Home Loan Eligibility Criteria for Self Employed, Businessmen and Professionals

Apart from salaried employees, self-employed professionals and business owners can also apply for a Home Loan. Read this post, to know more about the income criteria for such applicants.

A Home Loan is a big-ticket loan, and is generally repaid over a tenure of 15 - 25 years. For a lender, it is essential to ensure that the applicant can comfortably repay the loan on time, without any delays or defaults. This makes the monthly income of a prospective borrower a vital consideration for every lender.

Top lenders nowadays offer Home Loans to the salaried and self-employed professionals. However, as self-employed professionals do not receive a monthly salary like the salaried people, their income criteria consists of some additional requirements. Here’s a detailed overview of the Home Loan eligibility criteria for self-employed applicants.

Who is considered as a Self-employed Home Loan applicant?

Self-employed applicants are divided into two categories-

1. Professionals like CAs, Lawyers, Architects, Doctors, etc., who are professionally qualified, and have set up their own practice
2. Non-professionals, such as Traders, Painters, Insurance Agents, Contractors, etc., who are not professionally qualified, but run their own business.

Applicants from both categories can apply for a Home Loan.

What are the income criteria for self-employed applicants?

While the income criteria may vary between lenders, most top Home Loan providers prefer self-employed professionals with an income of Rs 2,60,000 per year (Lawyers – Rs 2,75,000) and  self-employed non-professionals with an income of Rs 2,60,000 per year. The fixed obligations, such as EMIs of existing loans, rent, etc., should not be more than % of the monthly income, to ensure that the borrower can comfortably afford the Home Loan EMIs.

The higher the income, the higher will be the Home Loan amount, in case the applicant also meets the other requirements of Home Loan eligibility for the self-employed.

What income proofs should self-employed applicants submit for a Home Loan?

Here is the list of income proofs that self-employed applicants are required to submit, along with their Home Loan application:

• Business/Practice should be operational for at least 3 years, in case of professionals and 5 years in case of non-professionals
• Business and Personal Bank Statements of at least 3 years
• Proof of regularly filing GST, TDS, and Income Tax
• Income Tax returns of at least 2 years
• Income Proof Certification from a CA.

Can self-employed applicants get a Home Loan without the formal income proofs?/

Most self-employed applicants from informal sectors often do not have the required income documents. But, even without the formal income proof, it is possible for a self-employed professional or non-professional to get an approval on a Home Loan. This is possible, if they fulfil all other requirements and show the gross professional receipts or business turnover.

For instance, if an applicant has a good history of loan repayment and an excellent credit score, a lender might still approve their loan application, even if some of the income documents are missing. So, it mostly depends on the loan provider you select. Applicants also have the option to add a co-applicant, like their spouse or immediate family member, to increase their eligibility for the loan.

Home Loans for the self-employed people

Even if you are a self-employed professional or non-professional, without adequate income proof, it is still possible to get approval for a Home Loan. There are top lenders in the country; with highly flexible eligibility requirements and minimum documentation requirement that helps many self-employed applicants fulfil their dream of being homeowners.

Leading Banks also offer complete assistance, throughout the application process, to help the applicants get an approval on their Home Loan application, at the earliest.