Five Expert Tips to Improve Your Home Loan Eligibility

Monday, 21 March 2022

If you are one of those who just thought to buy a property and bought it outright, then you are fortunate enough. The majority of salaried individuals don’t have such a financial foothold. Applying for a mortgage seems to be their last resort, but the real challenge arises when someone doesn’t qualify for the loan even.  And that does happen a lot many times.

Getting a home loan sanctioned is in no way a cakewalk. You require proper research and in-depth learning of different loan programs and the one that you can easily qualify for. And for that, you have got to check your eligibility criteria. Your home loan eligibility signifies the maximum mortgage amount you can avail of from your lender or broker.

It is crucial to understand that talking about home loans and being eligible for the same are two different things. Qualifying for a loan is not a simple thing, especially for first-timers. However, with the following pro tips, you may increase chances of your overall home loan eligibility significantly –

  1. Work Upon Your Credit Score

For the ones who are new to the term, a credit score is a number that depicts your creditworthiness. The higher is your credit score, the more trustworthy you are in the eyes of lenders. This means you can get the amount of loan you desire.

Since your payment history is the governing factor here, you must be on time with the pending bills. Next, you have to pay off as much of your existing debt as possible and try not to apply for new ones for the time being.

  1. Add Multiple Sources of Income

Other than the stability of your primary income, it is good to have additional sources of revenue. Mention them in your application to meet the desired debt-to-income ratio and boost your chances of qualifying for the loan.

It doesn’t matter if it is the dividend, interest on investments, rentals, part-time business, or contract-based job. You will ultimately have the advantage of better financial health and receive a higher loan amount.

  1. Include a Co-Applicant

This is one smart and practical way to speed up your residential loan application process. With your spouse or co-applicant, such as parents, child, or siblings on the list, you gain more trust from the lenders and some other amazing benefits.

The income of the second borrower is added to the loan, thereby increasing the amount you get approved for. However, the co-applicant, too, has to meet the minimum guidelines required by your lender.

  1. Save for a Large Down Payment

The higher you put down on your property, the more risk the lender is ready to take on. A smaller down payment does free up more cash for other priorities. But, a sum of 20% or more on your purchase frees you from private mortgage insurance and pay lesser monthly installments.

But is it essential? Well, no. First-time buyers may put 6% down, and certain loan programs allow 3% or zero down. It is just experts recommend larger down payments to reduce your overall interest charges, decrease your monthly payments, and get a better interest rate.

  1. Consider a Longer Tenure

Your home loan eligibility criteria are evaluated based on your ability to repay the loan amount every month as equated monthly installments (EMIs). So, when you opt for a longer time frame, your EMIs are lowered, and you easily fit in the category.

Of course, that means you have to pay more interest payment overall to the lender but don’t be disappointed. Your income will see a rise, and you can always balance your expenditures to buy a dream home for your family.




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