What is Home Loan Parameter?
Loan eligibility depends primarily on income, in case a borrower doesn’t know about the particular standards that go into calculating that eligibility. If the applicant could not meet the eligibility criteria may prompt refusal of the loan application, leaving a negative imprint on the person’s credit profile.
If a person applying for a loan requires a clear idea of the parameters that are considered, they can seek help from the nearest bank or can visit their website to check. The loan lender will inspect the applicant’s income documents, credit history, CIBIL score, age, and related parameters.
Below are the 5 major parameters that determine the eligibility criteria of the borrower to avail a home loan:
1) Age
2) Income
3) Cibil Score
4) Service period
5) Occupation Type
Home loan eligibility based on age
Age is one of the most prominent determining factors when it comes to loan tenure. The maximum tenure that you can benefit is 20 years.
You will be able to avail of a longer repayment tenor if you are of a lower age. You can also avail of a home loan of higher value provided you have a high income.
You will have the option to benefit a longer repayment period in case you are younger. You can likewise benefit a home credit of higher worth gave you have high pay.
Salaried applicants have to be between the ages of 23 and 62 years to apply for a home loan. Self-employed applicants have to be within the age bracket of 25 and 70 years to avail one.
The table below explains the maximum tenure a person is eligible for based on their age:
| Age | Salaried applicants – Maximum tenure | Self-employed applicants – Maximum tenure |
| 25 Years | 30 years | 30 years |
| 30 Years | 30 years | 30 years |
| 35 Years | 30 years | 30 years |
| 40 Years | 30 years | 30 years |
| 45 Years | 25 years | 25 years |
| 45 Years | 20 years | 20 years |
Home loan eligibility based on income
Another parameter that determines the eligibility criteria of how much loan an individual can avail is the income (in-hand salary). Income is important as it assists in calculating a borrower’s repayment potential.
An individual’s salary will decide the credit sum you are qualified for. Banks will consider your in-hand salary, minus a few general deductions, for example, PF, ESI, gratuity, etc. The in-hand income will decide the EMI sum you can manage the cost of and consequently the total amount of loan one will get.
For example, if the in-hand monthly salary is Rs. 25,000, an applicant can borrow as much as Rs.18.65 Lakh as a loan to buy or build a home worth Rs. 40 Lakh (if there are no current monetary commitments.) But in case the monthly in-hand income is Rs. 50,000, you can get Rs. 37.28 Lakh for the same property. Similarly, if the take-home is Rs. 75,000 an applicant can increase the loan amount to Rs. 55.93 Lakh.
| Age | Net monthly income (in Rs.) | ||
| 25,000 | 50,000 | 75,000 | |
| 25 Years | 18.64 Lakh | 37.28 Lakh | 55.93 Lakh |
| 30 Years | 18.64 Lakh | 37.28 Lakh | 55.93 Lakh |
| 35 Years | 18.64 Lakh | 37.28 Lakh | 55.93 Lakh |
| 40 Years | 18.64 Lakh | 37.28 Lakh | 55.93 Lakh |
| 45 Years | 18.64 Lakh | 37.28 Lakh | 55.93 Lakh |
| 50 Years | 18.64 Lakh | 37.28 Lakh | 55.93 Lakh |
Home loan based on Cibil Score
What CIBIL Score?
A CIBIL score is a three-digit number sum up of a borrower’s complete loan history. The value of a credit score is normally between 300- 900. The loan applicant’s CIBIL score is prepared based on their credit history. This comprises all verified as well as unbound loans and whatever other obligations that you may have or had.
It is good to always know one’s CIBIL or credit score before applying for a loan. One can get their credit report from CIBIL by paying a nominal fee. A credit report will consist of the below records:
- credit benefited by the borrower
- repaying loans and credit card bills
- delayed payments or failure on past credit held by you
- credit cards and loans that you currently hold
- fresh information about loan and credit card applications submitted by the borrower
Higher the CIBIL score, the greater the chances to get a loan. A higher CIBIL score means that the individual is financially sound and has reimbursed each commitment on time. But, a lower score doesn’t really imply that the individual has not paid his/her duty on time. A new borrower may have even a zero CIBIL rating. The base CIBIL score for home loan approval is 750. Moneylenders look at the CIBIL score to decide if a person is eligible for a home credit. They inspect credit inquiry to check the same. Apart from that, a few banks may offer a home loan against a lower rating since these credits are secure.
Home loan based on Service period
The service period plays an important role in determining the eligibility for a home loan. Service period clarifies the stability of a borrower besides, in determining the capability of loan repayment.
A bank will not give loan to a person who has just started working or is under probation period. The bank will also not provide a home loan to a person who is working on a contractual basis.
Moreover, the service period to be served will be also looked upon while determining eligibility for a home loan. If a person is already in his or her 50s or 55+ and let’s say, the loan tenure is for the next 20 years. In such cases also, the possibility of getting a home loan is less to no.
Example: A person goes for a home loan of Rs. 15, 00,000 over a period of 20 years. Let’s say, the building will be completed in 3 years, during which this person thinks to pay pre-EMI. Following the completion of these 3 years and the pre-EMI payment termination, the EMI reimbursement period begins. Subsequently, the total loan tenure would be 3 years (pre-EMI period) + 20 years (loan tenure) = 23 years.
Thus, a salaried individual should have at least two years of work experience, and not more than 50 years of age in order to be eligible for a home loan. In the case of self-employed individuals, the business should run for at least 3 years.
Home loan based on Occupation type
Another important parameter to be eligible for a home loan is the occupation type. A person working in any organization must be working on a permanent post not on a project or contract basis to get a home loan.
Moreover, banks give preferences based on the type of organizations an applicant works. For example, if a salaried person is working in Navaratna companies like ONGC and OIL or in MNCs like HP, Infosys, etc. eligibility to get a home loan is more in such cases.