What is home loan eligibility? What are the factors that determine your eligibility for a home loan?
Home loans can be a valuable means of financial assistance in the path towards becoming a homeowner. They offer a suitable solution to the difficulties of making a large, one-time payment towards purchasing your own home. However, they come with their own predefined set of criteria that a borrower must meet to be eligible for them. So, what are these criteria and how do they determine your home loan eligibility? Here’s what you need to know:
What is Home Loan Eligibility?
Let us first look at the question of ‘What is home loan eligibility?’. A loan availed by a person is essentially an amount of money that he or she borrows from a lender. This is accompanied with the agreement that the borrower will repay this amount to the lender in home loan EMIs, including added interest. However, it is important for the lender to be assured that the borrower is indeed in a financial position to be able to fulfill this agreement.
That is where home loan eligibility comes in. To be assured of repayments, every lender lays out certain conditions or criteria that the borrower must fulfill. These eligibility criteria are the first step that are to be presented before the home loan application moves forward. In case a potential borrower fails to meet one or more of these criteria, his or her application can get rejected.
Factors Determining Home Loan Eligibility
The criteria for housing loan eligibility can vary from lender to lender. However, there are a few factors that almost every provider takes into account to determine the eligibility of the borrower. Here are some of the most common factors that determine home loan eligibility:
- Gross Income- It is considered that the higher the income, the more the amount of money that a borrower can spare for EMIs.
- Employment Status– Employment status is often a mark of a person’s financial stability and hence plays a part in determining eligibility.
- Credit Score- A person’s credit score is considered an ideal way to gauge his or her credit worthiness. Hence, lenders often place a benchmark credit score that the borrowers must meet or exceed to gain eligibility.
If you are still unsure about whether you meet the required eligibility criteria, make sure to go through the information provided by the lender. Most lenders also provide a handy home loan eligibility calculator on their websites to help make this process easier. Simply enter the required details in the given fields and the calculator can accurately determine your housing loan eligibility.