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Many people lose out on home loans simply because they don't understand how important an Income Tax Return (ITR) is. Banks use it to check if you can repay. If you haven’t filed one, your chances may drop or you might face delays. But not everyone needs to file an ITR—and not every bank has the same rules. Knowing when it matters and what to submit instead can make all the difference. If you're unsure whether ITR is required for a home loan, missing this could cost your approval or lower the amount you can borrow.
An Income Tax Return (ITR) is a document you file with the Income Tax Department each year. It shows your total income, tax paid, and sources of earnings. For banks, this form acts as solid proof that your income is genuine and declared. It helps them assess if you can repay a home loan without delays.
Lenders also use your ITR to understand how steady your income is over time. This becomes even more important if you're self-employed or have income that changes from month to month. Filing regular ITRs builds trust and increases your chances of loan approval.
Whether you need to file an ITR depends on how you earn and your total income. But when it comes to filling ITR for a home loan, lenders often expect it even if it’s not legally required. Here's what you need to know:
If you're salaried, banks usually ask for salary slips and Form 16. You may not need an ITR if your income is below the taxable limit, but many lenders still prefer it—especially if your pay includes bonuses or variable components. However, filing ITR for a home loan may still improve your eligibility.
For self-employed individuals, filing and submitting ITRs is essential. Since you don’t receive fixed salaries, lenders rely on your ITR to verify income and check repayment ability.
You may not need to file an ITR if:
You are 75 or older and earn only pension and interest from the same bank
You’ve submitted a declaration and the bank deducts TDS under Section 194P
Your income is below the basic exemption limit
Even if exempt, submitting ITR can improve your loan eligibility and help build financial trust with lenders.
Banks use your ITR to check how stable your income is and whether you can repay the loan on time. Most lenders require ITRs from the past three financial years. Here's why this matters:
Lenders review ITRs to confirm that you earn regularly and legally. A consistent ITR record over three or more years shows that your income is not one-off or seasonal.
Your ITR helps banks judge if you can manage monthly EMIs without delays. If you’ve filed ITRs on time, it shows financial discipline and builds trust.
If you’ve just started working or had breaks in your income, your ITR history plays a bigger role. Filing regularly helps create a stable financial profile.
A strong ITR track record can lead to quicker approvals, higher loan amounts, and better interest rates. It shows that you take your financial responsibilities seriously.
Here is a clear comparison between home loan eligibility for salaried and self-employed applicants to help you understand what lenders look for:
Eligibility Criteria |
Salaried Applicants |
Self-Employed Applicants |
|---|---|---|
Income Proof |
Salary slips (last 3–6 months), Form 16, employment letter |
ITRs (last 3 years), profit & loss statement, balance sheet |
ITR Requirement |
May not be mandatory if income is below the taxable limit |
Mandatory for income verification and loan eligibility |
Income Stability Check |
Based on regular monthly salary credits |
Based on business income trends and profit consistency |
Loan Processing Time |
Usually faster due to clear, fixed income documents |
May take longer due to detailed financial checks |
Loan Amount Eligibility |
Based on fixed income and tenure of employment |
Based on average profits, business health, and ITR declarations |
Additional Documents |
Bank statements, ID/address proof, property documents |
Business registration, GST filings, CA-certified financials |
A salaried profile often has quicker processing, but self-employed applicants with strong ITR records can also get competitive home loan terms. Make sure your documents are up to date for a smoother process. This clarifies the home loan ITR requirement for different profiles.
If you haven’t filed an ITR, you’ll need strong supporting documents to prove income and creditworthiness. Here are the key alternatives banks may consider:
You must provide clear income proof such as salary slips, bank statements, or CA-certified business income statements
Form 16 from your employer can support your income claim if tax has been deducted at source
Regular salary credits in your bank account help lenders assess your financial discipline and earning pattern
A valid employment contract or offer letter confirms your job role, employer, and expected income
Self-employed applicants can submit CA-certified profit and loss statements in place of an ITR
A strong credit score between 750 and 900 is essential to show repayment ability and build trust with the lender
Banks also check your repayment history, outstanding loans, and credit utilisation from your credit report
Even if ITR is not mandatory, reliable income proof and a good credit score are crucial for home loan without ITR approval
Filing regular ITRs not only fulfils your tax obligation but also plays a key role in improving your chances of getting a home loan. Here's how it helps:
An ITR reflects that your income is legal, declared, and consistent, which increases trust with lenders reviewing your home loan application.
When combined with a strong credit score, your ITR acts as additional proof that you manage your finances well and pay dues on time.
Unlike salary slips or bank entries, ITRs are government-verified and offer a clearer picture of your yearly income and deductions.
Lenders use ITR details to calculate whether you can handle monthly EMIs based on your net income and existing financial obligations.
With a higher declared income in your ITR, banks may approve a larger loan amount or offer more flexible repayment terms.
Applicants with complete and recent ITRs often face fewer delays, as the documentation reduces the need for extra verification.
A well-documented financial history, including the ITR for housing loan, gives you better chances to negotiate interest rates and loan terms with the bank.
It is possible to get a home loan without ITR, but banks will look for other strong indicators of financial stability. Here’s how you can improve your chances:
Requesting a lower loan amount reduces the lender’s risk and makes it easier to qualify for a home loan without an ITR.
Applying with a co-applicant who has a strong income and files ITRs regularly can improve your eligibility and increase approval chances.
Banks where you hold accounts, savings, or fixed deposits may be more willing to consider your application based on your financial behaviour.
Some banks offer tailored home loan schemes for low-income earners or informal workers where ITRs may not be strictly required.
You’ll need to provide other valid documents like salary slips, Form 16, employment letters, or CA-certified income statements.
A credit score above 750 is essential when applying without an ITR, as it reassures lenders of your ability to repay.
While the answer to ‘Can you get a home loan without ITR?’ is yes, filing regular ITRs still gives you stronger eligibility, better terms, and faster approval.
Here are the key consequences you face if you fail to file your ITR on time:
Filing your ITR late triggers a penalty under Section 234F, usually Rs 5,000 or Rs 1,000 if your income is below Rs 5 lakh. No penalty applies if your income is below the basic exemption limit.
Late filing means you lose the right to carry forward losses to offset future income, increasing your tax liability. However, losses from house property can still be carried forward.
You must pay 1% monthly interest on unpaid tax from the due date until payment under Section 234A. This increases your total tax burden the longer you delay.
If your tax liability exceeds Rs 25,000, non-filing can lead to imprisonment from six months to seven years plus a fine. For lower liabilities, imprisonment ranges from three months to two years with a fine.
Banks may reject or delay your loan without your ITR and might offer smaller amounts or higher interest rates. Knowing these consequences can help you prepare better before applying.
Here are real-life examples to help you understand when filing an ITR is necessary or optional:
If your income is below the taxable threshold, you may not need to file an ITR, provided you have strong salary slips as proof.
You must file ITRs for the last two to three years to verify your income and business stability.
Filing an ITR helps show consistent earnings despite irregular payments, increasing your credibility.
You might not have an ITR yet but can submit an offer letter and recent salary slips to prove income.
The Income Tax Department requires you to file ITR if:
Your business turnover exceeds Rs 60 lakh in the previous year
Your professional gross receipts exceed Rs 10 lakh in the previous year
You have tax deducted at source beyond a certain threshold
Understanding these cases helps you meet legal requirements and support your loan application effectively.
Lenders need a complete picture of your finances. Apart from your ITR, you must submit other key documents. Here are the most common documents to submit along with your ITR for a home loan:
PAN card and Aadhaar card as identity and tax proof
Address proof such as utility bills, passport, or rental agreement
Identity proof like voter ID, driving licence, or passport
Recent salary slips and Form 16 for salaried applicants
Business registration, ITR copies, and profit & loss statements for self-employed applicants
Bank statements for the last six months showing regular income
Property documents including sale agreement, title deed, and approved building plan
Completed and signed loan application form
Additional documents such as photographs, employment proof, or no-objection certificates if requested
Submitting these documents with your ITR helps lenders verify your financial profile and speeds up loan processing.
While it is not always legally required, most banks expect you to file your ITR before giving you a home loan. It proves your income and builds trust. If you’re self-employed, filing ITR is usually a must. Even if you're salaried, it improves your eligibility and can help you get better terms. Skipping it can reduce your chances or lead to delays. So, even if you're wondering “Is it mandatory to file ITR to get a home loan in India”, it’s wise to file it anyway and stay on the safer side.
Filing an Income Tax Return (ITR) is crucial because it proves your income is legal, consistent, and taxable. Lenders use ITRs to assess your financial stability and repayment capacity. Regular ITR filings strengthen your credit profile and increase your chances of loan approval with better terms.
Most lenders request ITRs for the past two to three financial years. This timeframe helps them verify your income consistency and growth, especially for self-employed applicants. A steady ITR history indicates reliable earnings, which improves your home loan eligibility.
Yes, salaried individuals whose income falls below the taxable limit can apply without an ITR. However, they must provide alternative income proofs such as salary slips, Form 16, and bank statements. Lenders may apply stricter scrutiny or offer smaller loan amounts in such cases.
Yes, if you haven’t filed an ITR, banks may accept salary slips, Form 16, bank statements showing regular income, employment contracts, or CA-certified income statements for self-employed borrowers. These documents help lenders verify your income but usually carry less weight than ITRs.
A higher declared income in your ITR generally improves your loan eligibility because it shows a stronger repayment capacity. Lenders consider your income to decide the loan amount and interest rates, so accurate and higher income declarations can help secure better loan terms.
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