Mumbai: Banks are playing it safe when it comes to home loans. They're putting in stringent safeguards against possible defaults, which could mean more trouble for borrowers.

With hardening home loan rates and stringent mechanisms putting in by banks to check defaults, financing your dream homes may get tougher.

Bank of Baroda has recently introduced variable eligibility criteria for its home loans.

The eligibility for people earning above Rs 1 lakh a month has been increased from 60 to 70 per cent making it possible for them to take more loans than earlier.

But for those earning below Rs 20,000 a month the eligibility has been decreased from 60 to 50 percent.

"We want to ensure that they have enough money left for other expenses after paying their EMIs," said Bank of Baroda General Manager Ajay Kumar.

Private banks, which already had differential eligibility in place, are becoming more conservative in amount of loans given out.

Kotak Bank has reduced its loan to value ratio. Earlier it stood at 90 per cent but now its been reduced to 80 to 85 per cent.

HDFC too has reduced this ratio from 85 to 80 per cent for most cases a few months back.

Which means that for a Rs 10 lakh home you will now get loans upto Rs 8 lakh as against Rs 8.50 lakh earlier.

Even ICICI Bank has now become more conservative on property valuation for home loans.

Home loan rates have gone up by 3 to 4 per cent in the last 18 months. With EMIs swelling and eligibility declining, customers are losing out on both fronts.