Want a bigger home loan? 7 ways to Increase Loan Eligibility Amount Amid Rising Interest Rates

housing loan eligibility


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Last updated on 27th February 2024

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7 Ways to Increase Loan Eligibility Amount Amid Rising Interest Rates

As the financial landscape has rapidly evolved, where interest rates are continuing to rise, securing a larger home loan has become more complicated and challenging. It is particularly poignant in India, where the housing market dynamics are unique in their relationship with economic fluctuations. It is crucial that prospective homeowners understand how to enhance their home loan eligibility in this shifting landscape. The blog addresses effective strategies that will not only increase your housing loan eligibility but will also align with contemporary financial wisdom. The use of these approaches can assist individuals in securing more substantial home loans even as interest rates rise.

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1. Good Credit Score

A high credit score is paramount. It's a reflection of your creditworthiness and a critical factor lenders assess. Maintaining a good credit score can be achieved by timely bill payments, keeping credit card balances low, and avoiding unnecessary loans or credit inquiries. This is a fundamental step in how to increase home loan eligibility. Keeping a good credit score can also help to reduce interest rates and save you thousands of dollars over the term of the loan. Additionally, having a higher credit score can also give you access to better loan terms.

2. Increase the Loan Tenure

Opting for a longer loan tenure reduces the monthly repayment burden, making the loan more affordable. However, it's essential to note that longer tenures also mean paying more interest over time. This is a key aspect when looking to increase home loan eligibility. Therefore, it's important to calculate the total cost of the loan before opting for a longer tenure. Additionally, it's also important to consider the financial position of the loan taker when deciding on a loan tenure.

3. Add a Co-Borrower

Including a co-borrower, preferably with a stable income and good credit score, can significantly increase your loan eligibility. It reduces the risk for the lender as the responsibility is shared. This strategy is particularly effective in housing loan eligibility in India, where family income often plays a crucial role. Adding a co-borrower may also reduce the interest rate of the loan, and it can also help the borrower get a loan approval faster.

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4. Increase Down Payment

A higher down payment reduces the loan amount, lowering the lender's risk. This can lead to better loan terms and potentially larger loan eligibility. However, this requires upfront capital, which might not be feasible for everyone. Increasing the down payment is a direct method to increase home loan eligibility. Some lenders may require a larger down payment for certain types of loans, such as jumbo loans. Borrowers should talk to their lender to find out the requirements for their loan.

5. Reduce Existing Debt

Lowering your existing debt enhances your Debt-to-Income (DTI) ratio, a crucial factor in loan approval. It demonstrates your ability to manage and repay new debt effectively. Borrowers should try to reduce or eliminate existing debt before applying for a loan. This could include paying off credit cards, car loans, and personal loans.

6. Proclaim Any Additional Income Sources

Disclosing all income sources, including rental, freelance, or part-time income, can increase your loan eligibility. It paints a fuller picture of your financial capacity, crucial for housing loan eligibility. This can help lenders better assess your ability to repay the loan. Additionally, it can also help to reduce the amount of interest that you will have to pay on the loan.

7. Regular Income Stability

Consistent and stable income reassures lenders of your repayment capacity. Frequent job changes or erratic income can be red flags for lenders. This factor is particularly significant in the context of housing loan eligibility in India, where consistent income is highly valued by lenders.


Consider Mr. Sharma, who earns ₹1,00,000 per month. He wants a loan of ₹50,00,000. The bank calculates his eligibility based on a tenure of 20 years at an interest rate of 8%. His monthly EMI comes out to be approximately ₹41,822. However, his existing debts take ₹20,000 of his income, making his effective eligibility lower. By reducing his existing debt and opting for a longer tenure of 25 years, his EMI reduces to around ₹38,484. Further, if he adds his wife as a co-borrower, who earns ₹50,000 per month, their combined eligibility increases, making it easier to secure the desired loan amount.


It takes a balanced approach to increase your home loan eligibility amidst rising interest rates. While strategies like extending loan tenure or adding a co-borrower can provide immediate benefits, they also entail long-term considerations such as higher total interest outgo or shared financial responsibility. Each step should be weighed against personal financial stability and long-term goals. By carefully considering these factors, borrowers can effectively enhance their eligibility for a larger home loan, even in a challenging economic climate.

FAQs about Increase Loan Eligibility Amount

Your home loan eligibility is determined by factors like credit score, income stability, existing debts, age, and property value. Lenders assess these to gauge your repayment capacity.

Improving your home loan eligibility can be achieved by maintaining a strong credit score, reducing existing debts, increasing your down payment, and possibly extending your loan tenure.

To secure a larger home loan, you can improve your creditworthiness, opt for a longer loan tenure, increase your down payment, and ensure your income is stable and sufficient.

While a high income is favorable, it doesn't automatically increase loan eligibility. Other factors like credit score, existing debts, and job stability are also crucial.

Increasing a home loan amount post-sanction is possible in some cases, but it requires re-evaluation by the lender and may involve additional processing.

Increasing your home loan amount doesn't directly affect your credit score, but managing this higher debt responsibly is key to maintaining a good score.

Yes, including your spouse's income as a co-applicant can significantly enhance your home loan eligibility by increasing the combined income considered by the lender.

Absolutely, declaring additional income sources such as rental income can enhance your loan eligibility, as it increases your total income, demonstrating a higher repayment capacity.

Published on 28th November 2023