05 MAY, 2021

After finally settling in his job, Sameer decided to invest in a house that he could call his own. After doing some research, he came to know that a home loan is an easy way to finance his dream home. However, he also knew that if his loan application gets rejected, it can deplete his credit score, affecting the chances of availing a loan in future. So, he decided to talk to his cousin, who was a bank manager to guide him on the home loan application process. His cousin gave him some tips that helped him get his loan approved without any hassles.

If you too are looking forward to applying for a home loan, these tips for a first time home-buyer can be helpful. 

  • Check your credit score
    Your credit score is an important consideration for the lenders while processing your loan application. Therefore, before you fill the application form, ensure that you have a good credit score and a favourable credit report. If you have a credit score of 700 and above, there are high chances that your loan application will be approved, if all other eligibility criteria are also met. If your credit score is below 650, you might face some difficulty in getting the loan approved.
  • Check your eligibility
    Your loan application would be approved only when you fulfil the eligibility criteria. The home loan eligibility is based on your age, income, financial status, other debt obligations, etc. Therefore, it would be helpful if you check your home loan eligibility before applying to avoid rejection.  You can use home loan eligibility  calculator online to do a quick check.
  • Choose longer tenure
    The EMI of a home loan depends on the loan tenure you choose. To increase the chances of loan approval, you can opt for a longer tenure as it will attract low EMI. With a longer tenure, you get more time to repay the loan. The lenders are more likely to approve your loan when they can envision that you can comfortably pay the loan EMIs. However, a longer tenure would increase your overall interest outgo. To avoid paying additional interest amount, you can foreclose your loan or make pre-payments during the tenure. 
  • Pay attention to your FOIR
    Lenders consider your Fixed Obligation to Income Ratio (FOIR) while processing the loan application. FOIR is debt-to-income ratio. It reflects the portion of your income that you are currently paying towards existing debt obligations. Lenders prefer borrowers who have a FOIR below 50% (including the EMI of the new loan). If your FOIR is more than this mark, you are more likely to default as more than half of your income would be going towards mandatory payments. To reduce and maintain the FOIR, consolidate your current loans or reduce the outstanding by making partial payments of the existing  loans.


Buying a home for the first time through a home loan can be overwhelming. However, if you do some background research and groundwork before applying, you can significantly increase the chances of approval of the loan application. Follow the above-mentioned home-loan-approval tips and apply for home loan now.


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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.