Owning a home is a significant milestone for many people, but it often comes with a hefty price tag. For most, securing a home loan is the only way to make this dream a reality.
However, qualifying for a home loan can be challenging, especially if you’re a first-time home buyer. Understanding the requirements and eligibility criteria is crucial to increase your chances of getting approved for a home loan.
In this guide, we’ll take a detailed look at the requirements and eligibility criteria to qualify for a home loan. So, if you’re looking to buy your dream home, keep reading.
Requirements and Eligibility Criteria to Get Approved for a Home Loan
The applicant must be at least 21 years old to be eligible for a home loan. The largest age limit can vary depending on the lending institution.
The applicant must have a regular and stable source of income, which could be either salaried or self-employed. The lender usually checks the applicant’s income through salary slips, bank statements, and income tax returns.
3. Credit Score
A good credit score is essential to qualify for a home loan. The lender assesses the credit score to evaluate the borrower’s creditworthiness and repayment capacity. A credit score of 750 or above is considered good by most lenders.
4. Employment stability
The lender looks for a stable employment history of the borrower. A minimum of two years of continuous employment is generally required to qualify for a home loan.
5. Property value
The lender evaluates the property value that the borrower intends to purchase or construct. The property should have clear title documents and be located in a legal and approved area.
6. Loan-to-Value Ratio
The loan amount sanctioned by the home loan provider in Ahmedabad is determined by the Loan-to-Value (LTV) ratio. LTV is the percentage of the property value that the lender is willing to finance. In India, the maximum LTV ratio is 80% of the property value.
7. Down Payment
The borrower needs to make a down payment towards the property’s purchase price. The down payment percentage varies from lender to lender and is usually between 10% to 20% of the property value.
8. Debt-to-Income Ratio
The lender evaluates the borrower’s debt-to-income (DTI) ratio to assess their repayment capacity. DTI is the percentage of the borrower’s monthly income that goes towards debt payments. In India, the maximum DTI ratio allowed by most lenders is 50%.
9. Documents Required
The borrower needs to submit various documents to the lender for a home loan application. These documents include identity proof, address proof, income proof, property documents, and bank statements.
10. Loan Tenure
The home loan tenure can range from 5 to 30 years, depending on the borrower’s age and the lender’s policies. The borrower needs to pay EMIs (Equated Monthly Installments) towards the loan repayment.
A house loan qualification process can be challenging. However, you can improve your odds of being approved if you have the necessary information and preparation.
AGIL Finance is one of the best home loan providers in India. We will offer you a home loan with minimal paperwork, maximum flexibility, and quick disbursement.
To obtain our efficient financing services, please contact us at firstname.lastname@example.org.