Required Documents and Eligibility for a Home Loan Application

Required Documents and Eligibility for a Home Loan Application

You have been dreaming of your own home for long and now you are in a position to apply for a Home Loan and easily keep up with the EMIs. However, you want to get the best loan terms, so you have narrowed down your search for Home Loan lenders to one or two banks/NBFCs. You are now in the process of applying for the loan.
To ensure that your loan application is processed fast, be ready with all the documents required for a Home Loan.

Home Loan Application Process
If you have a good credit score, you can apply for Home Loans with confidence. However, limit your loan application to just one or two lenders, do not submit applications to a lot of banks and NBFCs. If you do and your loan application gets rejected by many lenders for any reason, it can adversely affect your credit track record.

Home Loan Eligibility
Lenders look at the financial records and credit record of the applicant while processing the loan application. They also look at the employment status and income stability, age, income, savings, other loans you are paying EMIs on and more.

Banks favor salaried individuals because of the steady income source as compared to self-employed. However, self-employed people can also get Home Loans easily as long as they have a good financial status – savings and investments.

Banks prefer younger people as they have more productive years in front of them, and their income has more potential for growth. If your employer is a well established and reputed company, your chances of getting the loan are high. Business owners who can establish the stability of their business and a good financial record showing steady growth also have better chances of securing a Home Loan.

If you own real estate or other valuable property and have a lot of savings and investments, this can also influence lenders in your favor. These show you as a good prospect for a loan because you have backup financial resources to keep up with the EMIs, besides your regular income. All these and your credit record form a vital part of your Home Loan eligibility criteria.

Your Credit Record
Your credit record is your track record in getting and repaying various loans and other credits like credit card usage. If you do not have too many loans running at once, you have kept up steadily with loan repayment schedules, have a habit of clearing all the monthly dues on your credit card and so on, you will have a good credit track record. Lenders can access these record through accredited credit rating firms like CIBIL. These agencies also give you a credit score. Generally, a CIBIL score of 750 and above is ideal and makes you a better prospect for a loan.

Documents Required for Home Loan
When you are applying for a Home Loan, be ready with all the necessary documents, this will help speed up the loan processing time. You will need to submit documents to verify vital information about your Identity, address, age, income and more.

Identity, age, and address proofs are generally part of the documents you submit to banks as Know Your Customer information.

Identity Proof
For this, you can submit any one of these photo identity documents:

  • Voter ID
  • Passport
  • PAN Card
  • Adhar Card
  • Driving License

Address Proof
One of the following is required:

  • Adhar Card
  • Passport
  • Driving License
  • Bank Passbook
  • Utility Bills like Electricity Bill, Gas, or Water Bill

Age Proof
One of these:

  • PAN Card
  • Driving License
  • Birth Certificate
  • Passport

Income Proof
The documents required for this differs depending on whether you are salaried or self-employed
Income Proof for Salaried

  • Form 16
  • Bank Statement for last 6 months
  • Salary slip for the previous 3 months
  • Employment Certificate
  • Appointment Letter
  • Experience Certificate that also shows records of previous job experience
  • IT Returns for the previous three years

Income and Business Proof for the Self-Employed
Proof of Business Existence

  • Brief introduction to Business or Professional Practice
  • Business Registration Certificate under the Shops and Establishments Act or Factories Act
  • Tax Registration Certificate
  • Advance Tax Payments Receipts if applicable
  • Certificate of Practice in case you are a self-employed professional. You also need to furnish proof of Professional Qualification
  • Form 16A if applicable

Income Proof

  • Last 3 Years Income Tax Returns
  • Audited Statements of last 3 years Balance Sheet
  • Audited Statements of last 3 years Profit and Loss Accounts

Besides all these, whether you are self-employed or salaried, you also need to submit:

  • Documents pertaining to any other ongoing loans, including sanction letter and repayment records
  • Investment proofs like FD Certificates, Mutual Funds investment documents etc.
  • If you are a self-employed professional you need to submit a copy of your Professional Degree Certificate

Before proffering all these documents, you need to submit the duly filled-in and signed Home Loan Application Form along with passport sized photographs.
Make sure you meet all the Home Loan eligibility criteria and furnish all the documents required for a Home Loan. Ensure that you have a good credit history, and apply for an amount that is within your means. All these can help you get your loan sanctioned faster and also enhance the chances of getting the amount you want as a loan.

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