Everything You Need to Know About the Home Loan Eligibility

A home loan might be a quick fix to all your home-related financial woes, but like any other loan, your lender will require you to prove your worth before awarding you with the funds.

So, how do you go about it?

It’s quite simple. All you have to do is produce all personal/professional details to your lender. Here’s a list of eligibility criteria you need to meet to successfully avail of a loan.

1. Examining your Eligibility

You’ll have to fulfil certain criteria to convince your lender(s) that you’re cut out for the loan. Here’s your home loan eligibility criteria checklist that might vary slightly depending on your lender, while maintaining the same essence:

  • Valid identification proof (passport/voter identification/ driver’s’ license) to prove that you’re an Indian resident
  • You must fall within the 25-70 years age group
  • If you are a self-employed individual, you’ll need to submit proof that your business is at least 5 years old
  • Your loan amount must fall between the minimum and maximum amount offered by your lender
  • Your latest credit report with a score of 750 or more and a brief history of on-time payments and credit utilisation

2. Documents Required for Home Loan Sanction

Once you’re eligible, the financial institution lending you funds will require documented proof of your existence and financial stability. Here are the papers you’ll have to put up:

  • Complete Home Loan application with all your credentials
  • Latest passport size photographs
  • Proof of identification (voter’s identification/passport/driver’s license)
  • Proof of residence (voter’s id/water or electricity bill)
  • Proof of business address (in case of self-employed candidates)
  • Bank account statement for the past six months
  • Signature identification
  • Personal assets and liabilities statements in a proper format as stipulated by your lender
  • Detailed information about loans you’re already paying including details of the lender and securities mortgaged

If you’re a salaried individual, you’ll have to provide the lender with additional documents. Here’s a list to help you organise your papers:

  • Original salary certificate for the previous month
  • Tax Deducted at Source certificate – Form 16 or a copy of the IT returns you’ve made in the past two years acknowledged by the Income Tax Department

For a self-employed individual running an enterprise, the additional documents to be submitted are as follows:

  • Income tax returns made in the past three years acknowledged by the Department of Income Tax
  • Receipt copies of advance income tax payments

3. Property Documents Required for a Home Loan Sanction

When you put up your property for a home loan, the financial institutions will demand legitimate paperwork to clear it of any illegalities before the loan amount is sanctioned. Here’s a list of documents you might have to produce if asked by your lender:

  • Agreement of sale
  • Paid building and land tax receipts
  • Certificate of possession
  • Location sketch of the property certified by revenue authorities
  • Letter of allotment issued by housing board or private builder
  • Receipts of advance payments made towards purchase of the flat
  • Non-encumbrance certificate
  • Original NOC under Urban Land Ceiling Act, 1976
  • Copy of relative order if the land has been utilised for agricultural purposes
  • Original NOC from Housing Society or private builder
  • Detailed estimation of the cost of construction

A stellar paper trail is undoubtedly the best method to get your loan application approved because those pieces of paper justify your ability to repay a loan. You’ll have to think of it as a job interview. Every detail mentioned in your documents has to be legitimate to get the final nod of sanction from your lender.