Buying a home is a dream for most people. But if you fulfill the eligibility criteria for a home loan, it is just for your asking. Whether you want to look into an expensive villa or an affordable residential unit like the apartments for rent in Washington, a home loan can make your dream come true. However, you must satisfy the lender about your income and repayment capacity. That’s what they look for in a home loan aspirant before approving the application.
To know whether you qualify or how much money you can take as a home loan, you can use the home loan eligibility calculator usually available on the homepage of a housing finance company.
Here are a few tips to improve your eligibility for a home loan:
Pay Your Loans and Credit Card Bills On Time
Lenders and credit bureaus like to see people taking credit and repaying them in a financially responsible manner. If you default on a loan or credit card repayment, it reduces your creditworthiness by negatively impacting your financial history and credit score. So, make sure you keep these two things clean and in good health to maximize your chances of securing a loan to buy a land or a home loan. A credit score of above 750 is considered good for seeking a home loan.
Ask For a Long Loan Tenure
You can find a home loan that can be repaid in 15-30 years. When you choose short home loan tenure, you have to pay a higher EMI that can sometimes be more than a repayment capacity. It can lead to default in repayments. But if you choose a long tenure, your EMI will be less, and you may find it easy to include it in your budget. The housing finance company looks at these points before giving their approval. So, to maximize the chances of home loan approval, consider longer repayment tenure.
A home loan is given based on your income as it shows your capability to repay the loan. To show a higher income, you can include earning members of your family as co-applicants. They can be your parents, children, or spouse. In this case, the lender is better assured of the repayment. A co-applicant has to submit largely the same set of documents as the main applicant.
Keep FOIR below 40%
If you have taken loans and are making regular repayments, the lender would assess your consolidated obligations post the home loan. If the fixed obligation to income ratio (FOIR) exceeds 40%, your home loan application is unlikely to get approval. Given this, if your FOIR is overshooting this mark, you should clear some of the loans before moving ahead with your home loan application.
Show Additional Income Sources
It is a good idea to use the home loan eligibility calculator at your lender’s site to check how much home loan you can take. Based on your income and liabilities, it will show a figure that you can ask for. If it falls short of your need, you can pool in other sources of income that you may have to bolster your claim for higher amounts in a home loan.
To Sum Up
A home loan can make your dream of buying or building a new home come true. But for this, you must fulfill various eligibility criteria for a home loan. In some cases, you may need to work around them and improve your chances of getting the loan sanctioned. We have discussed the top 5 such tips that can help you secure a home loan easily.
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