- A Rs 24 lakh annual salary and 750 credit score do not guarantee home loan approval
- High existing EMIs reduce home loan eligibility despite good income and credit score
- Unstable employment or short job tenure can lead to loan application rejection
A Rs 24 lakh annual salary and a credit score of 750 may seem like a strong starting point for getting a home loan. Yet, a good income and a healthy credit score do not guarantee approval. Banks assess several other factors before sanctioning a loan, and issues with any of them could lead to a rejection.
A Good Salary Doesn't Guarantee a Loan
Imagine Rahul, a 32-year-old IT professional who earns Rs 2 lakh a month. His credit score is 750, and he applies for a Rs 70 lakh home loan to buy his own first apartment.
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He feels confident that his application will get approved soon. Instead, his application is rejected.
Why? This is because Rahul has an outstanding car loan, personal loan, and credit card. A significant portion of his income goes to pay off EMIs on account of these existing loans.
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What Could Have Gone Wrong?
Here are a few possible reasons behind such a rejection:
High Existing EMIs: Banks check how much of your salary is being used to pay EMIs. This can limit your home loan eligibility.
Unstable Employment: Constantly changing jobs, having a short tenure at your job or working for a company that is unstable financially could result in this denial..
Property-Related Issues: At times the issue might not be the borrower but the property itself. Problems like unclear documentation, legal problems or no approvals might result in rejection.
Income Isn't Fully Considered: Sometimes variable incomes, bonuses and incentives might not be considered as regular income by the lenders.
Credit Score Isn't Everything: Even though 750 is a good credit score, the banks consider other things too.
What Can You Do?
Before applying again, ensure that you have checked your current EMIs, cleared off any debt if possible, your credit score, and the legal documents of the property.
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Getting a home loan is not necessarily a question of earning enough or having a good credit score. The banks want assurance of your ability to pay off your loan comfortably. Sometimes, your liabilities become much more important than your income.
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