Owning a place that one can call home is everyone’s dream. In the case of the the young in the modern world, while this desire is natural as they compare themselves with their colleagues and their circle, often it is the desire of the parents who want the best for their children, as they believe owing a house or an apartment regardless of affordability is the best thing for their young ones. Nevertheless, it is undeniable that home gives the greatest of the comforts than all the rest of the beautiful places the world has.

When one has not sufficient fund to make the full payment outright, in this age, that is no more a hindrance. If one has sufficient net cash inflow to make regular and periodic payments, one can avail a loan to buy their dream house or property. However, not always a home loan meant for buying a house to live in. Home loans are classified into different kinds based on the objective of the loan.

• Home Purchase loan
• Home Construction loan
• Home Improvement loan
• Home Extension loan
• Land Purchase loan 

Current income tax laws allow various tax benefits on home loans depending on the type of the house, i.e., self-occupied or let-out property.

At present, for a self-occupied house, one can avail a tax break on the principal amount repaid on the home loan as well as the interest paid on it. Under section 80C of the Income Tax Act, you get a deduction for the principal (of the loan) repaid up to Rs 1.5 lakh a year and the interest paid is deductible up to Rs 2 lakh per annum under section 24. These deductions are allowed from the gross total income before calculation of tax, thereby reducing the total tax payable.

In the July Budget 2019 , the maximum amount of interest paid on a housing loan eligible for tax benefit was increased to Rs 3.5 lakh from Rs 2 lakh earlier i.e. an increase of Rs 1.5 lakh for buying a house under affordable housing scheme. An additional tax benefit was given to the first-time home buyers buying house property whose stamp duty value is up to INR 45 lakhs.

As per income tax laws, an individual can claim interest paid on housing loan as a deduction from gross total income. The amount of interest which can be claimed as deduction is currently capped at Rs 3.5 lakh for the above category (those buying house under affordable housing scheme). This increase in amount of deduction was allowed from FY 2019-20 onwards.

Below are the basic documents to check the financial eligibility:

• Pan Card
• Aadhar
• Latest 3 months pay slips
• Latest 3 years ITR with computation (for self-employed and businessperson)
• Latest 6 months statement of the bank into which the salary or income gets credited

If employment is less than one year in present company, the lender might ask for additional documents. Once sanction letter is confirmed the same would be valid for a period of 30 days. This might change from one institution to another. If the month changes from the one in which a sanction letter is issued, for disbursement of the loan, the bank or the financial institution might ask for additional, latest documents.

Salaried or self-employed or businesspersons, aged 18 to 65 with good credit score and stable income can get a home loan. Ideal credit score to be eligible for a loan is 750 or more. Some financial institutions may offer loans to those having a lower credit score, but they charge higher interest rate.

Process to apply for loan: Loan process starts with the financial eligibility and credit check. The bank or financial institution confirms the maximum eligible loan one can get, in the sanction letter sent to the applicant either through mail or orally by the employee who processed the application.