Home Loan Eligibility: Are you Worthy of your House?
Created on 23 Jul 2022
Wraps up in 5 Min
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Updated on 16 Sep 2023
In the movie Khosla Ka Ghosla, Kamal Kishore Khosla, played by Anupum Kher, wants to build a house for his family and buys land worth ₹ 1.5 crores but gets conned by the builder. Then, Asif Iqbal, played by Vinay Pathak, helps the middle-class family get their land. Tragedy aside, the point we are trying to make is that in the story, Mr Khosla wanted his own house where he could live with his family.
Like him, it is only natural to wish the same, but the prices can be nothing less than scary. Home loans fill just that gap, but the question is- are you eligible for them? Read on to find out more about home loan eligibility.
What are Home Loans?
Home loans can either build a trench for you to fall in or lift your sense of accomplishment by a thousand-fold. How does one go about the right way?
A home loan or housing loan is monetary assistance that a financial institution provides to buy a house. Many prefer home loans because when you borrow money from a bank to purchase your house, it comes with a reasonable interest rate. Hence, more practical.
The usual need for a home loan arises when people seek to buy flats or buy plots of land to construct a new building or renovate their homes. In the case of a home loan, the bank keeps the property as a mortgage.
The benefits of a home loan are:
Low-interest rate: Though interest rates keep increasing and decreasing over time, home loans are offered at economical interest rates.
Appreciation value: Capital appreciation has been consistent over the years. The value of the property increases with time.
No more renting: Having your own house means no monthly rents, saving money in the long run.
Long payment tenure: Home loan tenures can go up to 30 years, which is a relief for many people as it allows them to pay the loans with lower monthly instalments.
What are the factors that impact home loan eligibility?
As Mason Cooley said, "Good advice is never as helpful as an interest-free loan." Hence, trying to find out how to fulfil the criteria of home loan eligibility is necessary, especially considering the low-interest rates it offers.
Credit Score: A good credit score can expedite your loan acquisition process and afford you lower interest rates as well. A credit score of 750 is considered ideal, and possessing this score or higher can get you the aforementioned benefits.
Debt: Think of your creditworthiness as a rubber band, with each debt you take stretching the band further. Just like the band’s elasticity, your creditworthiness also has limits. Your unpaid loans reduce the principal you can borrow as a home loan.
Income: Banks have a minimum income baseline according to the area of residence. Cities like Delhi and Mumbai have Rs. 30,000 as the minimum net salary per month, but other places like Kolkata and Lucknow have a drop of Rs. 5000. You should have the minimum income to get your loan sanctioned.
Age: The borrower's age must be between 21 and 65 years. Your retirement age also impacts your home loan eligibility. Being close to one’s retirement age reduces the amount of loan amount sanctionable or increases the interest rate imposed on the loan.
5 most popular home loans and their eligibility criteria
Home loans have rapidly evolved, making it easier for more people to apply. Furthermore, several banks have started to provide these loans, giving you several options to select from. Each of these banks has its own housing loan eligibility criteria. Some of the most popular home loans eligibility criteria are as follows:
1. Pradhan Mantri Awas Yojana Eligibility
Pradhan Mantri Awas Yojana is a scheme launched by The Ministry of Housing and Urban Poverty Alleviation to help economically weaker sections by providing them with houses. Various banks have joined in this initiative, actively relieving the housing concerns of low-income families in India. Here are the grounds for Pradhan Mantri Awas Yojana Eligibility:
The Pradhan Mantri Awas Yojana Eligibility requires the borrower's family not to previously own any plot or house in any region of the country.
The applicant should not have taken benefit of any other housing schemes from the Indian Government.
PMAY eligibility criteria also have a dedicated section for listing annual family income. People with an annual income of Rs 3 lakh can get a loan for 60 square meters of land under this scheme.
2. HDFC Home Loan Eligibility
HDFC Bank offers loans to customers at preferable interest rates. Their interest rate starts at 6.90% per annum and can have a tenure of nearly 30 years. No wonder they are leading in the home loan category! However, you should be aware of the eligibility criteria to get a loan successfully sanctioned. Here are some of them:
HDFC Home Loan Eligibility considers your age, employment type, and salary.
Anyone in the age group of 21 to 65 years can apply for the HDFC home loan.
You should have a minimum monthly salary of Rs. 10,000.
3. Asha Home Loan Eligibility
Asha Home Loans provided by Axis Bank can be your perfect choice for many reasons, one of them being extremely affordable. Axis bank believes in the slogan "A home is never small". The loan tenure can extend up to 30 years with minimal interest, allowing the borrower to be at ease. The eligibility criteria for the Asha Home Loans are as follows:
Salaried with a salary slip of the last three months or ITR (Income Tax Return) as the income proof
Passport or driving license as address proof
Voter ID, Employment ID card, and PAN card for identity proof
The loan requirement should be between Rs. 1 lakh to Rs. 25 lakhs
4. ICICI Home Loan Eligibility
Like other banks, ICICI Bank also has a long list of home loan eligibility criteria. ICICI Bank offers an attractive interest rate, and the loan process is quite simple. The home loan eligibility criteria of ICICI Bank are as follows:
The borrower should lie in the age group of 21 to 60 years.
The minimum salary for a home loan borrower is Rs 25,000 per month. There are no prepayment charges. Moreover, the maximum loan amount can increase depending on the borrower’s repayment capability.
Documents such as a voter's ID or passport will be required to confirm identity and address.
5. Kotak Mahindra Bank Home Loan Eligibility
Kotak Mahindra Bank Home Loan offers an effective rate of interest at 7.50% per annum with zero processing fees. The applicants under the PMAY eligibility can avail of the subsidy under this loan. The bank can disperse up to 90% against the land/property. The eligibility criteria are as follows:
The applicants must submit their ID, income proof, and other KYC documents to verify their identity.
You can repay the loan in 20 years.
The credit score must be above 750.
The applicant must be between 18 and 60 years old.
The Bottom Line
A home loan is an amazing way to get the remaining money to buy your future house. You must consider your housing loan options before getting a loan. As lucrative as these schemes may sound, you should understand all the terms and conditions before signing up for a loan.
As P.T. Barnum said, "Money is a terrible master but an excellent servant." Check the pros and cons before taking any debt on your shoulders.
Drop a comment below and tell us which is the best home loan company according to you!
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