Discover Your Home Loan Eligibility in Seconds!

Buying a home is a big financial decision, and securing a home loan can often feel overwhelming. The key to getting the best loan options lies in your home loan eligibility. But how do you know if you qualify? What factors impact your eligibility? And most importantly, how can you improve your chances of approval?

This guide will walk you through everything you need to know about home loan eligibility, how it’s calculated, and how to improve it using our Home Loan Score Tool.

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How Can I Check My Home Loan Eligibility with the Home Loan Score Tool?

Many people apply for home loans without fully understanding their eligibility. This can lead to rejections, delays, or unfavorable loan terms. Our Home Loan Score Tool helps you assess where you stand before applying.

Home Loan Eligibility Criteria

Before we dive into the tool, let’s look at the key factors banks and lenders consider when evaluating your home loan eligibility:

Factor	Impact on Eligibility
Credit Score	Ideally 750+, but some lenders accept lower scores.
Income Stability	A stable monthly income increases approval chances.
Existing Loans & Debts	Your Debt-to-Income (DTI) ratio should be balanced.
Age	Younger applicants (25-40) have higher approval chances.
Property Value & Down Payment	A higher down payment reduces loan risk.

How to Use Our Home Loan Score Tool

In just a few steps, you can get an estimate of your loan eligibility, potential loan amount, and approval chances.

Here’s how you can use the tool effectively:

Step 1: Enter Your Basic Details

• Monthly Income – Your monthly income helps determine how much loan you can afford.
• Existing Loan EMIs – If you’re currently paying EMIs on loans (personal loan, car loan, education loan, etc.), input the total monthly amount.
• Credit Score (CIBIL Score) – If you know your score, enter it for a precise evaluation. If not, you can use Credit Dharma’s Credit Score Checker and get your score ready.
• Age & Tenure Preference –Your age influences your loan tenure. Younger applicants qualify for longer repayment periods.
• Property Value – The cost of the home you want to buy.
• Downpayment Percentage – How much you can pay upfront. A higher downpayment reduces the loan requirement and improves eligibility.

Step 2: Get Your Home Loan Score

Once you enter your details, the tool will analyze your information and provide:

• Your Home Loan Score – A score indicating how likely you are to get loan approval.
• Eligible Loan Amount – An estimate of the maximum loan amount banks/NBFCs might offer you.
• Approval Chances – A categorization of whether your profile is strong, moderate, or weak for approval.

What Does Your Score Say About Your Home Loan Eligibility?

Your home loan score gives you a quick assessment of where you stand in terms of loan approval. Lenders look for financial stability, and this score reflects how well you meet their criteria.

Here’s what different score ranges mean:

0 – 4.5 | Low Eligibility

Your chances of loan approval are very low, and if approved, the interest rates might be high. Lenders may see you as a high-risk borrower, which means you may need to work on improving your eligibility before applying.

What you can do:

• Improve your credit score by making timely payments.
• Pay off existing loans to reduce your debt burden.
• Increase your downpayment to lower the loan amount required.

5 – 7.5 | Moderate Eligibility

You might qualify for a loan, but lenders may offer it at a higher interest rate or for a lower amount than requested. Some areas need improvement before you get the best loan deals.

What you can do:

• Reduce EMIs by closing small existing loans.
• Add a co-applicant to increase your income eligibility.
• Try to boost your credit score above 750 for better offers.

7.5 – 10 | High Eligibility

You have a strong chance of loan approval with better interest rates and flexible repayment terms. Banks see you as a low-risk borrower, which means you can access the best deals available.

 What you can do:

• Compare loan offers from different lenders to get the best deal.
• Maintain your credit score and avoid taking on unnecessary new loans.
• Ensure that your FOIR (Fixed Obligation to Income Ratio) stays within limits for a smooth approval process.

Knowing your home loan score in advance helps you apply with confidence and negotiate better loan terms.

Example: How the Home Loan Score Tool Helped Neha Get Better Loan Offers

Neha, a 30-year-old marketing professional, was excited to buy her first home—a ₹60 lakh apartment. But before applying for a home loan, she wanted to be sure she met the eligibility criteria. Instead of guessing, she used the Home Loan Score Tool to check her chances.

She entered:

• Credit Score: 680
• Monthly Income: ₹80,000
• Existing EMIs: ₹20,000
• Downpayment: ₹12 lakh (20%)

Her Home Loan Score: 6.5/10 – meaning she was eligible but not in the best position to get low-interest rates.

How the Tool Helped Neha Improve Her Loan Offers
The tool gave her personalized suggestions to improve her eligibility:

• Increasing her downpayment to 25% would lower the loan amount and improve approval chances.
•  Paying off a small personal loan would reduce her monthly EMIs, improving her affordability.
•  Boosting her credit score above 750 would qualify her for lower interest rates.

Neha took these steps, and when she checked again, her Home Loan Score improved to 8.2/10. With this score, she started receiving better loan offers with lower interest rates and flexible repayment terms.

Instead of applying blindly, the Home Loan Score Tool helped Neha secure the best possible loan deal for her dream home.

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How is Home Loan Eligibility Calculated in Home Loan Score Tool?

Lenders assess how much loan you can afford based on your income, existing financial obligations, and the property value. They consider two key aspects:

1. Income Eligibility – How much loan can you afford?

Lenders use the FOIR (Fixed Obligations to Income Ratio) to determine how much of your income is already committed to EMIs and how much is available for a new loan.

Formula:

• FOIR = 50% of Monthly Income
• Loan EMI = FOIR – Existing EMIs
• Home Loan Amount = EMI capacity for 30 years at 8.25% interest rate

Example:

• If you earn ₹1,00,000 per month, banks assume 50% of your income (₹50,000) can be used for loan repayment.
• If you have existing EMIs of ₹20,000, your available EMI for a home loan is ₹30,000.
• Based on this, your loan eligibility will be calculated using a standard 30-year tenure at 8.25% interest.

Check Out: How to Buy a House with Low Income?

2. Property Eligibility – How much loan do you need?

Banks generally finance up to 80% of the property value.

For example,  if a property costs ₹1 crore, the bank may sanction up to ₹80 lakh as a loan. The remaining ₹20 lakh needs to be arranged as a downpayment.

If your income eligibility is higher than the loan required, your chances of approval improve significantly.

Final Eligibility Score Calculation

The Home Loan Score Tool evaluates both income eligibility and property eligibility to give you a score out of 10. The score reflects how well you meet lender requirements and highlights areas for improvement.

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What Factors Affect Home Loan Eligibility?

Home loan eligibility depends on several key factors that lenders evaluate to determine your borrowing capacity and repayment reliability. These include age, existing financial obligations, credit history, employment status, and the property downpayment amount. Understanding how these factors influence eligibility can help you improve your financial profile, secure better loan terms, and enhance your chances of approval.

How Does Age & Tenure Affect Home Loan Eligibility?

Your age directly impacts the loan tenure you qualify for. Younger applicants can opt for longer repayment terms, which lowers EMIs and improves affordability. Older applicants, however, may get shorter tenure options, leading to higher EMIs and reduced eligibility.

Age Group	Maximum Loan Tenure Available	Impact on Eligibility
Below 35 years	Up to 30 years	Higher eligibility, lower EMIs
35 – 50 years	15 – 25 years	Moderate eligibility
Above 50 years	10 – 15 years	Lower eligibility, higher EMIs

Example:

• Rohit (30 years old) applies for a ₹50 lakh loan for 25 years. His EMI is lower, improving approval chances.
• Vikram (52 years old) applies for the same loan but gets only a 12-year tenure. His EMI is higher, reducing his eligibility.

How to Improve Eligibility Based on Age?

• Apply at a younger age to qualify for longer tenure.
•  Add a younger co-applicant to increase eligibility.
•  Choose a tenure that balances affordability and repayment capacity.

Also Read: 15 vs 30 years Home Loan Tenure

How Does Credit Score Affect Home Loan Eligibility?

Your credit score indicates your creditworthiness, reflecting your repayment history and financial discipline. Lenders prefer applicants with higher credit scores, typically above 750, as it signals lower risk.

A high credit score boosts your loan approval chances, qualifies you for higher loan amounts, and attracts lower interest rates. Conversely, a low credit score may lead to rejection or higher interest rates due to perceived risk.

Credit Score Range	Loan Approval Chances	Impact on Interest Rate
Above 750	High	Lower interest rates
650 – 750	Moderate	Slightly higher rates
Below 650	Low	Higher interest rates or rejection

Also Read: Ideal Credit Score For Home Loans

How to Improve Eligibility Based on Credit Score?

• Maintain timely repayments on existing loans or credit cards.
  
• Avoid multiple loan applications in a short period.
  
• Regularly monitor and rectify errors in your credit report.

Check Out: How to Improve Credit Score

Calculate Your Credit Score in Minutes with Credit Dharma’s Free Credit Checker

How Does Employment Type Affect Home Loan Eligibility?

Your employment type—salaried, self-employed, or professional—plays a significant role in determining loan eligibility. Lenders favor applicants with stable and regular income, such as salaried individuals working for reputable organizations, due to lower default risk. Self-employed or freelance applicants may need to provide extensive income proof and business stability documents, making their approval process stringent.

Employment Type	Loan Approval Chances	Documentation Required
Salaried	High	Salary slips, employment proof
Self-employed	Moderate	ITR, business documents, income proof
Freelance/Consultant	Lower	Extensive proof of consistent income

How to Improve Eligibility Based on Employment Type?

• Maintain consistent employment records.
  
• Provide detailed financial statements or income proofs.
  
• Ensure your business or professional practice has a healthy financial history.

Read More: Home Loan Eligibility- Salaried vs Self-Employed

Does Existing Debt Affect My Home Loan Eligibility?

Lenders evaluate your Debt-to-Income Ratio (DTI) to check how much of your income is already committed to loan repayments. If you have too many existing loans, your eligibility for a new home loan decreases.

DTI Ratio	Loan Approval Chances	Impact on Loan Amount
Below 30%	High approval chances	Can qualify for a higher loan amount
30 – 50%	Possible approval	Loan amount may be restricted
Above 50%	High rejection risk	Need to reduce existing EMIs

Example:

• Meera earns ₹1,00,000/month and has ₹20,000 in existing EMIs. Her DTI is 20%, making her eligible for a high loan amount.
• Sameer earns the same but has ₹55,000 in EMIs. His DTI is 55%, which reduces his eligibility.

How to Improve Eligibility If You Have Existing EMIs?

• Pay off smaller loans before applying.
•  Opt for a longer home loan tenure to lower EMIs.
•  Avoid new loans or credit card debts before applying.
  

Also Read: What is DTI?

Importance of Property Downpayment in Home Loan Eligibility

Lenders typically finance up to 80% of the property value, meaning the rest must be arranged as a downpayment. A higher downpayment reduces the loan requirement, improving your approval chances.

Downpayment Percentage	Loan Approval Chances	Impact on Interest Rate
20% or more	High approval chances	Lower interest rate
15 – 19%	Moderate approval chances	Slightly higher interest rate
Below 15%	High rejection risk	Higher interest rate

Check Out: How to Save For Your Home Loan Downpayment?

Determine your downpayment amount with Credit Dharma’s Home Loan Downpayment Calculator

Debt-to-Income Ratio (DTI) and Home Loan Eligibility

Your Debt-to-Income Ratio (DTI) measures how much of your monthly income is already used for existing loan payments. A high DTI means you have too many financial obligations, reducing your home loan eligibility.

DTI Ratio	Loan Approval Chances	Loan Amount Impact
Below 30%	High approval chances	Can get a higher loan amount
30 – 50%	Moderate approval chances	Loan amount may be restricted
Above 50%	High rejection risk	Need to reduce debts

Example:

• Sonia earns ₹1,00,000/month and has ₹25,000 in existing EMIs. Her DTI is 25%, so she qualifies for a high loan amount.
• Arjun earns the same but has ₹55,000 in existing EMIs. His DTI is 55%, making it hard for him to qualify for a home loan.

How to Lower DTI and Improve Eligibility?

• Close existing loans before applying.
• Keep total EMIs below 50% of monthly income.
• Increase income sources to balance debt.

FOIR’s Impact on Home Loan Eligibility

FOIR (Fixed Obligations to Income Ratio) is a key metric banks use to check if you can afford a new home loan based on your income and existing financial commitments. The lower your FOIR, the higher your eligibility.

FOIR Range	Loan Approval Chances	Impact on Loan Amount
Below 40%	High approval chances	Can get the desired loan amount
40 – 50%	Possible approval	Loan amount may be restricted
Above 50%	High rejection risk	Loan amount will be reduced

Example:

• Asha earns ₹1,00,000 per month and has ₹30,000 in existing obligations. Her FOIR is 30%, which helps her qualify for a higher loan amount.
• Manoj earns the same but has ₹55,000 in fixed obligations. His FOIR is 55%, making it difficult to get a home loan.

How to Improve FOIR?

• Pay off existing loans to reduce fixed obligations.
•  Apply for a lower loan amount if FOIR is high.
•  Increase income sources to lower the FOIR percentage

Read More: Impact of FOIR on Home Loan Eligibility

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How Much Loan Amount Can I Get Based on My Eligibility?

One of the most common questions home buyers ask is, “How much home loan can I get based on my income and financial profile?” The answer isn’t the same for everyone—it depends on several factors, including your income, existing EMIs, credit score, FOIR (Fixed Obligations to Income Ratio), and downpayment capacity.

Lenders assess your repayment capacity before approving a loan to ensure that you can manage the EMIs comfortably. Here’s how it works.

Suggested Read: How Much Home Loan can I get for 1.5L Salary?

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How Do Banks Calculate Your Loan Eligibility?

Banks and financial institutions use two key methods to determine how much home loan you qualify for:

1. Income-Based Loan Eligibility (FOIR Method)

Most banks follow the FOIR (Fixed Obligations to Income Ratio) method, where only 50% of your monthly income is considered available for EMI payments.

Formula:

• FOIR = 50% of Monthly Income
• Home Loan EMI = FOIR – Existing EMIs
• Loan Amount = EMI Capacity for 30 years at 8.25% interest

Example 1: Higher Income, Lower EMI Burden (Better Eligibility)

Rahul earns ₹1,00,000 per month and has no existing EMIs.

Income	FOIR (50%)	Existing EMIs	EMI Available for Home Loan	Eligible Loan Amount
₹1,00,000	₹50,000	₹0	₹50,000	₹58-60 lakh

Since he has no existing loans, his entire EMI capacity can go toward a home loan, making him eligible for a higher loan amount.

Example 2: Lower Income, Higher EMI Burden (Lower Eligibility)

Neha earns ₹80,000 per month, but she has an existing car loan EMI of ₹15,000.

Income	FOIR (50%)	Existing EMIs	EMI Available for Home Loan	Eligible Loan Amount
₹80,000	₹40,000	₹15,000	₹25,000	₹30-32 lakh

Since a portion of her income is already committed to a car loan, her home loan eligibility is lower compared to Rahul.

2. Loan-to-Value (LTV) Ratio – Property-Based Loan Eligibility

Lenders also consider the property value while calculating the maximum loan amount they can offer. Most banks provide up to 80% of the property’s market value as a loan, meaning you need to arrange at least 20% as a downpayment.

Property Value	Maximum Loan Amount (80% LTV)	Minimum Downpayment (20%)
₹50 lakh	₹40 lakh	₹10 lakh
₹75 lakh	₹60 lakh	₹15 lakh
₹1 crore	₹80 lakh	₹20 lakh

Example: How Property Value Impacts Loan Amount

Amit wants to buy a ₹80 lakh home.

• The maximum loan he can get = ₹64 lakh (80% of ₹80 lakh)
• He needs to arrange a downpayment of ₹16 lakh (20%)

However, if he increases his downpayment to ₹20 lakh (25%), his loan requirement reduces to ₹60 lakh, which improves his eligibility and lowers his EMI burden.

Read More: LTV Ratio in Home Loans

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Tips to Increase Your Home Loan Eligibility

Here are some effective strategies to boost your home loan eligibility and secure a better loan offer.

1. Reduce Existing EMIs and Debt
2. Increase Your Downpayment
3. Improve Your Credit Score
4. Opt for a Longer Loan Tenure
5. Add a Co-Applicant for Higher Eligibility
6. Maintain a Low FOIR (Fixed Obligations to Income Ratio)
7. Opt for a Step-Up Loan
8. Show Additional Income Sources
9. Choose a Joint Loan with a Parent or Sibling

Also Read: Joint Home Loans – Guide to Increase Eligibility

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How To Apply For a Home Loan?

1. Check Eligibility Criteria: Verify age, income, credit score, and employment status.
2. Calculate Loan Amount and EMI: Use online EMI  calculator to determine affordable loan amounts and monthly installments.
3. Gather Required Documents: Collect identity proof, address proof, income statements, and property-related documents.
4. Choose Application Method: Apply online through the bank’s website or visit a nearby branch in person.
5. Submit the Application: Complete the application form accurately and attach all necessary documents.
6. Loan Processing and Verification: The bank reviews your application, verifies documents, and conducts a credit appraisal.
7. Property Valuation and Legal Checks: Banks assesses the property’s market value and performs legal due diligence.
8. Receive Approval and Sanction Letter: Upon successful verification, you receive a loan approval and sanction letter detailing terms.
9. Sign the Agreement: Review and sign the loan agreement, agreeing to the specified terms and conditions.
10. Disbursement of Funds: The approved loan amount is transferred to your account or directly to the property seller.
11. Complete Post-Disbursement Formalities: Finalize any remaining documentation and set up repayment methods for EMIs.

Also Read: How to Apply for a Home Loan For an Apartment?

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Home Loan Tax Benefits 2025

Home loans offer significant tax benefits under the Income Tax Act, 1961. These benefits apply to both the principal amount and interest paid, making home loans more cost-effective.

Section	Deduction Type	Maximum Deduction Amount	Conditions
80C	Principal Repayment of Home Loan	₹1.5 Lakh per annum	The house property must not be sold within five years of possession.
80C	Payment of Stamp Duty	₹1.5 Lakh per annum	These expenses can only be claimed in the year they are incurred.
24b	Interest Payment on Home Loan	₹2 Lakh per annum	The loan must be taken for purchasing or constructing a house. If constructing a house, the construction must be completed within five years from the end of the financial year in which the loan was taken. If the property is let out (rented), there is no cap on the interest deduction under Section 24(b). This allows property owners renting out their property to claim full interest payments as a deduction.

Note: Section 80C also covers other investments like Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), and more, up to a combined total limit of ₹1.5 lakh.

1. Section 24B – Deduction on Home Loan Interest

What It Is:

• Allows you to claim a deduction on the interest paid on your home loan.

Benefits:

• Self-Occupied Property: Deduct up to ₹2 lakh per year on interest payments.
• Rented Property: No upper limit on the interest amount you can claim.

Example:

Category	Amount
Loan Amount	Rs. 70,00,000
Interest Payable Per Year	Rs. 4 Lakhs
Tax Deduction	Rs. 2 Lakhs/ Year
Tax Bracket	30%
Tax Benefits per Year	Rs. 66,000

2. Section 80C – Deduction on Principal Repayment

What It Is:

• Allows deduction on the principal portion of your home loan repayments, up to ₹1.5 lakh per year.

Benefits:

• Reduces your taxable income by the principal amount repaid.
• Also includes stamp duty and registration charges (one-time claim in the year incurred).

Example

Category	Amount
Loan Amount	Rs. 75,00,000
Principal Payable Per Year	Rs. 3.5 Lakhs
Tax Deduction	Rs. 1.5 Lakhs per Year
Tax Bracket	30%
Tax Benefits per Year	50,000

Total Tax Benefits (Section 24B + Section 80C) = Rs. 1.16 Lakhs/ Year

3. Joint Home Loans – Double the Benefits

What It Is:

• When two or more people take a joint home loan and are co-owners of the property.

Benefits:

• Section 24B: Each co-borrower can claim up to ₹2 lakh on interest.
• Section 80C: Each can claim up to ₹1.5 lakh on principal repayment.
• Total Tax Savings: Potentially ₹1.05 lakh per person per year (at 30% tax rate).

Who is Eligible to be a Co-Applicant?

• Father/ Mother
• Unmarried Daughter
• Siblings
• Husband/ Wife
  (Minors cannot be considered as co-applicants for a Home Loan)

Example:

Category	Co Applicant 1	Co Applicant 2
Tax Deduction under 24B	Rs. 2 Lakhs/ Year	Rs. 2 Lakhs/ Year
Tax Deduction under 80C	Rs. 1.5 Lakhs/ Year	Rs. 1.5 Lakhs/ Year
Tax Deductions/ Year	Rs. 3.5 Lakhs/ Year	Rs. 3.5 Lakhs/ Year
Tax Bracket	30%	30%
Tax Benefits	Rs. 1.16 Lakhs/ Year	Rs. 1.16 Lakhs/ Year

When you opt for a co-applicant on your home loan, the savings can be substantial due to the ability to claim tax deductions separately. For example, with a co-applicant, the total tax savings can amount to ₹2.32 lakhs annually. Here’s how it works:

• EMI Paid per Year: ₹60,000 x 12 = ₹7,20,000
• Money Saved through Tax Deductions: ₹2,32,000
• Net Money Paid after Deductions: ₹7,20,000 – ₹2,32,000 = ₹4.88 lakhs

By utilising this tax benefit, you effectively lower your financial outflow, paying only ₹4.88 lakhs per year instead of the full ₹7.20 lakhs. 

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How to Compare Home Loan Offers by Top Banks?

When comparing home loan offers, consider key factors such as interest rates, loan tenure, processing fees, prepayment charges, and eligibility criteria. Different banks may offer varying rates and benefits, so thorough comparison is crucial. Visit Credit Dharma’s dedicated Compare Banks page to conveniently evaluate home loan offers from leading banks side-by-side, helping you choose the best fit for your financial needs.

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How Credit Dharma Simplifies The Home Loan Journey? 

Buying a home is a big step. Getting a home loan can be hard, but we make it easy. At Credit Dharma, we make this possible by offering lowest guaranteed interest rates that keep your monthly payments manageable, allowing you to enjoy more of what truly matters.

But that is not it. We offer:

• Guaranteed up to 100% funding
• Receive lifetime assistance and expert guidance long after your loan is approved.
• Enjoy a fully digital process with minimal paperwork 
• Get your loan approved within just 1-2 weeks.

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Conclusion

Figuring out your home loan eligibility doesn’t have to be complicated. It mostly comes down to factors like your age, credit score, employment type, existing debts (your Debt-to-Income Ratio and FOIR), and how much you can pay upfront as a downpayment. By managing these factors carefully—like keeping your credit score healthy, paying down debts, choosing the right loan tenure, and putting aside a good amount for your downpayment—you’ll greatly improve your chances of getting approved.

Also, don’t forget to compare home loan offers from different banks. It can save you money and help you find the best deal tailored to your needs. Remember, the better prepared you are, the easier it is to turn your dream home into reality.

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Frequently Asked Questions