Home Loan Stages | Sanction Letter Meaning | Documents | Process | Importance | Sample Format | Points To Remember | Digital Sanction Letter | FAQ

Whenever you want a loan for personal or professional reasons, you will need to file a loan sanction letter. A home loan is a specific type of loan that is undertaken when you are buying a new place for yourself. When you are submitting a loan sanction letter, there are several documents you will need to fill and here we are going to familiarize you with the specifics.

We are going to tell you about the home loan sanction letter format and the different documents you will need and the right process to follow. Of course, getting a loan is not easy. A lot depends on your credit score and the different details that you are submitting along with it.

Here, we are going to tell you every single point so that you will be able to submit your home loan sanction letter in the right format.

The Home Loan Stages

There are mainly three stages of a home loan sanction letter. Let us see what they are.

The Application

This is the first stage wherein you fill out the application. You make it a point to submit all the required documents along with it and use the right format and furbish all the key details in it. This is a time-consuming stage as you have to make sure that you are filling in all particulars accurately.

Loan Sanction

This is the second phase of the process. This process is lengthy concerning the banks. Once the documents have been received, the banks verify the documents and assess the loan details. The whole application goes through a well-defined process and then decides whether or not the loan should be approved. Once they decide to approve the loan, they send the home loan sanction letter to the applicant. This is a legal document that is proof that you are eligible to avail of the loan and the bank has agreed to give it to you.


This is the final stage and here as per the listed terms and the payment details, the loan is officially sanctioned. The applicant receives the money and the process is executed.

What Do You Mean By The Home Loan Sanction Letter?

A sanction letter is a legal document which is offered by the bank or the lending firm to the borrower. It states that the applied home loan has been duly approved.

This document contains tons of important details. Here are the full details of what they are. 

  • The amount of home loan
  • The mode in which the loan will be repaid
  • The tenure of loan repayment
  • The validity of the sanction letter
  • The applicable interest rate
  • The base rate of interest
  • EMI details
  • Pre-EMI payment details
  • Tax benefit
  • Any special schemes, if applicable

The Documents

You will need to submit several documents along with the application. Here are the details of what they are.

  • Passport sized photographs
  • The ID proof
  • Last income tax return form
  • Residence proof
  • Documents of property
  • Last six months’ bank statement
  • Last three months’ salary certificate

Along with this, the borrower may ask you for other proof of your financial condition as it is important to assess your financial stability before you are sanctioned the loan.

The Process Of Sanctioning Of Home Loan

First of all, the borrower needs to submit the application form. He/she must have all the necessary documents handy.

The banking institute or the lending body will then check all the documents and duly verify them. This is a very crucial stage as it will decide whether or not the applicant is eligible for the home loan. The financial status of the applicant is also duly considered. Banks also make it a point to check the creditworthiness of the borrower. This credit score check remains one of the most important steps.

After everything has been studied and assessed, if the borrower seems financially stable enough about the loan amount, the loan is sanctioned. Then the sanction letter clearly stating the terms and details of the loan is sent to the borrower.

Ideally, the whole process takes three to four weeks. But, if there is some information lacking or the credit score is hard to assess, the process may take longer.

The Importance Of The Home Loan Sanction Letter

The home loan sanction letter remains one of the most important documents that you can ask for. It is proof that you have been sanctioned the loan. This document is different from the formal loan agreement but it has its importance.

home loan sanction letter
Source: Yingko / Shutterstock

This document contains some vital details including the EMI you have to pay every month and the loan tenure, the interest rate applicable and so on. Along with this, the sanction letter is one such document that you will have to pay the housing society when you decide to purchase a home on loan.

Apart from this, if you end up in a dispute with the lender, this document will be binding proof as far as the terms and conditions are concerned.

The Sample Format

Before you submit a home loan sanction letter, you need to have some idea of what the actual format is. The details of the format will allow you to have a clear idea of how to write the letter and the details to enter.

You can either ask the lender for the sample or find one on the web yourself. Some lenders are specific with the format so it is always advised to ask them first.

Find complete details of the home loan procedure here.

Points To Remember

Here are some key points you should remember when applying for a home loan sanction letter.

  • Always check the home loan application process of the borrower before you kickstart the process. This will save you both time and the effort
  • Make sure that you check the details of the sanction letter before you decide to accept it
  • You need to know that the amount of loan sanctioned can be lower than the loan amount requested. The sanctioned amount depends largely on the credit history and the financial situation of the applicant
  • The borrower may ask you for more documents as proof of your financial history
  • Always make sure to doubly check the details of the property you want to purchase. If the property doesn’t have the right legal document or approvals, banks may reject your loan as there is no assurance for the disputed property.

What Is A Digital Sanction Letter?

The whole process has got digital. You can submit an e-application and upload all the necessary documents. After the lending body approves it, they will send you the sanction letter online. This is the digital sanction letter and holds the same validity as the physical copy. This makes the whole process hassle-free and thereby serves your need as well. With everything being digitized these days, the digital sanction letter is becoming a lot more popular.

Find the list of top banks for home loans here.


For how long is the home loan sanction letter valid?

A home loan sanction letter is valid for six months. If the borrower doesn’t avail of the loan during this period, the sanction letter will cease to be applicable anymore. The borrower will then have to apply for the whole process again.

Can you cancel the sanction letter?

If you don’t seem to agree to the interest rate, the tenure or any of the other terms listed by the borrower; you can choose to cancel the home loan. However, make sure that you do so before the loan has been disbursed.

Can someone with a bad credit history get a home loan?

Yes, even if you have a bad credit history, you may be able to avail of the loan. However, the odds reduce significantly. You may also have to fill in a lot of documents as proof that you are eligible for the loan.

Is the sanction letter an official document?

Yes, the sanction letter holds a lot of importance. You will also have to produce it when you are purchasing the property. The document can also be used in case you end up in a legal dispute about payment terms.