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What is the credit score needed to purchase a home in 2021?

Buying a house is a huge milestone in one’s life, and with a conducive residential property market, 2021 is indeed a good time to purchase your dream home.

“Healthy credit is key to securing the best home loan deals on the market. In the present Covid-19 scenario, when the financial market is uncertain, lenders show a higher preference for borrowers with good credit scores and history.”

When getting a home loan to fund your dream property, having a high credit score makes a world of financial difference. Your credit score is a numerical factor that demonstrates your creditworthiness to lenders. A good credit score helps you score a great deal on your home loan – this means you pay less on home loan interest rates, thereby lowering your loan burden.

Besides ensuring that you get the best deals on home loans, your credit score plays a crucial role in determining whether you are sanctioned for the loan or not in the first place. Continue reading to understand more about the relationship between home loans and credit scores, and the credit score required to secure home loans in 2021.

What is the credit score required for a home loan in India for 2021?

Having a credit (CIBIL™) score of above 750 is considered excellent. This score ensures that you are eligible for most of the home loans on the market and also fetches you the best interest rates.

With that said, a score above 700 is still considered good enough and will make you eligible. Though, you may not enjoy the best interest rates.

Keep in mind that the actual credit score cut-off for home loans varies from one lender to another. While lender A may approve home loans for applicants with credit scores above 650, lender B may demand credit scores above 700.

A high credit score offers many benefits while applying for a home loan:

  • Swiffer loan approval
  • Easy eligibility
  • Best interest rates
  • Longer tenure
  • Higher loan amount

So, it’s highly recommended that you build and maintain a high credit score to enjoy the best loan deals and offers.

What is the minimum credit score required for a home loan in 2021?

The minimum credit score cut-off for home loans varies from one lender to another. Some lenders require you to have a minimum credit score of 700 to be eligible for home loans, while others sanction loans to borrowers with credit scores of 650.

Broadly speaking, having a credit score of 650+ will make you eligible for home loans from most lenders in India.

With that said, it’s highly recommended that you take corrective steps to improve your credit score and bring it to the excellent range (750+) to secure the best deals on home loans.

Can I get a home loan with bad credit in 2021?

It’s not impossible to secure a home loan with low credit, but it’s challenging. A poor credit score indicates that you have a history of bad debt management, thus making you a riskier borrower for lenders.

To help offset this risk, lenders charge higher interest rates to borrowers with poor credit scores. Additionally, they may also ask you to pay higher down payments or get a guarantor to secure the loan.

So, be prepared for these additional financial constraints if you apply for a home loan with poor credit. Alternatively, take some time to improve your credit score before applying for a home loan.

Has Covid-19 impacted credit scores for home loans in 2021?

It’s true that Covid-19 has led to a reduction of home loan interest rates across the board. However, lenders are still cautious of sanctioning home loans to untrustworthy borrowers. They want to ensure that the loans they give out will be repaid on time. So, lenders still place extra emphasis on creditworthy borrowers with a good credit score and stellar credit history.

4 Points to Keep in Mind before Buying a Home in 2021

You may be excited by the idea of purchasing your dream home. But, don’t let your excitement sweep you away. Make sure that you prudently plan your finances and work on your credit score to secure the best home loan deals.

If you’re planning to purchase a residential property in 2021, make sure to follow these steps to make an informed and empowered decision.

#1: Check your Credit Score

Today, purchasing a property with your savings alone is next to impossible. With residential property prices easily reaching Rs. 1 crore, the huge majority of home buyers seek the help of a home loan.

Even though home loans are readily available, they come with strict eligibility criteria and other terms and conditions. To ensure that you’re eligible for the best home loans from reputed lenders and the best home loan interest rates, you need a healthy CIBIL™ (credit) score.

So, the first step is to check for your credit score. You can check your credit score for free within minutes, using trusted credit platforms like CreditMantri.

  • Monitor and track your credit score for months before you plan to take a home loan.
  • Take necessary corrective actions to improve your score if needed.

#2: Research Property Values & Estimate Monthly EMIs

Real estate investments are expensive and a life-long commitment. So, you need to ensure that you’re getting the property at the best prices. Do your homework – compare different real estate websites, contact local real estate vendors to get an idea of the property prices in your preferred location. This gives you an idea of the loan amount that you will need.

Remember, that a home loan is a long-term commitment. You may have to pay EMIs for several years, and can even go up to 20 years. To ensure that you repay the loan on time, you need to have a solid repayment plan at hand.

Use a home loan calculator to play around with the various factors – loan amount, tenure – to find the EMI that you’re comfortable with.

  • Financial experts recommend that your home loan EMI should not exceed 20% – 30% of your average monthly income.

#3: Save for the Downpayment

Very often, first-time borrowers assume that the home loan will cover 100% of the property cost. But, the reality is that – lenders sanction only 80% – 90% of the property value as the loan. The rest has to be paid out of pocket.

  • It’s a financially smart move to save 20% to 30% of the property’s value as a downpayment.
  • Even if you manage to secure a higher loan amount, you can use the extra amount you saved for the downpayment to pay for ancillary costs like furnishing, interior decoration, home appliances, furniture, etc.

#4: Finally, Don’t Forget to Compare Home Loan Lenders

Once you have figured out the various home loan factors – downpayment, EMI that you can afford, expected loan amount etc. – the final step is to compare different lenders. Check the interest rates, loan terms, prepayment charges and other fees at different banks and HFCs (Housing Finance Institutions).

Note that the interest rates and loan terms vary based on factors like credit score, borrower’s income, the age of the borrower, etc. Using a home loan comparison site like CreditMantri simplifies the search for the best lender.

Also, note that certain lenders provide pre-approved home loan offers for existing clients. This helps you secure the loan faster and speed up the loan disbursal time.


Being aware of your credit score makes your homeownership dreams come true. Monitor and track your credit score for at least six months before you apply for a home loan. Take corrective actions to improve it, if needed.

Note that the actual credit score required for a home loan varies from one lender to another. Having a score of 750+ can help you qualify for the majority of home loans and get you the best deals.