10 Reasons Why Home Loans Are Rejected

Home loans are something that most people apply for while getting ready to buy a house. More so because it is not often that people have the luxury to buy their dream house with ready cash. However, there are times when home loans could be rejected- sometimes, because of issues with the real estate builders and others because of your own credit history. Here are some more obvious reason that your home loans might get rejected.

Reasons Why Home Loans Are Rejected

Source: indianmoney.com

Eligibility of the property:

If you believe that banks do not offer loans for old properties or buildings, then that’s not true. In fact, a bank calculates the eligibility of a property based on the remaining residual life and physical condition of the property. If the property condition is poor, then the bank may not take the risk of giving you a loan.

Poor credit score:

These days the CIBIL score is becoming more and more relevant. Make sure to check your CIBIL score before applying for a loan. Also, ensure to pay all your dues on time to maintain required score.

Unpaid dues:

Do you have any unpaid dues you should worry about? It could be anything from credit cards bills to telephone bills and unclear EMIs. Generally, late EMI payments history, pending debts, are all a major reason why your loans could potentially be rejected.

Job stability:

If you keep switching jobs or currently having a temporary job, then banks might not sanction your home loan. Because constant job shift could affect your credit worthiness and also show a lack of stability.

Other loans:

If there are other commitments that you are already paying for, banks may refuse to offer the home loan. Existing personal/auto or any other loans in comparison to your salary could be a reason that loans are rejected because banks calculate your affordability before accepting your home loan application.

Income tax returns:

Remember, having a job stability and good credit score is not sufficient to get a home approved. If you have not been paying your income tax for at least 2 years, then the bank may refuse to sanction your loan.

Rejected loan before:

A financial institution usually rejects a loan application if you have applied for a loan earlier and got rejected. Applying again will increase scrutiny towards your loan.


Age could be one of the major factors in figuring out if you are eligible for the loan. This means, trying to buy a house when you are very old can be troublesome for banks. The earlier you tend to buy, the more likelihood you will get a sanction. Trying to buy a house closer to your retirement age can increase your chances of rejection.

Lack of Documents:

Although proof of identity, address and income are some of the key documents for getting a home loan approved, not having “Know Your Customer Documents (KYC)” or “Property Documents” could delay or reject your loan application.

Policy guidelines of the property:

It could be that sometimes the properties policies may not align with the financial institute. When this happens, there is every chance that despite your eligibility to get a loan, you may still be rejected.

Overall, make sure that you are covered in terms of how you pay your bills. That determines how and at what rate you get your home loan. Also, research about the builder you are dealing with and that they have the ability to provide you the required loan. Ensure your signatures match with submitted documentation, and collect and maintain all NOC for previously taken loans.

Also Read: What is Mortgage Finance Option?

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