Important Things To Consider While Applying for a Home Loan

Property is a valuable addition that can help individuals achieve a wide variety of financial goals. A home loan is a great alternative if you’re strapped for cash or don’t want to sell your savings.

In India, three types of financial institutions offer house or home loan – housing finance companies, non-banking financial companies, and scheduled commercial banks. Unlike the other two financial institutions, housing finance companies focus solely on property loans and often offer the best interest rates.

You can use a housing loan interest calculator to compare the rates of different institutions before applying for the best one. However, irrespective of which financial institution you choose, keeping the following factors in mind is necessary when you want the most from a home loan.

Factors to Consider Before Applying For a Home Loan in 2022

The following are the top six factors you must consider to avail of the best home loan in India:

Credit Score for Home Loan

The credit score is part of a borrower’s Credit Information Report (CIR). The credit score is an accurate determinant of your credit profile. You can expect the best home loan interest rates if your credit score is robust. To increase your credit score, you must pay your loan EMIs and credit card dues on time. It is wise to keep the credit score above 750 to get attractive interest rates.

Eligibility Criteria for Home Loan

Besides the credit score, home loan eligibility also depends on other factors like monthly income, work stability, property location, age, etc. Generally, lenders specify the minimum income needed to apply for a housing loan – the higher your income above the threshold, the better the prospects of loan approval will be. Similarly, work stability is equally important.

Professionals in a stable job or business are more likely to get easy loan approval. Also, the more your age towards the minimum age of 21, the higher the chances of loan approval will be. Moreover, if your property is in a prime location, your eligibility will be higher.


It’s a good idea to get your home loan pre-approved before you start looking for a house. Pre-approval allows you to set a specific budget and narrow down your house search. Pre-approvals might also help you bargain more effectively and finish agreements faster.


Though there are many sorts of home loans to choose from, you should bear in mind that budget is a critical factor to consider prior to applying. You should be able to manage not just the fixed monthly EMIs, but also overhead charges above and above the EMI like interest expenses, service charges, administrative costs, late payments.

You will also have to keep some money aside for monthly expenses and even to cover any unanticipated emergency.


Your EMIs and the duration of the repayment are closely linked. Housing loans can be approved for up to 30 years, depending on the customer’s creditworthiness. If you have a steady and rising income and stick to a limited income, a short payback period with increased EMIs is preferable.

Interest Rate

Presently, housing loan interest rates range between 6.99% and 8.90%. However, the actual rate depends on the borrower’s eligibility. As previously discussed, borrowers’ eligibility criteria depend on their credit score, monthly income, work stability, age, and property location, among others. A housing loan interest calculator can give you an accurate estimate of EMI, and you can use it to prepare better.


When you start repaying the home loan EMI, a larger part goes towards the interest component. Hence, the principal remains the same for the first few years. However, if you prepay the principal (or a part of it) during the initial years, your interest cost will come down, which will be reflected in the tenure. It is prudent to know that Indian lenders do not levy any charges on preclosure or part-payment of floating-rate home loans.


Examine the contractual documentation thoroughly to have a clear understanding of the home loan you are willing to apply for. Although the factors mentioned above might make your journey simpler, it is wise to gather as much information as you can about the lender. The best lender generally publishes all loan terms and charges on their website. Moreover, you can access a home loan interest calculator for free to calculate your home loan EMI and make the best decision.


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