It is normal for homebuyers to go beyond their budget when buying a home. We all stretch our pockets to the fullest. After all, it is not every day that one buys a home and therefore, when one finally decides to become a homeowner, the desire to stretch one’s budget to as much as comfortably as possible is massive. Unfortunately, when people borrow more than they can afford to comfortably repay, the risk of loan default significantly increases. Therefore, lenders sanction loans after carefully studying the home loan eligibility of housing loan applicants. 

What is Housing Loan Eligibility? 

Banks, NBFCs and commercial lenders assess each loan application against a set of criteria. These criteria revolve around diverse factors, such as the credit score or CIBIL score, debt-to-income ratio, LTV ratio, job and income stability, loan tenor, etc., and help lenders accurately judge whether the loan applicant is indeed capable of repaying the loan on time and without missing EMI due dates. 

What is a Housing Loan Eligibility Calculator and How Does it Work?

The housing loan eligibility calculator is an online tool that lets you calculate the loan amount that you are eligible for and can conveniently get approved for. There are no fees or charges applicable to the use of these calculators. Here’s how a housing loan eligibility calculator works: 

• To start with, enter your gross monthly income. While calculating your gross monthly income, take into consideration income from all the different sources, such as income from business or salary, rental income, monthly income received from dividends, etc. 
• Next, enter the number of years you need to repay your loan, followed by the housing loan interest rate at which you have been repaying the loan. Borrowers must make their best efforts to secure an affordable home loan. Doing so eases the burden of the home loan journey and helps one enjoy a better return on investment. 
• Finally, provide details regarding other EMI obligations you have. 

Once these details are fed into the housing loan eligibility calculator, the online tool delivers results which include the total home loan amount that one can apply for and the home loan EMIs they will need to pay each month if they do get approved for this home loan amount. When one applies for a home loan amount that they qualify for, the chances of loan approval go up. More importantly, the loan applicant’s ability to ask for loan terms and conditions that they find desirable also increases exponentially. Thus, the smart use of a housing loan eligibility calculator can help loan borrowers enjoy economical EMIs and higher returns on investment in the long run.

Simple Tips on How to Increase Your Housing Loan Eligibility 

If you have low housing loan eligibility or you do not qualify for the home loan amount you have in mind, you can increase your housing loan eligibility by following these simple tips: 

1. Many people make the mistake of including only income from their job or business while applying for a affordable home loan. If you have low housing loan eligibility, you can increase your loan eligibility by including income from different sources in your loan application. For instance, if you derive income from rental units, you can include this income in your total income and increase your home loan eligibility. 
2. Home loan applicants can also increase their housing loan eligibility by adding a co-applicant to their loan application. However, if you want to increase your housing loan eligibility, you must choose someone with excellent repayment capacity and creditworthiness. Their income should be high and their credit score must be excellent. 
3. People can also increase their housing loan eligibility by repaying some of their existing debt. This will reduce the loan applicant’s debt-to-income ratio and therefore, their housing loan eligibility. 

Final Words

When you are applying for housing finance, you must assess your home loan eligibility beforehand and apply for a home loan that you qualify for. Doing this will increase your chances of loan approval and negotiating power as well.