Home First or Loan First - How to Decide Between the Two?

Home First or Loan First - How to Decide Between the Two?

Are you planning to buy a new home for your loved ones? You must have made the checklist of things to consider before zeroing in on some options. Indeed, a home purchase is a significant decision that an individual makes in the entire lifetime. That is why the selection of the most suitable homeis worth the time and effort. From figuring out a location to checking out amenities nearby, several things might have come across your mind.

But have you thought about the financing part? How will you pay for the new home?

Sadly, many homebuyers keep this aspect as the last priority, because of which their plans to buy a home often get delayed. Sometimes, they do not have the amount required to pay as the down-payment orfail the housing loan eligibility test.

Since it is a common situation faced by many, it results in a common question as well, which is – ‘Should you search for a home first or apply for a housing loan first?’

The answer varies from one case to the other. While both these aspects are crucial, it is mostly up to an individual to decide where to start.

Let’s discuss what can happen in each of these possibilities.

When You Decide to Search for Home First

In this case, you will most likely to proceed in the following manner:

1. Figure Out a Budget

Doing this is crucial as it helps in narrowing down the choices of available homes. It would be a waste of time to visit homes on sale that are out of your budget. Neither you nor a housing loan provider can help you buy a costlier home than what your budget could accommodate.

2. Choose Location(s)

Not all regions in a city would be suitable for you to live in. Therefore, you need to finalize some specific locations before you begin searching for homes. This will also eliminate the hassles of roaming around the city in search of theright home.

3. Finalize a Home and Apply for Housing Loan

Once you have charted down a few locations, visit the available homes there by yourself or with a real estate advisor. Following this, all you have to do is use the EMI calculator for home loans and apply for it.

When You Decide to Check Your Housing Loan Eligibility First

Starting with housing loan eligibility check first means you will use the EMI calculator for home loans available online. After getting an estimate of the EMI for a specific loan amount, you proceed with your housing loan application.

There are two possibilities when you apply for a housing loan before starting with the house hunt:

1. Fail to Pass the House Loan Eligibility Test

This can happen because of your low income or CIBIL score. Lenders, in general, check both these parameters before proceeding with a housing loan application. They want to ascertain whether the applicant can repay the loan with interest timely.
If this happens, you will need to wait to fulfill your dream of buying a home until your income increases or the credit score improves.

2. Become Eligible for the Required Loan Amount

If you pass the loan eligibility test, you will get a rough estimate of the EMI payable for the housing loan. You can then start with finalizing the location for your new home and buying it for your family with the help of a housing loan.


As detailed above, you have to do things like budget planning and location choice in both these cases. But knowing your housing loan eligibility beforehand is better than doing everything else first only to find out you will have to wait for some more years.

Renowned banks in India, like Axis Bank, follow an easy housing loan application process with which you can come a step closer to realizing your dream of buying a home.