Banks don't reject home loans for mysterious reasons. Every rejection I've seen in ten-plus years traces back to one specific line in one specific document — and almost none of them are fixed by the generic advice to “maintain a good credit score.” Two of the four cases below involved people with scores above 770. Here's what actually went wrong, file by file.
Case 1: The FOIR breach nobody warned him about
Salaried engineer, ₹1.4L a month in hand, CIBIL 782, applying for a loan with a proposed EMI of ₹52,000. Rejected. The reason sat in his own bank statement: a car loan EMI of ₹18,500 and a personal loan EMI of ₹12,000. Banks cap your FOIR — fixed obligation to income ratio, the share of monthly income already committed to EMIs — at somewhere between 50% and 60%. His came to ₹82,500 on ₹1.4L, about 59%, and this lender's cap was 55%. The score was irrelevant; the ratio killed it. The fix was mechanical: he closed the personal loan (11 months left, ₹1.2L outstanding), reapplied two months later, sanctioned. If you have a loan under a year from finishing, close it before you apply, not after you're rejected.
Case 2: The co-applicant's ₹28,000 ghost
A couple in Vadodara, 2024. His profile was clean. Her CIBIL was 688 — dragged down by a credit card dispute from 2019 that had been closed as “settled” for ₹28,000 instead of “paid in full.” She'd genuinely forgotten it existed. But “settled” is a red flag word on a credit report: it tells the bank a previous lender accepted less than what was owed. Because she was co-applicant (needed for the income to work), the whole file was rated on the weaker score. They paid the ₹9,000 difference to the card issuer, got the status updated to closed, waited one reporting cycle, and got sanctioned. Before any joint application, pull both reports — the co-applicant's history counts fully, not as a footnote.
Case 3: The builder who wasn't on the list
This one hurts because the borrower did nothing wrong. Under-construction flat in Pune, booking amount of ₹4L already paid, loan application in. Rejected — not on his profile, which was excellent, but because the project wasn't on the bank's APF list, the roster of builder projects the bank has already legally vetted and approved to lend against. The builder had a title-documentation issue with that specific tower. A second bank said the same thing, which told us it wasn't bank fussiness, it was the project. He eventually financed it through the one lender that did fresh legal vetting, at a rate 0.4% higher. The lesson runs backwards from how people buy: check which banks have approved the project before paying the booking amount. It's one phone call, and it's also a free second opinion on the builder's paperwork.
Case 4: The ITR that told on itself
Self-employed boutique owner in Ahmedabad, real monthly income comfortably over ₹1.5L by her bank credits, wanting a ₹45L loan. Her last two ITRs declared taxable income of ₹4.8L a year — the classic outcome of aggressively minimising tax. Banks lend against declared income, not lifestyle. On ₹4.8L a year, her eligibility was about ₹14L, and the gap between her claimed income and her ITR made the file look worse, not better. There was no quick fix; there never is for this one. She filed two honest returns, paid more tax than she liked, and got sanctioned in 2025 for the full amount. If you're self-employed and a home loan is anywhere in your two-year plan, your ITR is your loan application. File it like one.
The common thread
None of these four people had a “bad profile.” They had one findable, fixable fact — and in three of the four cases, twenty minutes of checking before applying would have surfaced it. That pre-application check (both credit reports, FOIR against the target EMI, ITRs, and the project's APF status) is standard in our loan advisory process precisely because a rejection isn't just a no — it's a hard enquiry on your report and a question you'll have to answer on the next application.
These are general accounts of real, anonymised cases for educational purposes and aren't a substitute for advice on your specific application — lending norms, FOIR caps, and documentation requirements vary by bank.