How to Improve Your Chances of Getting Approved for a Home Loan

March 23, 2023

How to Improve Your Chances of Getting Approved for a Home Loan

Loan Services

How to Improve Your Chances of Getting Approved for a Home Loan

Last few years we have seen a sharp rise in home affordability, with both home rates falling and the interest rates on loans dropping to their lowest levels. If you are looking to purchase a home, you will want to obtain as much loan as you can. It takes some research to determine eligibility for a home loan if you are a first-time home buyer.

The eligibility for a home loan is an important reference point for banks, non-banking finance firms (NBFCs), or housing finance companies. It allows them to determine the maximum amount that a homeowner is allowed to borrow and to assess their trustworthiness to repay the loan.

Lenders conduct a thorough analysis of an applicant for a home loan based on factors such as income, credit score, term of the loan, repayment ability, and income. It is important to know how to increase home loan eligibility so that they can afford their dream homes.

Getting approved for a home loan can be a daunting process, but there are steps you can take to improve your chances of success. 

In this blog we have curated some of the amazing things you must consider to improve your chance of getting a home loan. 

1. Enhance your CIBIL Score or Credit Score

A good credit score will always increase your eligibility for a home loan. You must ensure that all loan payments are made on time to achieve this. Your credit score will reflect your seriousness about settling your debt. It will be negatively affected if you delay in paying them. Your credit score will be improved by maintaining a low credit utilization rate (CUR).

The lender will usually check your credit score when you apply for a loan. Banks and Home loan provider in Ahmedabad use a variety of credit bureau scores. Although there is no minimum score required for a home loan, a score of 750 or higher is considered to be a good score. A good CIBIL score will also lead to lower home loan interest rates.

2. Joint Home Loans

If you have more than one earning member of your family, applying jointly for home loans will significantly increase your chances of getting a loan. Applying for a home loan together with your spouse or parents is the best option.

The co-borrowing of a home loan not only increases eligibility, but also reduces the repayment burden and provides tax benefits. Co-borrowing with a co-borrower who has a high credit score will increase your EMI affordability and improve your home loan eligibility.

3. Choose a longer tenure

A longer term home loan can be used to increase your home loan eligibility. While a longer tenure home loan will lower your EMI, it will also increase the total interest you pay. You must consider the higher cost of borrowing and the longer repayment term.

4. Get rid of your debt obligations

Financial institutions evaluate the eligibility of home loan applicants based on their debt-to-income ratio. It is a good idea for an applicant to pay off all outstanding loans that will have a positive impact on her/his eligibility for a home loan. Repaying outstanding debts will improve credit scores.

5. Keep your FOIR below 40%

Fixed Obligation Ratio (FOIR), which is the ratio of your income to debt. It is crucial for determining eligibility for a home loan. The majority of financial institutions assume that you will need to spend close to half your income on living expenses. To increase your chances of approval for a loan, limit your FOIR to no more than 40% when you apply for a home loan.

6. Get those credit ratings up

Credit ratings are near the top of the list when it comes to the criteria that lenders consider when evaluating home loans. In determining your eligibility for a loan, it is important to consider your credit history over the last few years.

A good credit rating can also help you get lower interest rates.

You can check your credit rating every once in a while to find out if you have any defaults or negative repayments. This allows you to rectify credit problems and prevent lenders from seeing them. Lenders will be more cautious if there are multiple inquiries.

7. Don’t panic or hurry

Do not panic or rush to apply for a home loan. 

Before applying for a loan, you should do your research thoroughly and take your time. Before applying for a loan, you should calculate your budget and your income.

8. Select the right lender

A best home loan provider in India will give you a better chance of getting a loan if you’re new to credit, or if you are self-employed. Many housing finance companies have in-house models that help them determine the creditworthiness and repayment ability of applicants with informal income sources.

Bottom line

You can easily qualify for a loan amount that is higher, a longer term, and better terms and conditions if you follow the steps above. Start by improving your credit score and correcting any errors.

These strategies are not the only way to increase your chances of getting a home loan. You can also compare offers from different lenders and research what works for you.

Experts at AGIL are specialized and trained to conduct research on your situation to make your application for a home loan as strong as possible.

Reach out to us at now!