ill I or won't I get it?

Will they give me the amount I need or less?

Questions and more questions. With no easy answers.

Everyone knows that finance companies go through applications with a fine tooth comb before giving the green signal.

Get Ahead offers you a rundown on the scrutiny process.

At the end of it, you will be able to determine for yourself what your chances are.

What will make you qualify for a home loan?

First, the company will look to see if they should even glance in your direction. Only after you meet certain prescribed criteria, will they look you over.

Here are some:

~ Location, location, location!

Your address matters. The first thing they want to know is which city you live in.

There's a reason for this. They offer loans only in some cities, not all over the country.

For instance, Citibank Home Loans are given only to individuals residing in Mumbai, Pune, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Coimbatore, Vadodara and Ahmedabad.

HSBC insists the applicants must reside within city limits of areas where they operate.

Standard Chartered offers loans in 19 cities.

In this regard, nationalised banks will score since they have branches all over the country.

~ Are you old enough?!

How young (or old) can you be? Some finance companies don't want anyone less than 23 years approaching them. Others are willing to even consider a 21 year old.

Vijaya Bank breaks all barriers and is happy to begin with 18 year olds and go right up to 70 years of age.

Barring this, there is a fair amount of uniformity when it comes to the upper age limit.

It stops at 58 and goes up to 65 if the individual is self-employed.

Dewan Housing Finance Ltd too subscribes to the 65-year age limit, but puts it at 60 years for salaried individuals.

In case you are wondering why finance companies are so flexible, here's more clarity for you: When they refer to the upper limit, they do not mean you can take a loan at that age.

What they mean is that your entire loan must be repaid by that age.

So you cannot approach Vijaya Bank when you are 65 years old and ask for a 10-year loan. They will expect the full loan to be repaid by the time you are 70.

~ Tenure

Just because you are 25 years old, it does not mean you will be able to take a loan for 30 years since you will only be 55 at the time of repayment.

Falling within the age parameters is no automatic go ahead. There is a maximum number of years for which you can take a loan.

It generally extends to 25 years, though ICICI Bank offers even 30 years.

Some like HDFC and Vijaya Bank stop at 20 years.

~ Amount sanctioned

When the finance company decides to sanction a loan amount, it includes the cost of the home as well as the stamp duty and registration fees.

There are two aspects to this:

1. The minimum and maximum amount.

If you hope to borrow Rs 50,000 or Rs 1 lakh, a number of finance companies may not even consider you. To get a Citibank Home Loan, your amount must be at least Rs 2.1 lakh, while Vijaya Bank insists on Rs 1 lakh.

DHFL stands out by starting at Rs 10,000.

The upper limit could go up to Rs 1 crore (Rs 10 million). ICICI Bank beats other players by offering a maximum of Rs 3 crore (Rs 30 million).

Some like Bank of Baroda stop at Rs 50 lakh.

2. The second is the percentage of the cost of the home.

Within the upper and lower limit, there are some more limits: Citibank, HDFC and ICICI Bank require the borrower to put up 15% of the cost of the home, while they will finance the balance 85%.

So even if your financial standing allows you for a higher loan, they will stop at 85% of the value of the transaction.

So within the highest and lowest amount limit, you are then restrained by 80% of the cost (this could go higher or lower), and then your average income.

Which brings us to the next point.

What will effect the amount you are sanctioned?

If you cleared the first four hurdles, good for you. But don't celebrate too soon.

Now that you have qualified for a loan, let's see how much is actually sanctioned.

~ Income

Obviously, there will be no maximum, just a minimum. And this figure will vary.

HSBC requires the annual net income of a salaried applicant to be higher than Rs 150,000.

Citibank looks at a minimum gross annual income of Rs 1 lakh; the amount drops to Rs 85,000 for a self-employed individual whose firm should have been in operation for the past three years and making profits for the past two years.

Once you take a loan, you will have to repay it in the form of equalled monthly installments (EMIs). This is a fixed amount that you pay every month.

The loan company will take into account the repayment tenure and the loan amount to arrive at the EMI. The EMI that they finalise will generally not exceed 35% to 40% of your gross income.

Citibank is willing to go up to 60% of the total household income.

Most important, the determining factor will be the customer's comfort level. An individual earning Rs 50,000 a month may not mind 30% (Rs 15,000) going off as an ElI and living with Rs 35,000 a month.

But an individual earning Rs 25,000 may not be too happy living with Rs 17,500 a month, though the percentage of salary being deducted as EMI is identical.

~ Dependents

Is your income supporting your wife, children and parents?

The more dependents you have, the less you are likely to get a loan -- unless your income is so high that the number of dependents makes no dent in your lifestyle.

Basically, the more you earn and the less you support, the more points you score with your finance company.

~ Employment

Good qualifications are not a criteria but an asset. They indicate better chances of landing yourself another job should your current one be hit.

Similarly, adequate work experience helps.

Citibank insists on at least two years of work experience. Stability and continuity of occupation also scores high. A steady job in an industry with reasonable growth potential is crucial.

UTI Bank requires at least a year in the current job with a minimum experience of two years.

And if you have less than a year's experience, you must have at least three years of total work experience to balance that.

If you are self-employed, your firm should have been operational for a couple of years, making cash profits and should have filed IT returns.

~ Liabilities

If you are paying back too many loans, the home loan company will definitely frown.

Because you now have less money with which you can pay back this loan.

The finance companies refer to this as the debt-to-income ratio, which simply means how much of your income goes towards paying back loans. The finance company will definitely ask you about other outstandings (loans) and also want bank statements over the past 6 months to monitor any regular payment being made to service a loan. They will also ask for proof of investments.

Well, that is pretty much it. Congratulations if you have figured that you do actually quality for a home loan. Now comes the tough part. Getting the housing finance company to grant you the amount you need. Come back later this week to find out how you can score points with the home loan company.

Next week: How to score points with your loan company

* Different parameters exist for salaried and self-employed individuals. Do check with the housing finance company.

*The housing finance companies mentioned here are only to provide an example. This is not a comprehensive list.

Illustration: Dominic Xavier