A home loan application guide. Everything you need to know

Buying your first home is a significant milestone, but it is by no means an easy process. In this guide, let’s walk you through everything you will need to know before applying for a home loan, from eligibility criteria to tips for first-time buyers.

1. Check your eligibility

Before you apply for a home loan, it is essential to understand the eligibility criteria. Banks and financial institutions usually evaluate your age, income, credit score, and other ongoing liabilities. If your credit score is higher (750 or above), it’ll increase your eligibility, whereas more debts lower your eligibility. Make sure you evaluate your financial record as you start the application. Make timely payments and reduce debts to increase your chances of approval.

2. Select the right loan type

There are several types of home loans available in India. It is crucial to choose the right one to fit your requirements. Loans with fixed interest rates are a stable choice as the interest does not change during the tenure. On the other hand, loans with floating interest rates fluctuate with market conditions and may add an extra burden to your EMI. A few lenders also offer hybrid loans that begin with a fixed rate for a couple of years and then switch over to a floating one.

Most first-time buyers would prefer opting for loans that have a longer tenure and lower EMIs to ease the financial burden, while individuals with stable income might opt for short tenure to reduce interest payouts.

3. Choose the loan amount

The next big decision would be to decide the loan amount. Banks in India typically offer loans that account for 75–90 per cent of the property's price. This varies according to the borrower's profile. The balance amount is known as the margin or down payment and needs to be provided by the buyer.

When calculating your loan amount, remember to include other costs such as registration fees, stamp duty and legal charges. Borrow money that fits your capacity to prevent financial stress if market interest rates fluctuate or your circumstances change in the future.

4. Compare interest rates

Comparing home loan interest rates across various banks is essential to securing the best deal. Even a slight difference in interest rates can lead to significant savings over time. Keep an eye on special offers as some banks provide discounted interest rates or processing fees.

Government schemes such as the Pradhan Mantri Awas Yojana (PMAY) also offer subsidies for eligible buyers, helping reduce the overall cost of the loan. Karur Vysya Bank offers you home loans with attractive interest rates and flexible repayment options.

5. Prepare the documents

Prepare the documents required to get a home loan. Generally, your proof of income, identity, age, and property documents are required. Before applying for a home loan, ensure that your documents are in order to avoid any delays in the application process.

A salaried person has to provide his salary slips, bank statements, and form 16, while a self-employed individual needs to produce financial statements and IT returns. You’ll also need to submit property documents like the sale deed, builder agreement, and any NOC (No Objection Certificate) from concerned authorities.

Pro Tip

Pay your taxes regularly! Lenders review your IT returns to verify your income when considering your home loan eligibility, so staying compliant helps ensure a smoother approval process.

17 April 2025

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