The shift is not about making credit dramatically easier. Instead, lenders say the industry is becoming more nuanced, data-driven and behaviour-focused — moving beyond the traditional dependence on fixed monthly salaries to assess a borrower’s ability to repay.
At the heart of this transition is a changing Indian workforce.
Alongside salaried professionals, lenders are dealing with freelancers, gig workers, startup employees, self-employed entrepreneurs and borrowers with variable cash flows.
For many of them, conventional underwriting models often failed to capture their true repayment capacity.
Ajai Shukla, Managing Director and CEO of PNB Housing Finance, an Indian housing finance company promoted by Punjab National Bank, describes this as a “dual shift” unfolding simultaneously across the market.
On one side, residential property prices continue to reflect strong demand. On the other, income profiles are becoming non-traditional, shaped by the gig economy, digital entrepreneurship and flexible compensation structures.
As a result, lenders are expanding the lens through which they assess borrowers.
Instead of relying solely on salary slips and annual income, housing finance companies are evaluating repayment behaviour, banking patterns, financial discipline, existing liabilities and digital transaction trails. Technologies such as the Account Aggregator framework, GST return analysis and real-time banking data are allowing lenders to build a more detailed picture of a borrower’s financial life.
The evolution is especially significant for self-employed and informal-income borrowers, a segment that historically struggled to qualify for formal housing credit despite steady earnings.
Atul Monga, CEO and Co-Founder of BASIC Home Loan, an Indian fintech startup, says underwriting is steadily becoming more “holistic” and data-led. Lenders are now studying repayment history, liabilities, digital financial records and household-level cash flows alongside traditional income metrics to assess borrower quality.
This broader approach is also changing how first-time buyers are evaluated, particularly in Tier-2 and Tier-3 cities where housing demand remains strong but income structures may not always fit conventional frameworks.
Munish Jain, Chief Business Officer for home loans at Capri Loans, a publicly-traded Non-Banking Financial Company (NBFC) in India, says the industry is shifting from a “static, income-centric model” to one that incorporates behavioural and financial indicators in real time.
Repayment history, savings behaviour, liability management and digital transaction patterns are becoming central to underwriting decisions.
The implications are two-sided. Borrowers with disciplined financial behaviour but unconventional income streams may find it easier to access credit than before. At the same time, missed payments, high credit utilisation and excessive leverage are likely to weigh more heavily on eligibility assessments.
Even as digital underwriting expands access, lenders insist they are not relaxing risk standards. In fact, many experts say affordability concerns are making the industry more cautious.
Property prices in several major Indian cities have risen faster than entry-level salaries, stretching affordability for younger buyers despite stable interest rates. This is forcing lenders to rethink not just how much borrowers can technically qualify for, but how much they can realistically sustain over the long term.
Vishal Valecha, Chief Operating Officer at Easy Home Finance, says the market is witnessing “smarter tightening” rather than broad-based easing of norms.
Most lenders, he notes, continue to operate within relatively stable EMI-to-income and loan-to-value thresholds. The difference lies in how repayment capacity is structured. Longer tenures, joint borrowing, step-up EMI products and clubbed household incomes are becoming more common tools to maintain affordability without excessively stretching leverage.
Several lenders are now offering repayment horizons of up to 30 years, allowing borrowers to lower monthly EMI burdens even as property prices climb. The strategy helps lenders preserve prudent loan-to-income ratios while keeping housing finance accessible.
But experts acknowledge that easier loan approvals do not necessarily translate into easier home ownership.
“For a young borrower today, getting a loan sanctioned may be easier than it was a decade ago,” one expert said. “Affording the desired property in a major metro is the harder part.”
This tension between expanding credit access and rising housing costs is reshaping the industry’s risk philosophy. Lenders are focusing on total financial obligations rather than headline income alone. Existing EMIs, credit card dues and recurring liabilities are receiving greater scrutiny through metrics such as fixed obligation-to-income ratio (FOIR).
The broader objective, according to industry experts, is to build a more sustainable credit ecosystem where eligibility reflects financial behaviour and repayment discipline rather than simply income size.
Rohit Garg, Co-Founder and CEO of fintech platform Olyv, says the sector is steadily moving towards a more personalised lending framework powered by digital underwriting and alternate data.
“Responsible financial behaviour rather than income alone will define eligibility,” Garg says.
That transition could gradually make India’s housing finance market more inclusive, particularly for younger borrowers and self-employed professionals who have long operated outside conventional lending frameworks. But it may also create a system where financial discipline is constantly monitored and dynamically reassessed, making home loan eligibility less of a one-time approval and more of an ongoing financial profile.
In the years ahead, the Indian home loan market may still care about the payslip. But, lenders also want to understand everything around it.
