Home Loan for Self Employed

A Housing loan for self-employed is meant to provide financial assistance in the purchase or construction of property. Self-employed individuals, like businessmen, freelancers, traders, shop owners, entrepreneurs and others can avail a home loan as easily as salaried individuals. Mortgage companies for self-employed have made the home loan application process easier than ever, offering fast approvals and quick disbursals to loan seekers.

We discuss everything related to self-employed mortgage loans, from the eligibility criteria to documentation and best offers to the application process. Stay tuned and find the best home loan deal for yourself.

Home Loan for Self-Employed – Features and Benefits

Housing mortgage for self-employed people come with unique features. The highlights of the loan are discussed below in detail.

Upto 90% Financial Coverage

As per the RBI’s latest home loan guidelines, lenders can cover 75%-90% of a home purchase for self-employed borrowers. The down payment obligation for self-employed individuals, thus, ranges between 10%-25%.

Take a look at the financial coverage offered by lenders on different home loan amounts:

  • Up to 90% financial coverage for home loans worth ₹30 lakhs or less
  • Up to 80% financial coverage for home loans between ₹30 – 75 lakhs
  • Up to 75% financial coverage for home loans higher than ₹75 lakhs

Affordable Interest Rates

Lenders offer home loans at fixed or floating rates of interest. Home loans require a borrower to pledge the concerned property with the lender until the loan is fully settled. Hence, these are secured loans. As a result, lenders are willing to offer affordable rates of interest, usually starting from 8.4-8.5% p.a.

Loan Tenure

Home mortgages for self-employed can be settled in as many as 30 years. The tenure offered by a lender depends on a number of factors, such as the loan amount, the borrower’s financial strength and others. 

Comfortable Repayment

Self-employed individuals can repay the loan in equated monthly instalments (EMIs). Lenders also provide prepayment and foreclosure options to ensure faster settlement of loans. However, banks charge a certain fee for extending prepayment/ foreclosure services.

Accessible to All

Home mortgages for the self-employed are available to self-employed professionals (such as doctors, lawyers, CAs etc.) as well as self-employed non-professionals (such as freelancers, vendors, drivers and others). 

Easy Application Process

Lenders accept digital as well as offline applications for home loans. Further, loan seekers can apply individually or jointly at a suitable lender. Housing loans for self-employed are usually approved within a few hours to a few days. 

Tax Benefits

Home loan borrowers can claim up to ₹2 lakhs and ₹1.5 lakhs on interest and principal repayments on their loan. The Income Tax Act of 1961 offers these benefits to home loan borrowers under the concerned sections. 

Tailor Made Loans

Self-employed borrowers come from different financial backgrounds. Upon analysing every candidate’s financial statements and income records, lenders offer tailor-made home loans to cater to the varying needs of their wide customer base.  

Home Loan for Self-Employed – Eligibility Criteria

Home loan for self-employed eligibility depends on a number of factors. Take a look at these criteria below and increase your chances of approval.

  • Age: Age specifications for a borrower usually range between 21 to 60 years, with 60 years being the maximum age at the time of loan’s maturity. Lenders usually prefer extending home loans to younger candidates as they have much more time and potential to repay the loans.
  • Income Levels: Different lenders specify different levels of minimum monthly/ annual income for home loan seekers. Banks check an applicant’s tax filings and financial statements to establish their repayment potential and make a loan offer accordingly.
  • Work Experience: Loan providers look for a consistency of operations. Details like work experience help them assess an applicant’s profit-making and risk-management abilities, which ultimately influence their repayment behaviour.
  • Educational Qualifications: Some self-employed mortgage lenders also consider an applicant’s educational background while reviewing their loan application. 
  • Credit Score: Applicants with a credit score of 750 or more are preferred by lenders while approving home loan requests. Credit scores highlight the financial behaviour of an applicant. The higher the rating, the higher will be the chances of approval. 
  • Citizenship/ Residential Status: Indian banks provide home loans to Indian citizens only. Some lenders also offer NRI home loans whose terms differ slightly from home loans designed for Indian residents.
  • Financial Standing: Lenders demand applicants to disclose their existing debts and assets before approving their loan request. Debts and liabilities higher than a candidate’s income hampers their loan eligibility. While additional income and other assets increase the chances of approval.

Home Loan for Self-Employed – Documents Required

The above-mentioned eligibility criteria are established by home loan documents required for self-employed borrowers. While different banks may demand different documents, a general set of documents are listed below:

  • Duly filled loan application form
  • PAN card
  • Identity Proof: Aadhar card/ Driver’s licence/ Voter’s ID/ other proofs
  • Address Proof: Utility bills/ Aadhar card/ Other accepted proofs
  • Income Proof: Balance Sheet and P&L account/ Tax returns/ other documents 
  • Property related documents 
  • Disclosure of existing assets and liabilities
  • Passport size photographs

Home Loan Interest Rates for Self-Employed

Urban Money provides quick self-employed mortgage loans to its customers from the top banks and Housing Finance Companies (HFCs). Take a look at the best interest rates available on home loans below:

Bank Interest Rate (p.a.) Type of Interest Rate Available
HDFC Bank 8.75%-9.40% Floating 
SBI Bank 9.15%-9.35% Floating 
Axis Bank 9.10%-14%  Floating and Fixed
Kotak Mahindra Bank  8.80%-9.60% Fixed and Floating 
IDFC First Bank  9.25% onwards Floating 

* The above table highlights the applicable interest rates on the banks’ standard/regular home loan products. The rates may change with a change in the type of home loan.

Frequently Asked Questions (FAQs)

What is the age limit for a self-employed home loan?

Most mortgage companies for self-employed require a minimum age of 21-23 years at the time of application. While the maximum age is capped at 60 years at the time of maturity. 

Which bank is best for a self-employed loan?

Different banks suit different borrowers, depending upon their financial situation. Interested borrowers can check out the complete list of banks offering home loans for self-employed at Urban Money’s website.

Urban Money