To be able to get a home loan, an applicant needs to satisfy a host of eligibility criteria that lenders set. Now, one of the most important aspects that lenders focus on is the income of the applicant. So, does that mean that those who are not earning a significantly high income have no chance of getting approval on their home loan applications? Not at all! If an individual is earning a relatively low income, they can still improve their chances of getting a home loan from a lender by making sure that they make up for it in other areas that lenders evaluate.
Let’s take a look at how an individual with a low income can improve their chances of getting a home loan approval:
- Keep a healthy credit score
Any financial institution will check the applicant’s credit history before giving them a loan. This is why it is so important for every borrower to maintain a healthy credit score, especially if they have a low income. Ideally, one should aim to keep a credit score of 750 or more.
- Satisfy all other eligibility criteria
If a borrower’s income is low, they should make sure that they are able to satisfy all the other criteria set by the lender. For instance, apart from age and income criteria, lenders also evaluate other factors such as an applicant’s minimum qualifications, age, existing debt obligations, and so on. Make sure to keep these in mind before applying for a home loan.
- Opt for a joint home loan
When two co-borrowers apply for a home loan, a borrower can effectively improve their chances of a home loan approval. This is because when two borrowers are earning an active income and paying off a loan, it reduces the lender’s risk. This is because even if one borrower loses their job, the other borrower can keep paying the home loan’s monthly instalments.
- Apply as soon as possible
An applicant’s age is one of the most important eligibility factors that lenders consider before giving a home loan. Lenders prefer giving loans to borrowers who are young. This is because such borrowers have a long working career ahead of them and can be earning during the entire tenure of the home loan. So, it is better to apply for a home loan as soon as one can. Use a home loan EMI calculator to understand the monthly instalments of a home loan before doing so. This will help in understanding which plan is a suitable one.
Do keep in mind that most lenders do have a minimum income criterion set at Rs 20,000. This could differ from lender to lender, which is why it is better to check with the financial institution about their exact eligibility criteria for a home loan. It is also advisable to make use of a home loan eligibility calculator. This calculator is an online tool that will help a borrower in understanding a loan amount that they are eligible for.