Aspiring Home Loan borrowers are offered a loan based on whether they meet their chosen lender's eligibility criteria. Further, the maximum loan amount that an applicant can be offered as well as the terms and conditions of a loan are decided based on how well a person meets a lender's specified eligibility criteria. If you are a first-time homebuyer , you must understand how to increase Home Loan eligibility – this will help you avail of a loan on good terms and conditions.
6 Smart Ways to Increase Your Home Loan Eligibility
Here are a few tips that will help you increase your housing loan eligibility:
Improve Your Credit Score
Your credit score is an important parameter used by lenders to gauge your Home Loan eligibility. Lenders typically extend Home Loans at favourable terms to those borrowers who are creditworthy and typically have a credit score above 750.
The higher the credit score, the better the chances of getting a Home Loan at the best terms. Hence, improving and maintaining a good credit score by paying bills on time and keeping the credit utilisation ratio below 40% can help you avail of a Home Loan at favourable terms.
Disclose All Sources of Income
Income is another important factor that financial institutions consider before extending a loan to borrowers. If you do not meet your lender's income eligibility requirements, disclose all additional income sources in your application.
Pay Off Existing Loans
Your debt-to-income ratio, which is the amount of debt you have against your monthly income, indicates whether you have enough disposable income to repay your Home Loan. Therefore, clearing off your existing loans before applying for a new one can help you increase your Home Loan eligibility.
Make a Higher Down Payment
Lenders sanction up to 80% to 90% of a property's value as a Home Loan. The remaining amount, known as the down payment, must be paid by the borrower. When you make a higher down payment, you reduce the risk involved for the lender in lending you funds and therefore, increase your Home Loan eligibility.
Consider Applying for a Joint Home Loan
If your Home Loan eligibility is low, add a financial co-applicant to your application. Make sure this co-applicant has a good financial standing and credit score. In the case of a joint Home Loan, lenders consider the income of both applicants, which can help you avail of a substantial loan amount.
Avoid Frequent Job Switches
Lenders typically offer Home Loans to applicants with a stable source of income. Therefore, borrowers who can showcase stable employment or business vintage of certain years are preferred. To ensure that you are able to meet the Home Loan eligibility criteria of your preferred lender, maintain a stable employment record.
Also Read: Learn How to Calculate Home Loan Eligibility
*Terms and conditions apply.
Factors that Affect Your Housing Loan Eligibility
The housing loan eligibility criteria vary from lender to lender. Knowing the criteria can help one increase eligibility for a Home Loan. Lenders usually consider the following factors:
- Income and employment type of the borrower
- Age of the applicant
- Credit score of the applicant
Note that the eligibility criteria may include other parameters as well.
