Home Building & Planning

Factors for Home Loan Eligibility

Some borrowers get huge loan amounts easily sanctioned. Others face rejections even for small amounts. In other words, the loan eligibility varies from person to person. What are the factors that go into determining if you are eligible for a big loan or not?

Lenders prefer offering loans to people who have a steady source of income and repayment capacity. They scrutinise the applicant's past records to verify any cases of defaulting. In case the apllicant has a history of evasion on previous debts, he will not be favored by the lender. Age, income, job stability, health, dependants, spouse's income, other savings, other debts and commitments go into determining the loan eligibility.

An applicant's income is a critical component that determines his capacity to repay debt without defaulting. The fraction of salary available for debt repayment in the form of EMIs depends on income. More income translates into greater disposable money available for loan repayment.

Most lenders ensure that the loan amount does not put undue pressure or economic strain on the borrower. The thumb rule goes that the monthly EMIs should not be greater than 35-40 percent of the monthly take-home salary of the applicant.

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