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Common Causes for Home Loan Rejections

by Kashif Khan
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home loan

You followed every step exactly, but you’re still concerned about the fate of your loan application. The worst experience is being turned down for a home loan, especially when you desperately need one. Make sure you’ve exhausted all of your options before rushing into the next bank to apply for your next home loan. One of the primary reasons for home loan denials can be the applicant’s CIBIL score check. If the applicant has a low Credit score, the banks will immediately reject the application.

Reasons for Home Loan Rejection

Here are some of the most typical causes for your home loan application not being approved. The following are the reasons:

The Applicant’s Age

The borrower’s home loan application will be denied if he or she is nearing retirement age. The lender is hesitant to lend to such borrowers because it believes that your repayment capacity is insufficient or non-existent after a few years. However, certain banks may be willing to make a short-term home loan. Short-term loans in large amounts would have high monthly payments, undermining the convenience of obtaining a home loan in the first place. As a result, the age of the borrower has a significant impact on the refusal of a home loan.


Maintaining a good CIBIL score is critical in order to get a home loan approved. Make sure you have a high CIBIL score before applying for a home loan. A high CIBIL score is required to be eligible for a home loan. As a result, when applying for a home loan, the applicant must have a CIBIL score of 750 or higher. CIBIL keeps track of each individual’s credit score (Credit Reports and Risk Management Solutions).

Current Debt

If you apply for a home loan while still in debt from previous loans, the bank may turn you down because your liabilities exceed your income. The bank is concerned that your residual income (after paying all of your current bills) will not be sufficient to repay the EMI for the desired housing loan.

Candidates with No Previous Work Experience

Employees who have been with the same company for at least a year are valued by banks. The bank uses the number of years of employment to assess the borrower’s stability and repayment chances. As a result, freshers are not favoured when it comes to bank approval of home loans. Applicants who have frequently changed jobs may have their applications rejected for the same reasons.

Unlawful Possession of Property

Banks check to see if the property has been approved by the local authorities. If the bank fails to meet certain restrictions imposed by local authorities, the loan may be denied. Banks, on the other hand, assess contractors before funding their projects. Even if the property is approved, your chances of obtaining a mortgage are slim if you select a builder who has not been approved or is on the bank’s blacklist.

Minor Property Rights

You may be denied a mortgage if the property you want to buy has minor rights. If the seller has not disclosed information about a minor with ownership rights, your home loan application is likely to be denied. Mortgage applications for homes with minority rights may be denied by banks. The bank is likely to reject the application if the seller fails to disclose that the property is owned by a minor.

Income Returns

Banks and lenders look for a consistent track record of filing income tax returns for the previous two years before approving a home loan. Even if your employer does not provide Form 16, you must file an income tax return each fiscal year. Before making a home loan offer, banks and lenders look for a proven track record of filing income tax returns.If you have a low CIBIL score, you can follow the steps on how to improve CIBIL score so that you can get a home loan in India. Furthermore, it is recommended that you check your CIBIL score before applying for a home loan to avoid rejection. Multiple loan rejections can lower your CIBIL score even further.

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