Key Factors that affect Your Home Loan Eligibility


Today, many lenders in India offer home loans, and although you have plenty of choices to choose from, the key to getting the best loan offer is to meet the lenders’ eligibility criteria. Read on to know the factors that affect your eligibility.

In India, buying a home is a dream for many. If you too have dreamt of owning your own home, you can now realise your dream by applying for a home loan. Many banks and non-banking financial companies in India offer a host of home loan offers to suit the varying needs of the borrowers. However, before the lenders sanction your loan application and disburse the amount, they will scrutinise your application to ensure that you are an eligible borrower.

If you are a first time home loan applicant, you must understand the various factors that affect the eligibility.


Most lenders in India consider income as one of the most important factors for determining the borrowers’ eligibility. It has a direct impact on the home loan interest rates and the maximum amount you can borrow. In simple words, the higher the income, the higher is your eligibility. The lenders want to ensure that you have the financial capacity to repay the amount.


This is another important factor that the lenders consider while determining eligibility. The younger you have the better chances you have, to get a loan for a longer duration. This is because, as a youngster, you are far from the retirement age, and you may have a consistent income for a longer period.

But, when you grow old, you may be nearing your retirement age, which means loss or reduction in income. Therefore, lenders tend to sceptical about approving loans for old-aged applicants. Even if you get your loan approved, you may have to bear with a higher interest rate.

Credit Score

A credit score is a three-digit number that reflects your creditworthiness. Most lenders in India have a minimum credit score requirement to qualify for the loan. And, if you don’t meet the benchmark requirement, you face the risk of getting your loan rejected, or the lender may charge you higher interest.

The credit score showcases your credit repayment history, the number of loans you have availed currently, credit card dues, and the type of debt you had previously. Thus, lenders use your credit score to measure your credit behaviour and your financial capability to repay the loan. Generally, lenders consider a credit score of 700+ as an ideal score for getting a home loan.

Financial dependents

A lot of lenders determine the home loan borrowers’ eligibility based on the number of dependent family members they have. More the number of dependents, the lower the chances of getting the desired amount. The logic behind this is that the lenders believe, the more number of dependents you have, a higher portion of the income will be utilised to meet their everyday needs. This means you have a little portion left towards repayment. But, if you can convince the lender about your financial capacity or showcase your additional source of income (if any), then you can easily get your loan approved.

Employment Status

Just like your income, the employment status is a decisive factor in determining your home loan eligibility. You have better chances of getting a favourable loan offer if you are employed with a reputed MNC or in a public-sector company. As an employee, you have a fixed and regular monthly income. Even if you are self-employed and you have a stable business, the lender may approve your loan application and provide a flexible repayment option as per your income.

Now that you are aware of the various factors that affect your home loan eligibility make sure that you do your research well about the lender-specific requirements before submitting your application.

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