How to Use a Home Loan Eligibility Calculator Effectively

How to Use a Home Loan Eligibility Calculator Effectively

Home loans or housing loans are long-term loans that homebuyers can avail of to secure funds. Home loans come with long tenors and low interest rates along with the home loan tax benefits. However, home loans also involve substantial amounts and consequentially, lenders sanction these loans only after a thorough background check and only when they are fully convinced that the borrower is a creditworthy individual capable of repaying the loan EMIs on time and without missing payment due dates. 

To assess housing loan eligibility, most lenders set fixed criteria and judge each application against it. Those applicants who meet the qualifying criteria get approved for housing finance. What are the housing loan eligibility criteria? How does it affect one’s home loan eligibility? The next section of this article answers these questions. 

Housing Loan Eligibility: What is it and What Factors Affect One’s Eligibility for a Home Loan 

Every lender defines a certain set of criteria against which they judge every loan applicant and their repayment capacity. Those who meet all the qualifying criteria are individuals with high creditworthiness who can easily repay their loans without defaulting. Consequently, financial institutions not only approve loan applications from such individuals quickly but also extend loans on favourable terms and conditions. Alternatively, not meeting all the qualifying criteria can easily lead to one’s loan application getting rejected or one being sanctioned a loan at terms and conditions that are not agreeable, including high home loan interest rates. 

So, what are the housing loan eligibility criteria? These are the housing loan eligibility requirements that lenders expect loan applicants to fulfil. 

  1. Financial institutions prefer lending funds only to those individuals whose credit score exceeds at least 750. Such a score indicates excellent repayment capacity, a clean repayment history, and an overall reliable credit profile. Individuals whose credit score exceeds 750 are unlikely to default on loan repayment and in general, have a responsible attitude towards credit repayment. 
  2. Every financial institution has age criteria as well that one must fulfil to be considered eligible for a home loan. Most financial institutions set this criterion at 21 and 65. Loan borrowers must know and remember that the maximum age is always the age that one cannot exceed at the time of loan maturity. 
  3. Financial institutions also take into consideration an individual’s income and income stability. Individuals with a stable job or stable business and income are given preference over individuals who have an unsteady income. 
  4. Most banks and lenders sanction loans only to Indian citizens. 

Apart from this, financial institutions also look into other factors, such as the loan applicant’s debt-to-income ratio, property type, and LTV ratio. Borrowers considering applying for a housing loan must read about the home loan eligibility calculator as this online tool can help them secure housing finance on the most beneficial terms. 

What is a Housing Loan Eligibility Calculator? 

A housing loan eligibility calculator is an online tool that lets home loan applicants calculate the home loan amount they will get approved for. The calculator takes into account several factors while calculating this amount. Depending on the calculator you are using, you will be asked to provide the following inputs: your current gross monthly income, the home loan interest rate you have been offered, the tenor you have opted for, and your existing EMI obligation or the amount you are paying towards covering your EMIs. Based on these inputs, the housing loan eligibility calculator will give you the loan amount you are eligible for and will get approved for. Apply for this loan amount to enhance your negotiating power and chances of securing the loan at the most profitable loan terms and conditions.

Housing loan eligibility calculators offer many benefits. They are not chargeable and you can use them without paying any fee. They give loan borrowers high negotiating power and the ability to secure the loan on the most beneficial loan terms and conditions. In short, every home loan applicant must make the use of these calculators a necessary step in the home loan application process.