This is the make‐or‐break stage. If the bank is not convinced about your credentials, your application may get rejected. If it is satisfied, it sanctions your loan.

The bank or the home financier establishes your repayment capacity based on your income, age, qualifications, experience, employer, nature of business (if self employed), etc, and based on these, works out your maximum loan eligibility, and the final loan amount is communicated to you. The bank then issues a sanction letter. This letter may either be an unconditional letter, or may have certain terms and conditions mentioned, which you have to fulfill before the loan disbursal.


  • Final loan amount and your loan eligibility are two different things. Once you know what you are eligible to get, you can decide on the loan amount. Normally thumb rule is that 50% of the salary in hand is the amount which one can pay as an EMI.
  • The sanction letter is an important piece of document and you should keep it safely.