There are several home loan criteria that all buyers should understand before committing to a home purchase. The first factor to consider is your credit score. A low credit score will almost always result in your home loan application being rejected. This will also negatively impact your credit score, making it much harder to qualify for a loan in the future. So it is important to know the home loan criteria of each lender before you begin shopping for a new home.
Another important factor to consider when determining the amount of your loan is your age. Applicants who are younger tend to qualify for a higher loan amount because they have more time to repay the loan. Moreover, a 55-year-old person may have only 5-10 years to pay off the loan, compared to a 30-year-old person who will have the luxury of 20 years. You should therefore know your repayment capacity before applying for a home loan, and plan accordingly.
The amount you earn per month is also important. Banks generally advertise a maximum loan amount that you can get if your income is between 55-60% of your gross monthly income. This amount will naturally decrease as the loan is processed, but other criteria will determine the final loan amount and the interest rate. You should make sure that you can comfortably afford the monthly EMI based on your income. The maximum amount of a loan depends on its tenure and interest rate.
You can also use a home loan eligibility calculator to calculate your eligibility. Once you have determined your eligibility, you will need to upload the necessary documents online. These documents include your PAN Card or other proof of residence. A Voter’s Card, Employee Card, Ration Card, and Driving License are examples of acceptable proofs. An up-to-date Electricity or Water Bill is also a good proof of your residence. You can also provide your credit score if you have it.
Home loan eligibility criteria differ from bank to bank. Depending on your age, credit history, employment status, and other personal details, you may have to apply with a different bank. Be sure to calculate your eligibility before applying. Remember, the repayment period of a home loan can be difficult for most borrowers. Having a clear understanding of the home loan criteria will help you avoid a major financial crisis during repayment. So, be sure to check your eligibility for home loans before applying. You can apply for a home loan online or at a local branch.
Once you know your credit score and down payment requirements, it is time to look into what other criteria lenders use. While a credit score isn’t a criterion itself, it is a key factor in determining whether your application is accepted. A low credit score will often affect your interest rate and indirectly price you out of a high-priced home. However, a high credit score will not have as significant an effect on your loan as a poor debt-to-income ratio will.