Under What Conditions your Home Loan Application can get Rejected?

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Whether you want to buy an apartment in a posh community, or a villa facing the sea, taking a home loan will be way more beneficial because you won’t have to worry about any financial crunch. Usually, when you want to buy any residential property, you must make 10 to 20% of the total market value as the initial down payment. Then, the rest 80 to 90% of the valuation can be substituted by the loan.

Although it sounds amazing to have a promising source of funds for your dream home, there are higher chances that your loan application can get rejected. Therefore, before you apply for a loan from any creditor, knowing more rejection causes will be beneficial. This way, you can avoid any unavoidable circumstance that might lead to processing delay or application rejection for the home loan.

Poor Credit Score and History

One of the primary causes of home loan application rejection is having a poor credit score and history. Most creditors look into the credit score of the board and ensure it is above 750 before proceeding further with the loan application. 

They will also check your credit history report and ensure you are running on time on any debt payment or have multiple loans under your name with complicated statuses. If you do not want the loan application to get rejected, try to keep the credit score above 750 and ensure the credit history is clean and reliable.

Unpaid Debts and Dues

Often creditors take time to assess if there is any unpaid due or debt under the borrower’s name. For instance, let’s say you have bought multiple items using your credit card but failed to pay the installments on time. 

As a result, there will be a certain amount in the unbilled transaction box, which implies that you failed to make payments right on time and the credit card company has charged you with late payment interest. This can reduce the chances of getting your home loan application approved.

Instability in Income Source or Job

Another reason the home loan application might get rejected is instability in your income source or job. For instance, if you have recently changed your job or have been let go by your employer, the chances of getting the loan approved will be less. 

Similarly, if your income source is unstable or you fail to provide appropriate pay slips from the last six months, the creditor might not proceed further with the application. This is why using a home loan calculator to understand the interest to be paid on a particular capital and its relationship with your income will be fruitful.

Complications in ITR Files

Before applying for the credit, you should check the home loan eligibility calculator to ensure your ITR file details meet the creditor’s expectations easily. If there is any complication in the taxation files, the chances of getting the loan application rejected will be high. For instance, if you failed to pay the taxes within time and a late payment interest has been charged, your creditor might not rely on you for the home loan.

Lower Ratio of Loan to Income

When you have multiple loans under your name, you must pay the debt amount every month. That particular amount is usually deducted from your monthly income. This is why most creditors will check your loan-to-income ratio, and if it is lower than the other certain threshold amount, you won’t get the home loan. 

For instance, getting a home loan will become problematic if you are liable to pay INR 25,000 as the total debt towards all the loans under your name and your income is INR 40,000. This is because you will be left with only INR 15,000, which may not suffice the total home loan debt.


As you now know, some of the significant conditions for which the application can be rejected, use the home loan eligibility calculator to check if you can apply for the same or not. This way, the chances of application rejection will reduce considerably, and you can buy your dream house without any further hassle.


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