22 MARCH, 2022

For many people, home loans are an easy means to buy their dream home. Thanks to home loans, they do not need to exhaust their savings or wait for years to afford a house property. Instead, they can buy their house with a small down payment and repay the amount comfortably over the years. However, to avail a home loan, lenders require you to fulfil certain eligibility criteria. These criteria are based on your age, income, profession, employment, etc. Typically, most eligibility criteria are similar for salaried and self-employed applicants. However, there can be additional requirements for salaried applicants.


If you are a salaried employee looking forward to buying an affordable home loan, here is a checklist for your perusal.


Eligibility criteria for salaried applicants to avail a home loan

  • You should be an Indian resident.
  • You should be at least 18 years old and not more than 60 years.
  • Your salary should be minimum Rs 20,000 per month if you live in cities like Delhi, Mumbai, Bangalore, Chennai and Pune. If you live anywhere in India other than these cities, your salary should be at least Rs 15,000.
  • If you are employed with a private limited company or partnership firm, your minimum educational qualification should be graduation. There is no educational qualification required if you are employed with a public limited company, Government or Public Sector Company or an MNC.


Income eligibility criteria for a salaried employee

The lender reviews the salary of the applicants to ensure that they earn enough to be able to repay the loan. They approve loan applications of only those salaried employees who earn monthly income above a specific limit to reduce the default risk. However, the higher your salary, the easier it is for you to get loan approval, provided your debt is in check. If you earn above the specified limit but have financial obligations, it can affect your home loan eligibility, loan amount and home loan interest rates.


Apart from the income and financial obligations, lenders also review your credit score, age, profession, employment history and employer. If you have switched too many jobs, have changed your profession recently, are employed with a start-up, it can also affect your eligibility and loan availing capacity.


How is your income analysed?

Lenders analyse your income by the documents you furnish. As a salaried employee, you need to provide your latest salary slips, Form 16 and bank account statement of the last three months. The lenders examine these documents and then decide if you fulfil their income parameters. 


How can you get your loan approved?

You can get your loan approved by having a co-borrower who can be your earning spouse or parent.


Considering how important it is to fulfil the eligibility for loan approval, you must check your home loan eligibility before applying. If you do not meet them, you can take steps to enhance your eligibility and reapply later.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.