Home Loan Process in India: A First-Time Buyer's Guide
What actually happens between applying for a home loan and getting the keys — eligibility, documents, sanction vs. disbursement, and the costs beyond EMI.
Published 11 October 2026
Eligibility: what lenders actually look at
Indian lenders size a home loan primarily around your net monthly income, existing EMI obligations, age (loan tenure usually has to end before you hit the lender's maximum age, typically 60–70), and credit score. As a rough rule of thumb, lenders cap total EMI obligations — including the new home loan — at 40–50% of net monthly income.
A credit score (CIBIL) above roughly 750 generally gets you both approval and the lender's best interest rate; scores in the 650–750 range can still get approved but usually at a higher rate or with a co-applicant.
Documents you'll be asked for
Identity and address proof (PAN, Aadhaar), income proof (salary slips and Form 16 for salaried applicants; ITRs and financials for self-employed), bank statements for the last 6 months, and property documents once you've shortlisted a unit — sale agreement, title documents, and for under-construction projects, the RERA registration and approved building plan.
For a self-employed applicant, lenders typically also want 2–3 years of audited financials or ITRs, since income verification is less straightforward than a salary slip.
Sanction vs. disbursement — these are not the same thing
"Sanction" is the lender agreeing in principle to lend you a certain amount, based on your eligibility — it doesn't mean money has moved. A sanction letter is valid for a limited window (commonly 3–6 months) and is what lets you negotiate seriously with a seller or confirm a booking.
"Disbursement" is the actual release of funds, and for a ready-to-move property it typically happens in one go against the registered sale deed. For an under-construction project, disbursement is staged — released in instalments tied to construction milestones the lender's technical team verifies, so you're not paying full EMI on an undelivered flat from day one (this is usually structured as pre-EMI interest-only payments until full disbursement).
Costs beyond the EMI
Processing fee (commonly 0.5%–1% of the loan amount), stamp duty and registration charges (varies by state — budget roughly 7–11% of property value in Tamil Nadu between the two), legal/technical valuation fees the lender charges to verify the property, and loan insurance if you choose to take it (optional, but strongly recommended for a loan this size).
Factor these into your total budget upfront — the sale price is not the amount you need in hand to close the deal.
A realistic timeline
From application to sanction typically takes 1–2 weeks once all documents are in order; disbursement for a ready property can follow within days of registration, while an under-construction property's full disbursement is spread across the construction period per the builder-lender payment schedule.