home loan

6 Factors Influencing Home Loan Eligibility

A home loan is a credit facility offered by banks and non-bank financial companies (NBFCs) to people who want to buy a house or land, build a house on their plot, or renovate and maintain their current home.

Applicants can get a home loan for up to 85% of the project cost, which will be paid back in EMIs over a 30-year repayment period. Interest rates currently range from 7.30% to 12%, depending on your eligibility.

Banks have strict home loan eligibility rules for sanctioning home loans because they are accessible for significant quantities and have long payback terms. When determining the status of your housing loan application, lenders consider a number of variables.

Applying for a home loan, the bank will consider whether you are salaried or self-employed, your salary, current loans, and your credit score. When analysing house loan applications. Lenders place great importance on credit scores since they show your potential to repay the loan. Your credit score may influence whether the bank offers you a higher or lower interest rate. Or even if your loan application gets accepted or rejected.

Top 6 Factors Affecting Home Loan Eligibility

Credit Score:

Your credit score and credit report are the most important factors in determining whether or not your home loan will be approved. The RBI has given four credit rating companies, also known as credit bureaus, permission to issue credit reports and scores. They generate and handle records of all credit-related transactions in collaboration with banks, credit card firms, and other structured lenders.

These lenders send the bureaus monthly information on all of your credit transactions. This includes information on your EMI and credit card payments, as well as the balance owing, any changes to your overall credit limit, and any other relevant information.


Another factor to consider is the average salary. Because there is no collateral, the banks will want to know that you earn enough money from your job and other sources to be able to make your monthly payments. The higher your income, the more likely you are to get approved for a home loan.

Employment Type & Employer:

Someone who has a history of regularly changing employment may be unsuitable for a home loan because he or she will not have a steady or predictable income during the loan term and will be unable to make regular payments. Working for at least a year before qualifying for a home loan is a smart idea.

During the loan approval process, your employment is also taken into account. Because borrowers who take out a home loan must pay a hefty monthly EMI. Lenders must ensure that you will have a consistent monthly income throughout the life of the loan, allowing you to make timely payments. That is why they are concerned about your employment prospects. They’ll take into account whether you’ve had stable employment and if you’ve lived in the same place for a long time.

Your credit history:

If you feel that because you have no credit history, your house loan application would go smoothly. You will be disappointed because your loan application is likely to be rejected due to this factor. If you don’t have a credit history, your lender won’t have anything to compare your credit behaviour against.

As a result, even if you are certain that you will not have any difficulties repaying your home loan. Your bank/lender will not believe you and will put an end to your dream of owning a home. Make sure you have at least a few years of strong credit history before applying for a home loan.


Banks frequently seek borrowers who will be able to repay the loan properly before reaching the age of 60. Which is the average retirement age in the Country. As a result, banks and NBFCs are more likely to issue you a home loan if you are young. Before retiring, they suggest that you have at least 10-15 years of experience. The length of the loan and the amount of money you can borrow are both determined by your age.

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