When you approach any financial organisation in India to get a home loan, you will know that they have a set process that is quite detailed and thorough. You must meet the eligibility requirements and submit a few important documents, which the lenders verify to assess your eligibility for the loan.
Proof of income and Income Tax Returns are among the essential documents required for a housing loan. Most lenders consider these documents mandatory for home loan approval. Does this mean that you cannot get a home loan without proof of income?
Although most home loan providers assess your eligibility and repayment capacity based on your income-proof documents, they also understand that not all borrowers can produce these documents. Some borrowers fail to produce income proof or ITR documents due to their informal nature of employment or other unforeseen circumstances.
So, if you do not possess these documents, do not worry. There are various methods to secure a home loan without ITR or income proof, which are discussed below:
- Apply for a home loan with a co-applicant
Applying for a home loan with a co-applicant essentially means applying for a joint home loan. If any of your family members, whether your spouse, sibling, or parents, are salaried employees with decent incomes, you can ask them to co-applicant for the home loan.
However, the co-applicant must have proof of income, such as salary slips, bank account statements reflecting salary credit, and ITR documents. In such cases, the co-applicant will become the primary borrower. Apart from overcoming the hurdle of getting a housing loan without ITR, having a co-applicant can help you enjoy other benefits.
Since the home loan lending organisation will consider both the applicants’ income, you can become eligible for a higher loan amount. Also, based on your co-applicant’s credit history and credit score, you may even get a discount on the housing loan interest rate.
- Apply for a lower home loan amount
If you cannot apply for a home loan with a co-applicant, you can improve your chances of getting the home loan without income proof or ITR documents by opting for a low loan-to-value (LTV) ratio. This means borrowing less money from the home financing lenders, which would reduce your repayment obligation.
When you borrow a smaller loan amount, the risk involved for the lender is lesser, and they are more likely to sanction your home loan application without any hassles. However, when you borrow a smaller amount for a home loan, you may have to pay a larger sum from your pocket to complete the property purchase transaction. Ensure you have sufficient funds at your disposal without depleting your emergency funds.
- Use the existing relationship with the lender
Another effective way to get a home loan without crucial housing loan documents like income proof and ITR is to contact the customer relationship manager or the lending organisation’s official and explain your situation to them. During the discussion, you can assure them of your financial capacity to repay the loan on time and provide adequate documents to support your claim.
Also, you can use your existing relationship with the lending organisation where you hold a savings account. If you have repaid your loan promptly and on time in the past or have maintained a good amount of savings in the account, you can talk your way with the official to get the home loan sanctioned without income proof or ITR documents.
- Provide proof of alternative income
Suppose you have more than one source of income, like income from housing rent, dividends from investments in different financial instruments, or business income which are not reflected in your ITR. In that case, you can provide proof of such income to the home loan lender by submitting documents like the dividends slip, financial statement of your business, lease agreements, etc.
All these documents would give the lender the confidence that you have the financial ability to repay the loan on time, and you would have a better chance of getting the loan sanctioned.
- Maintain a good credit score
Among the many things the lenders consider when evaluating your eligibility for a home loan, they greatly emphasise the credit score. It is not only a reflection of your creditworthiness but also works as a report card for how well you manage your finances.
If you don’t have an ITR or income proof documents to show, the credit score assumes even more importance. If you have maintained a high credit score of more than 750 for a long time, it will showcase to the lender that you are a responsible borrower and are more likely to pay back the amount on time. That will help you get the home loan approved.
Conclusion
As a home loan borrower, you must strictly adhere to the process and submit the necessary documents. However, when you don’t have important papers like income proof and ITR to showcase your financial credentials, you can use the above tips and tricks to improve your chances of getting a home loan approved by any home loan company.
