Top 5 Reasons Why Your Home Loan Application Can Get Rejected


While you are applying for a home loan, the lenders consider various factors before approving your application. Read this post to know some of the most common reasons due to which a lender might reject your loan application. 

The high prices of the real estate properties make it impossible for several middle-class Indians to afford buying a home without taking a loan. 

There are several factors that a lender takes into consideration before approving a housing loan application. If the lender has any reason to believe that you might not be able to repay the loan on time, your loan application can be rejected. Here are some of the most common reasons why financial institutions reject housing loan applications-

  1. Poor Credit Score

The most common reason why housing loans are dismissed is a poor credit score. Your credit score is a 3-digit number, which is calculated by credit bureaus based on how you have used credit in the past. If you were negligent with loans or credit card bill payments in the past, you might not meet the minimum credit score requirement of the lender.Most financial institutions generally prefer housing loan applicants to have a credit score of 650-700 or above.  

  1. Low Monthly Income/Unstable Employment 

Most lenders consider the monthly income as the most important factor to sanction the loan. You would be able to pay the monthly EMIs if you have a stable source of income, which is considerably higher than the EMI amount. For this, financial institutions generally have a minimum income criterion.

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Apart from your monthly income, factors like existing loans that you are currently repaying and job history will also be taken into consideration. If you do not meet the minimum income requirements of the lender, or do not have a stable employment record, your loan application may be rejected. 

  1. Age of the Applicant

Most of the lenders in India prefer housing loan applicants to be in the age range of 22 to 60 years so that the customer can repay the loan comfortably before retirement. 

But if you are already in your late 50s with only a few years to retire, the lender would consider your loan application with a shorter loan term. 

  1. Builder/Property is Blacklisted

Another common reason why lenders reject housing loan is if the lender has blacklisted the builder of the housing project. So, if you have approached a particular lender who has not approved the builder of your housing project, your loan application may be rejected.

  1. Previous Tenant/Owner was a Defaulter 

If the previous owner or tenant staying in the home you are currently living in was a defaulter, this might also result in home loan rejection. Financial institutions generally blacklist the defaulters as well as their residential address.  

So, if your current home address is in the defaulter’s list of the lender, your loan application can get rejected even if it was not you who defaulted on a loan or credit card payment. 


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