What Lenders Check Before Approving a Home Loan

Buying a home is one of the biggest financial decisions you will make, and home loan approval is the most critical step in that journey. Many borrowers assume that a good salary alone guarantees approval, but lenders look at multiple factors before sanctioning a home loan. In 2026, banks and NBFCs in India use a mix of traditional checks and digital verification to assess risk. At Saarathi.ai, we have observed that most home loan rejections happen due to gaps borrowers were unaware of, not because they were ineligible overall. Understanding what lenders check before approving a home loan helps you prepare better, avoid delays, and secure the best possible interest rate. This guide explains each evaluation step in clear, practical terms.

Credit Score and Credit History

Your credit score is the first and most important filter in home loan approval.

What lenders check:
• CIBIL score, usually 700 or above for smoother approval
• Past repayment behaviour on loans and credit cards
• Any defaults, settlements, or write-offs

A strong credit history signals financial discipline and reduces lender risk. Even one missed EMI in the recent past can raise red flags.

How to improve:
• Pay all EMIs and credit cards on time
• Avoid applying for multiple loans together
• Correct errors in your credit report early

Income and Repayment Capacity

Lenders need assurance that you can comfortably repay the home loan over 20 to 30 years.

They evaluate:
• Net monthly income
• Stability of income source
• EMI to income ratio, also known as FOIR

In most cases, lenders allow total EMIs up to 50 to 60 percent of net monthly income. Higher income with lower existing EMIs improves approval chances and interest rates.

Employment Stability and Work Profile

Your employment profile plays a key role.

For salaried borrowers, lenders check:
• Current employer reputation
• Minimum job continuity, usually 6 to 12 months
• Total work experience

For self-employed borrowers, lenders assess:
• Business vintage, often 2 to 3 years
• Consistency of income
• Nature of business and industry risk

At Saarathi.ai, we have seen that stable employment often compensates for slightly lower income or higher loan amount requests.

Age of the Borrower

Age affects both eligibility and loan tenure.

Typical criteria:
• Minimum age: 21 to 23 years
• Maximum age at loan maturity: 60 to 70 years

Younger borrowers get longer tenure options, which reduces EMI. Older borrowers may face shorter tenure and higher EMI pressure.

Existing Liabilities and Financial Commitments

Lenders examine all existing obligations to assess overall risk.

They review:
• Personal loans
• Car loans
• Credit card EMIs
• Education or business loans

High existing liabilities reduce loan eligibility. Even unused credit card limits can influence lender perception if utilisation is high.

Property Evaluation and Legal Checks

Unlike personal loans, home loans depend heavily on the property itself.

Lenders conduct:
• Technical valuation to assess market value
• Legal verification of property documents
• Title check to confirm clear ownership
• Approval status from local authorities

Properties with unclear titles, legal disputes, or incomplete approvals often lead to rejection or delayed disbursal.

Down Payment Capability

Lenders do not finance the full property value.

In 2026, typical norms are:
• Loan to value ratio of 75 to 90 percent
• Borrower must fund the remaining amount as down payment

Having the down payment ready and traceable through bank accounts improves lender confidence.

Savings and Financial Discipline

Lenders also look beyond income.

They observe:
• Bank statement trends
• Average monthly balance
• Savings and investment habits

Regular savings and disciplined banking behaviour reflect financial maturity and improve approval chances.

Documentation Accuracy and Completeness

Incomplete or inconsistent documents are a common reason for delays.

Documents usually required include:
• Identity and address proof
• Income proof such as salary slips or ITRs
• Bank statements
• Property documents

On Saarathi.ai, missing or mismatched documents are flagged early through a guided, paperless process to prevent last-minute issues.

Co-Applicant and Family Income

Adding a co-applicant can significantly strengthen your application.

Benefits include:
• Higher combined income
• Improved eligibility
• Longer tenure options

Spouse co-applicants are common and often viewed positively by lenders.

How Lenders Combine All These Factors

Lenders assign weight to each parameter and calculate an overall risk score. No single factor decides approval in isolation. A slightly lower credit score may be offset by high income or strong property value.

Understanding this balance helps borrowers focus on improving the right areas instead of guessing.

How Saarathi.ai Helps You Get Faster Home Loan Approval

At Saarathi.ai, we simplify the home loan approval process by offering:
• AI-driven eligibility assessment before application
• Access to 110+ banks and NBFCs in one marketplace
• Saarathi AI expert to clarify eligibility, documents, and property checks
• Saarathi Bazaar dashboard to compare interest rates, EMIs, and lenders
• Fully digital and transparent home loan journey

Our experience shows that informed borrowers face fewer rejections and get better interest rates.

FAQs on Home Loan Approval Checks

What is the minimum credit score for a home loan?
Most lenders prefer a score of 700 or above, but approvals are possible with slightly lower scores if other factors are strong.

Does property location affect home loan approval?
Yes, properties in approved layouts and established areas are easier to finance.

Can self-employed borrowers get home loans easily?
Yes, with consistent income, proper filings, and business stability.

Does changing jobs affect home loan approval?
Recent job changes can impact approval unless income and employer profile are strong.

How long does home loan approval take in 2026?
With digital platforms like Saarathi.ai, approvals can happen within a few days, subject to property checks.

Conclusion

Home loan approval is not based on salary alone. Lenders evaluate your credit behaviour, income stability, liabilities, age, and property quality together. Preparing each aspect in advance can save time, money, and stress. At Saarathi.ai, we combine AI-powered recommendations, expert guidance, and access to multiple lenders to help you get home loans faster and on better terms. Check your home loan eligibility on Saarathi.ai today and move one step closer to your dream home.