Buying a home is one of the biggest financial decisions most people make in their lifetime. On the other hand, making this possible through savings only is pretty challenging. To bridge this gap, people opt for Home Loans. However, getting approved for a home loan sometimes can be a bit complicated. But, we have simplified the entire process for you.

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Lenders have certain eligibility criteria, and qualifying for a home loan can be challenging, especially if you’re a first-time buyer. In this article, we’ll guide you on how to check loan eligibility and boost your approval odds.

Understand the Home Loan Eligibility Criteria

To increase your chances of getting approved for a home loan, it is crucial to familiarise yourself with the eligibility criteria established by lenders. Generally, lenders evaluate multiple factors before granting a home loan. These factors comprise your credit score, income, age, employment status, and debts.

When considering home loan applications, most lenders require a minimum credit score of 750 or higher and prefer applicants with steady incomes from stable employment. Moreover, lenders assess your repayment capacity, which refers to your overall monthly debt obligations, including the home loan EMI, that should not surpass 50% of your monthly income. By meeting these criteria, you can enhance your prospects of securing a home loan.

Improve Your Credit Score

A higher credit score indicates that you’re a responsible borrower and reduces the risk for the lender. If your credit score is below 750, you may face difficulties getting approved for a home loan.

Therefore, improving your credit score before applying for a home loan is essential. Here are some tips to boost your credit score:

Pay all credit card bills and loan EMIs on time.

Avoid applying for multiple loans or credit cards simultaneously.

Keep your credit utilisation ratio below 30%.

Check your credit report regularly for errors and disputes, if any.

Increase Your Income

If you’re self-employed or working on a contractual basis, getting approved for a home loan can be challenging. Increasing your income and demonstrating your repayment capacity to the lender is crucial. Here are some ways to boost your income:

Take up a part-time job or freelance work.

Invest in a side business or a rental property.

Ask for a salary raise or a promotion at your current job.

Reduce Your Existing Debts

Lenders evaluate your total monthly debt obligations before approving your application. Therefore, reducing your existing debts and improving your debt-to-income ratio is essential. Here are some tips to reduce your debts:

Consolidate your debts by transferring high-interest credit card balances to a low-interest loan.

Negotiate with your creditors for a lower interest rate or a flexible repayment plan.

Prioritise your debts and pay off the high-interest ones first.

Check Your Home Loan Eligibility Online

Check your eligibility online using a home loan interest rate calculator to determine your loan eligibility and estimate your EMI.

Here’s how to check loan eligibility online:

Go to a lender’s website or a home loan aggregator portal.
Enter your details, such as your age, income, credit score, and loan amount.
The calculator will show you your eligibility and the estimated EMI.

Apply for a Pre-Approved Home Loan

To boost your approval odds, apply for a pre-approved home loan, a conditional approval from the lender based on your credit score, income, and other eligibility criteria. Here are the benefits of a pre-approved home loan:

You can negotiate the interest rate and the loan amount with the lender based on your pre-approved status.

It saves time and effort as you can search for homes within your budget and finalise the deal quickly.

It also gives you an edge over other buyers as the seller knows you have a pre-approved loan and can close the deal faster.

Takeaway

Getting approved for a home loan requires careful planning and preparation. By following these tips, you can increase your chances of getting approved for a home loan and fulfilling your dream of owning a home.