With the entire world economy fluctuating due to the non-volatile stock market, investing in an asset or liability has become a challenge for the majority of people. Especially if you are a first-time homebuyer, The task becomes even more difficult when it comes to deciding the investment property as well as the suitable lender. While exploring the first time home buyer mortgage rates, you must be knowledgeable enough about how a home loan works in the current market. A home loan is a significant amount of money availed to invest in your dream house or two to renovate it. However, considering the current scenario, home loans can also be used to refinance the existing mortgage in order to get lower interest rates on the new mortgage.

What are the eligibility criteria for getting a home loan?

Depending upon the financial institution or the private lender you are planning to connect with, home loan eligibility criteria differ accordingly. However, below listed are some standard requirements of every lender:

  • The age of the borrower must be above 18 and below 60 years.
  • The borrower must be a salaried or self-employed individual with a consistent source of income.
  • The borrower’s salary must be more than the meaning of income quoted in the lender’s documents.
  • What are the factors on which your loan application hinges?

    1. Monthly Income
    While applying for a home loan with any type of lender, borrowers are required to present proof to the lender that they have 50% of their salary set aside for paying the EMIs. This means that if your income gets spent on your monthly expenses and you are left with less than 50% each month, you are not likely to qualify for the loan amount. In those cases, the borrower can opt to apply for a lesser amount of loan or generate multiple sources of income.

    2. Previous Loans
    Even if you have a high monthly income, there is still no guarantee that you will qualify for a loan amount. This is because If you are repaying any ongoing loans as well, your monthly income will significantly decrease. It will also reduce your chances of getting the desired loan amount, hence you should first clear off other loan commitments before applying for a home loan. In addition, you can also use the monthly mortgage payment calculator to check your affordability for the next loan and make a wise financial decision accordingly.

    3. Down Payment Capability
    The amount of downpayment you are willing to directly signifies you are affordability of the loan amount. In addition, the higher down payment also saves a lot of money on the interest rates of outstanding loan amounts. Therefore, to avoid any hassle or the rejection of your application, you must have a suitable down payment fund ready with you.

    After you submit the required document proofs to the lender, they will carry out a thorough financial background check to grant you the loan amount on suitable mortgage rates from none other than Preferred Rate.

    Author's Bio: 

    I am Eric Desuza a pro-level blogger with 5 years of experience in writing for multiple industries. I have extensive knowledge of Food, Fitness, Healthcare, business, fashion, Lifestyle, Business and many other popular niches. I have post graduated in arts and have a keen interest in traveling.