Real estate is one of the influential sectors in India, and its market size is anticipated to become around $1 trillion by 2030. This sector is divided into 4 sub-sectors – Housing, Hospitality, Retail and Commercial.

Mortgage loans such as home loans and loans against properties are financial products that are commonly used with these sectors. Borrowers avail such financial products to make real estate purchases.

Home loans experienced a booming growth of 18.30% in FY 2019. Considering that residential real estate is currently experiencing stagnant growth, the government has rolled out various schemes to encourage borrowers towards making property purchases by availing such loans.

There are few terms and conditions that an individual is subjected to meet to avail such a loan. Among such conditions are the eligibility criteria for a housing loan and required documents.

Most financial institutions mandate different home loan eligibility criteria for salaried individuals and self-employed borrowers. Here is a brief overview of the requirements.

Eligibility criteria for salaried individuals

  1. A salaried borrower should be an Indian resident.

  2. They should be aged between 23 and 62 years.

  3. The applicant should have a minimum work experience of 3 years.

Eligibility criteria for self-employed borrowers

  1. The applicant should be an Indian resident.

  2. The borrower should have a business vintage for at least 5 years.

  3. They should be aged 25 to 70 years.

Other than the home loan eligibility, an individual is required to meet a few more criteria to qualify for a home loan. They are –

  • CIBIL score – CIBIL Score or credit score is a numeric expression that ranges between 300 to 900. This score is derived from the data accumulated from the CIBIL Information Report (CIR). A credit score is used by most financialinstitutions to anticipate a borrower’s creditworthiness.

A credit score of 750 can help a borrower avail a home loan online at the most competitive loan terms including high LTV loan amount, EMIs, and affordable interest rates. It is thus vital for you to know how credit score can determine your home loan EMIs .

  • Fixed Obligation to Income Ratio – FOIR is a parameter that< can affect an individual’s home loan eligibility. It is a ratio between a borrower’s monthly obligations and their monthly income. Financial institutions consider borrowers with FOIR below 50%v as prospective. Such FOIR shows that a borrower has substantial residual income available to meet additional EMI obligations.

  • Stable employment history – Borrowers with an unstable employment history might not be qualified to avail a loan. A salaried-individual should have a minimum work experience of 3 years whereas a self-employed borrower should have a business vintage of at least 5 years. Other than that, an unstable employment history only reflects your fluctuating income which can be a factor affecting your home loan eligibility.

Other than qualifying in the mentioned eligibility criteria, a borrower should also provide a few required home loan documents. They are –

  • A borrower should provide their KYC documents.

  • Identity proof like Voter ID card, Aadhaar card, Passport etc. are required.

  • Aadhaar card, driving license, Voter ID card etc. should be provided as address proof.

  • Form 16 or immediate salary slip are required.

  • An applicant should produce their bank account statement for the previous 6 months.

  • Documents for proof of Business of a minimum of 5 years are required.

  • Photographs of the applicants are required.

An individual who provides required documents and meets specific home loan eligibility criteria can successfully apply for the home loan.

Home loan eligibility criteria and documentation differ between lenders. Make sure you check such requirements specific to the lender you choose before applying.