Are you planning to buy a house anytime soon? Then, financing a part of the home using a bank loan may be on the cards for you. However, a lot goes into getting housing loans approved. For starters, several applications get rejected due to incomplete paperwork or ineligibility. Several questions may be running through your mind regarding the process and eligibility. For starters, how much of a disbursement will you be eligible to receive? Or will your loan be approved quickly?
Since banks are the primary source of providing home loans in India, you need to make sure that you fit the bill before applying to ensure quick approval. For the same, every bank in India has a home loan eligibility calculator that you can use for free. This article will show you how to use one and answer other associated questions.
Ready to gain more clarity? Let’s get started!
Why Use an Online Home Loan Eligibility Calculator?
An online home loan eligibility calculator can be a lifesaver when you’re confused about varying eligibility criteria from various lending institutions. You’ll be able to quickly calculate the amount of housing loan you are eligible for based on factors like your income, age, and credit score.
If you have reservations, here are a few reasons why you should use an online home loan eligibility calculator before applying:
1. Saves Time and Effort: Calculating your home loan eligibility can be a time-consuming process, and you can’t rule out the scope of human error. An online calculator can give you the most accurate figure based on the values input by you, saving time and effort.
2. Helps You Plan Better: Knowing your home loan eligibility can help you plan your finances better. You can decide on the square footage of the house, down payment, and other such aspects.
3. Helps You Compare Lenders: Once you know your home loan eligibility, you can easily compare the offers and housing loan interest from different lending institutions to pick the one that suits you the best.
How to Use an Online Home Loan Eligibility Calculator?
An online home loan eligibility calculator is a highly convenient way to get an accurate answer about your chances of having a housing loan passed. Every bank has an online home loan eligibility calculator, so feel free to compare the criteria for more clarity.
Follow the steps mentioned below to calculate your home loan eligibility in 5 simple steps:
Step 1: Visit the lending institution’s website or a bank’s official site that offers a free home loan eligibility calculator.
Step 2: Input the basic information required, such as your age, income, city of residence, and the loan amount you are looking for.
Step 3: The calculator will process the information provided and give you an estimate of the housing loan amount you are eligible for.
Step 4: Experiment with varying repayment tenure values and loan amount values to find the sweet spot of your home loan.
Step 5: Once you have an estimate of your eligibility, start applying to banks you wish to borrow from!
Is the Calculator Accurate?
Most online home loan eligibility calculators are accurate to a great extent and can be relied on. However, the actual eligibility criteria may differ across all lending institutions. It’s critical to remember that the calculator only gives users an estimate of their eligibility and not the actual eligibility. You will only know the final answer once you apply with the needed documents.
While an online home loan eligibility calculator uses the best algorithms available, the results are still based on assumptions and approximations.
The eligibility calculator considers factors like the applicant’s income, credit score, and other financial obligations, but it may not consider elements such as savings, investments, and other assets. Moreover, the final loan amount a borrower is eligible for may depend on the bank’s internal policies and regulations.
Hence, the results should be considered an estimate, not a guarantee.
What are the eligibility criteria for a home loan?
The eligibility criteria for a home loan may vary from lender to lender, but the common factors that most lenders consider are:
- Age: The borrower must be at least 21 years old and not more than 65 years old at the time of loan maturity. This criterion ensures the borrower has enough time to repay the loan before retirement.
- Income: The borrower must have a steady income source and meet the lender’s minimum income criteria. Lenders generally prefer borrowers with a stable income and a low debt-to-income ratio. The income criteria may vary depending on the lender, the borrower’s location, and the loan amount.
- Credit Score: The borrower must have a good credit score, i.e., a score above 700. The credit score reflects the borrower’s creditworthiness and repayment history. A higher credit score indicates a lower risk of default, and lenders are more likely to approve the loan application and offer better interest rates.
- Employment Type: The borrower must have a stable job or business with a minimum work experience of 2-3 years. Lenders prefer borrowers with a stable income source and a consistent employment history. Self-employed borrowers may need to provide additional documents such as income tax returns, business registration certificates, etc.
- Other Financial Obligations: The borrower’s existing financial obligations, such as other loans, credit card bills, etc., are also considered while calculating eligibility. Lenders generally prefer borrowers with a low debt-to-income ratio, the ratio of the borrower’s total monthly debt payments to their monthly income.
End Note
Once you use the eligibility calculator and check various banks for their verdict, make sure to double-check by speaking with a loan specialist at the bank, or their relationship manager, who has all such information to give you a better answer. We hope this article bought you all the information required to use an online housing loan calculator with ease and apply for an accurate amount to the estimates.