sketch of the property and Possession Certificate issued by the Revenue Authority

8.0   Allotment letter issued by the Society, Housing Board, or Private builder
9.0   Flat purchase advance payment receipts in original
10.0   Copy of the approved building plan consisting of the key plan and floor plan when purchasing
11.0   Land tax payment receipt in original
12.0   No objection certificate (NOC) in original from the builder or housing society
13.0   House construction cost estimate in detail
14.0 Letter from the society, housing board, or builder with their account number and bank’s name to enable remittance of instalments

This is not an exhaustive list of documents to be submitted when applying for a home loan. The documents required for home loan approval often varies from one lender to another.

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