Investing in a plot of land is becoming increasingly popular in India. Whether you want to build your dream home, start a farm stay, or invest in real estate, a land loan can help turn your goals into reality. In this comprehensive guide, we explain how to get a land loan in India, including eligibility criteria, current interest rates, documentation, tax benefits, and key factors to consider before applying.
This article is designed to fulfill informational and transactional search intent. If you’re looking for a loan to buy land, or want to understand how land loans differ from home loans, this article is for you.
What is a Land Loan?
A land loan, also known as a plot loan or site loan, is a type of financing offered by banks and NBFCs (Non-Banking Financial Companies) for purchasing a piece of land. These loans are ideal for people who want to:
- Buy land for constructing a house in the future
- Invest in a residential plot for capital appreciation
- Purchase land in urban, semi-urban, or developing areas
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1. What are the Eligibility Criteria for a Land Loan?
Each bank or financial institution has its own set of eligibility rules, but the general requirements remain consistent. Here’s what you need to qualify:
- Employment Type: You must be a salaried or self-employed individual with a steady income.
- Age: Most institutions require you to be between 18 to 65 years of age at the time of loan maturity.
- Income Stability: Regular monthly income and a low debt-to-income ratio are key factors.
- Credit Score: A minimum credit score of 700 or above is often required.
- Nationality: Both Indian residents and NRIs are eligible, though the terms may vary.
Tip: Applying with a co-applicant (spouse or parent) can increase your eligibility and loan amount.
2. Documentation Required for Land Loan Approval
To apply for a land loan, prepare the following documents:
Identity Proof:
- PAN card
- Aadhaar card
- Passport/Voter ID
Address Proof:
- Utility bills
- Rental agreement
- Aadhaar/passport
Income Proof:
- Latest salary slips (last 3 months)
- Form 16/Income Tax Returns
- Bank statements (6 months)
Property Documents:
- Title deed
- Sale agreement
- Approved layout plan or drawing
- Allotment letter (if plot is from a development authority)
- No encumbrance certificate
- Property tax receipts
- Conversion certificate (if applicable)
Others:
- Passport-sized photographs
- Loan processing fee cheque
3. What are the Land Loan Interest Rates of Indian Financial Institutions?
Land loans typically carry slightly higher interest rates than home loans. Here’s a comparison of leading banks and NBFCs in India:
| Financial Institution | Interest Rate (per annum) | Loan Amount | Loan Tenure |
|---|---|---|---|
| HDFC Bank | 8.45% onwards | Up to ₹10 crore | Up to 30 years |
| DHFL | 8.35% onwards | 75% of plot value | Up to 20 years |
| SBI | 9.40% onwards | Up to ₹15 crore | Up to 10 years |
| Federal Bank | 8.80% onwards | Up to ₹25 lakh | Up to 5 years |
| Canara Bank | 9.65% | 3 years’ gross income or plot cost | Up to 10 years |
| PNB Housing | 9.25% onwards | ₹35 lakh onwards | Up to 30 years |
Note: Interest rates mentioned are indicative as of 2025 and subject to change.
4. Important Facts About Land Loans in India
Before applying for a land loan, here are key details you should be aware of:
- Purpose: The land must be non-agricultural and meant for residential purposes.
- Loan-to-Value Ratio (LTV): Most banks finance up to 70% of the land value.
- Tenure: Land loans have shorter tenures—usually 10-15 years.
- Construction Clause: Some banks require you to begin construction within 2-3 years.
- Processing Fee: Varies between ₹1,500 to ₹20,000 plus GST.
- Prepayment Charges: May apply—typically 3% of outstanding loan + GST.
5. How to Get Tax Benefits on the Land Purchase?
Land loans do not offer direct tax benefits, unlike home loans. However, you can claim deductions under the Income Tax Act if:
- You construct a house on the plot using the loan amount.
- After conversion to a home loan, you can claim:
- Section 80C: Up to ₹1.5 lakh annually on the principal amount.
- Section 24(b): Up to ₹2 lakh annually on the interest paid.
Note: Deductions are allowed only after construction is completed, and not during the purchase of land.
6. What are the Key Considerations for Investing in Land?
Buying land is a significant financial decision. Make sure to:
- Access and Location: Avoid plots in areas marked for government acquisition.
- Verify Land Type: Ensure it’s residential and not agricultural or reserved.
- Clear Title Deed: Check for disputes, encumbrances, or legal claims.
- Local Authority Approvals: Ensure layout plans are approved.
- Zoning Regulations: Land should be in a permitted zone for residential construction.
- Infrastructure Availability: Check for roads, water supply, drainage, and electricity.
- Encumbrance Certificate: Shows clear legal ownership.
