First-time borrowers: NBFCs or banks, which is a better choice?

As a first-time borrower, I will apply for a home loan.

- D. Arulmany

How do banks and non-banking financial companies assess creditworthiness? Do NBFCs offer any advantage over traditional banks for first-time applicants? What are key factors to keep in mind?

—Name withheld on request

With home loans getting cheaper and government subsidies like PMAY (Pradhan Mantri Awas Yojana) in play, this is a good time to borrow—especially for first-time homebuyers. If you're new to credit, lenders assess your eligibility based on factors like age, educational background, current living conditions, employment stability, and overall asset creation. Your income-to-obligation ratio (a measure of how much of your income goes toward debt repayments) must ideally be below 50-60%.