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When a person sends a home loan application to a lender, it checks many factors, including your income, before giving its loan approval. Having a high income shows that a person is likely to pay a loan easily compared to a person with a low income. But is there any minimum income benchmark for which a bank can reject your home loan application despite many other factors favouring you? Suppose you earn Rs 35,000 a month and you apply for a home loan, can the bank reject your loan application?Income Tax GuideIncome Tax Slabs FY 2025-26Income Tax Calculator 2025New Income Tax Bill 2025Adhil Shetty, CEO, BankBazaar.com, explains 10 reasons why a lender can reject your home loan application.1. What does the lender check when you apply for a home loan?When you apply for a loan, the lender makes two primary checks: your credit history and score and your income. If either of these doesn’t meet the lender’s minimum requirements, then the loan application will not move forward.2. High credit score is also important for home loan approvalMost banks will lend only if your score is above a certain threshold. So long as that criterion is met, your application will not be rejected. However, the bank may charge a higher rate of interest if the credit score is low. Similarly, the interest costs may be slightly higher if the borrower has never availed credit before and consequently does not have a score as the lender has no way of assessing the credit behaviour of the borrower.3. Past defaults on small loans or credit cards can also affect your chancesWhile it may no longer have an impact on the credit score, so long as it is present in the credit report, the lender may charge a higher rate of interest.4. Most lenders have minimum income threshold limit for home loan approvalMost lenders have a minimum threshold for income below which they will not lend. Usually, this limit is set at around Rs 30,000 a month. However, if your loan is of higher value, then the income requirements could be higher, and your application may be rejected if your income doesn’t meet the minimum income criteria.5. Employment and income records are also important factorsLenders also look for steady employment and income records of the home loan applicant. Factors such as age, nationality, and even educational qualification could also have an implication on loan approval.6. Changing jobs frequently can also mar your home loan approval chancesBanks attach a lot of importance to the job stability of the applicant. If you have changed jobs frequently in the past, banks are liable to infer that there is a high probability you will change jobs in the future, or that you may end up without one, reducing your chance of home loan approval.If you work in contractual jobs or if your income is irregular, that may be another reason for the home loan rejection.7. Correct information about yourself is necessary for home loan application's acceptanceInaccuracies in your application, specially in your name, age, address, etc., make it difficult for the bank to generate the necessary information about you and can lead to the application being rejected.8. Can my home loan be rejected if I have high income but existing loans?If you have existing loans, then despite having a high income, your loan application may be rejected if your Fixed Obligations to Income Ratio (FOIR) is high.FOIR takes into account all the fixed obligations that a borrower is supposed to meet regularly on a monthly basis, including house rent, existing debts such as credit card bills and EMIs on other loans, etc.The lower your FOIR, the better, as it implies that you have sufficient income to repay your loan. Usually, lenders will not lend if FOIR is more than 40%. What it means that all your EMIs put together should ideally be not more than 40% of your income.9. Your home loan can be rejected because of lower property valuationIn case of home loans, property valuation could also be a reason for home loan rejection.Banks undertake their own property valuation, which takes several factors into account, such as the age of the building, the condition and quality of construction, the location of the property, etc.So, even if you are eligible for a higher loan amount based on your income, the bank may downsize or reject your loan if it finds that the property has a lower valuation.10. Check if builder is blacklistedIf you opt for a property by a builder not approved or blacklisted by the bank, chances of getting a home loan approval are slim even if the property has been approved.Also, if the property is very old, the lenders may also conduct an investigation to evaluate the probability of structural collapse in addition to their usual legal and technical investigations. In certain cases, the condition of the property or the government norms surrounding old property may not allow the sanction of a loan against it.
