While salaried employees can easily apply for home loans, it’s the question of most self-employed how to qualify for home loan applications. This guide is appropriate if you don’t receive fixed monthly salaries. Since a housing loan involves an extravagant financial affair, it must take a minimum of 15 to 20 years to repay the loan and interest. 

Lenders always sort out prospective borrowers who can comfortably pay back the loan timely without making any defaults. This necessitates the monthly earnings of the home buyer, a crucial factor in lending money. 

The opportunity of a Home loan for the self-employed professionals 

Today’s top-ranked lending organizations have special offerings for the self-employed. Since they earn a fixed salary at the end of each month, similar to salaried individuals, their eligibility criteria must meet some additional requirements. Now, you must find out who is considered self-employed applicants under housing loans. Generally, self-employed applicants are categorized under two divisions:

• Non-professionals like painters, contractors, traders, insurance agents, and similar types of persons who don’t have professional competence but practice successful running of the business. 
• Professionals include doctors, lawyers, chartered accountants, and architects who practice in their fields and acquire the necessary professional qualification.

What’s the Minimum Income Requirement for Self-Employed Lenders?

The income requirement usually varies from lender to lender. However, most lenders who provide home loans set an annual income of Rs. 2,60,000 for the self-employed applicants. Ensure never cross the EMI above 40% of the monthly income to comfortably repay the loan. The amount of a home loan depends on the aggregate income. Thus, acquiring a home loan with substantial monthly earnings will be worthwhile. 

What Documents are Considered to Verify Income for Self-Employed Home Loan Applicants?

If a self-employed person wants to opt for the home loan application, he must provide the following list of documents as proof of monthly income.

 

• The last two year’s income tax files
• Bank statements for the last three years of the personal accounts or business accounts 
• For the professionals, operational evidence of practice or businesses for the last three years, and for the non-professionals 5 years of operational statement 
• Certification of income proof from an authorized Chartered accountant 
• Validation of regular filing of income tax, TDS, and GST

Is it Possible for Self-Employed Applicants to Acquire Home Loans Without Showing Any Formal Income Documents?

It’s common for most self-employed persons in the informal sector not to have the required formal income documents. However, the banking sector has made so many relaxations on regulations that even without any official income documents, self-employed can get their home loan approved. This is achievable if the applicant can make other fulfillments and furnish the gross professional turnover or earnings. 

Instead of not showing the formal income documents, if a self-employed can show his previous loan repayment along with a very good credit score, the lenders often approve the loan application. Whether the borrower gets a home loan or not depends on the lender. The self-employed loan applicants should add a co-applicant like the nearest family member to enhance the possibility of granting an ICICI bank home loan.