Home loans get rejected mainly due to low CIBIL score, unstable income, high FOIR (50–65%), poor banking behavior, property legal issues, mismatched documents, unapproved builder projects, or too many existing loans. Fixing these requires improving credit score, reducing EMI load, stabilizing employment, clearing documentation errors, and choosing RERA-approved properties.
1. Low or Weak CIBIL Score (Below 700)
Banks prefer 700+ CIBIL for home loans.
Below 650 = high rejection probability.
Why it happens:
Missed EMIs
Credit card overuse
Past settlements
Hard enquiries
Thin credit history
✔ Fix It:
Increase score to 720+
Pay credit card dues fully
Bring credit utilization below 30%
Don’t apply for new loans for 3 months
Correct errors in your CIBIL report
2. High FOIR (Fixed Obligation to Income Ratio)
FOIR = (Total EMIs ÷ Monthly Income)
Banks prefer FOIR below 40–50%.
Example:
Income = ₹40,000
Existing EMIs = ₹25,000
FOIR = 62.5% → Loan rejected
✔ Fix It:
Close small loans
Consolidate high-cost EMIs
Add co-applicant (spouse/parent)
Choose a longer tenure to reduce EMI
3. Unstable Employment or Inconsistent Income
Banks reject home loans if you:
Frequently change jobs
Have less than 6 months in current job
Are in probation
Work in cash-based income roles
Run unstable business income
✔ Fix It:
Show 6–12 months continuity
Provide IT returns for 2–3 years (self-employed)
Add co-applicant
Increase average bank balance
4. Property Has Legal or Technical Issues
This is a major home loan rejection reason.
Banks reject properties with:
Missing approvals
Encroachments
Disputed land
Non-RERA registration
Incomplete OC/CC
Builder not approved with bank
✔ Fix It:
Choose a RERA-approved project
Ask bank for builder approval list
Conduct legal verification before booking
Provide all chain-of-title documents
5. Low Income or Not Meeting Eligibility Criteria
Banks have minimum income thresholds:
Metro cities: ₹25,000–₹30,000+
Tier-2 cities: ₹18,000–₹22,000+
If income is too low → loan gets rejected.
✔ Fix It:
Add co-borrower
Extend tenure (up to 30 years)
Show additional income sources
Apply with NBFC (flexible criteria)
6. Poor Banking Behaviour (New 2026 Factor)
Lenders check your last 6–12 months of bank statements.
Rejection causes:
Low balance
Salary not credited regularly
Excessive cash withdrawals
Returned ECS/EMIs
High UPI spending without savings
Overdraft usage
✔ Fix It:
Maintain minimum average balance
Avoid EMI bounces for 3–6 months
Increase savings behaviour
Keep account clean before applying
7. Too Many Recent Loan Enquiries
Too many credit inquiries = “Credit hungry”
Banks see this negatively.
✔ Fix It:
Stop applying for 60–90 days
Allow score to stabilize
Apply to only one lender at a time
8. Errors in Documentation / Identity Mismatch
Common errors:
PAN-Aadhaar mismatch
Name spelling issues
Wrong address
Missing signatures
Incorrect income proof
✔ Fix It:
Update Aadhaar/PAN
Submit correct KYC
Re-upload missing documents
9. Your Employer Is Categorized as High-Risk
Banks maintain employer categories (A+, A, B, C, D).
Loans are often rejected if:
Company is not registered
Company has financial risk
Company is not in bank's approved list
✔ Fix It:
Apply with NBFCs (more flexible)
Add stable co-applicant
10. Property Valuation Lower Than Loan Applied
Bank valuation < Market price
Example:
Property cost = ₹60 lakh
Bank valuation = ₹50 lakh
Loan requested = ₹48 lakh → Rejected or reduced
✔ Fix It:
Increase down payment
Choose lender with different valuation team
Comparison Table – Why Home Loans Get Rejected
| Reason | Bank Perspective | Fix |
|---|---|---|
| Low CIBIL | High default risk | Improve score |
| High FOIR | Excess EMI load | Close loans / co-applicant |
| Job instability | Future risk | 6–12 months stability |
| Property issues | Legal risk | RERA-approved projects |
| Low income | Not eligible | Increase tenure |
| Poor banking history | Weak financial discipline | Clean statements |
| Documentation errors | Verification failed | Correct and reapply |
Expert Commentary
As a home loan advisor, I’ve seen that more than 60% of rejections are due to factors other than CIBIL score.
Banks analyze employment stability, repayment behaviour, FOIR, and property legality more deeply for home loans than any other type of loan.
A simple correction in documents or selecting the right lender can turn a rejection into approval.
🟦 Key Takeaways
CIBIL score alone does not guarantee approval.
Property documents and job stability matter heavily.
Clean bank statements improve approval chances.
High EMI load (FOIR) is the biggest hidden rejection reason.
Fix issues and reapply after 60–90 days.
FAQs
1. Why was my home loan rejected even with CIBIL 750?
Because banks check FOIR, property legality, and job stability.
2. Can I reapply after rejection?
Yes—after fixing the issue (usually after 60 days).
3. Is a co-applicant helpful?
Yes—improves eligibility and reduces FOIR.
4. Do banks reject loans due to property issues?
Yes—major reason for rejection.
5. What is a good FOIR for home loans?
Below 40–50%.
6. I changed jobs. Will loan be rejected?
Possibly—banks prefer stability.
7. Can NBFCs approve rejected cases?
Yes—NBFCs are more flexible.
Conclusion
Home loan rejection isn’t the end — it’s simply a signal that something needs correction.
With the right documents, stable income, and the correct lender choice, you can turn rejection into approval quickly.
Looking for easy loan access?
Vizzve Financial offers:
✔ Fast personal loan approvals
✔ Low documentation
✔ Flexible eligibility
✔ Trusted, secure experience
👉 Apply now at www.vizzve.com
Published on : 3rd December
Published by : SMITA
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