What Is a Home Construction Loan?
Unlike home purchase loans used to buy a ready property, a Home Construction Loan is specifically designed for individuals who own land and want to build a house on it.
The loan covers construction-related expenses like materials, labor, architect fees, and structural costs.
Key Features of Home Construction Loans
📊 Loan Amount: Up to 80–85% of estimated construction cost
📅 Repayment Tenure: 5 to 30 years
🧾 Disbursement Type: In stages, based on construction progress
📉 Interest Rate: Typically starts from 8.50% p.a.
🏦 Security: Land + Under-construction property used as collateral
Documents Required
Land ownership proof (sale deed or title deed)
Construction plan approved by municipal authorities
Cost estimate from a certified architect or engineer
PAN, Aadhaar, and photos
Income proof (salary slips/ITR)
Bank statements – last 6 months
Eligibility Criteria
Age: 21–60 years
Salaried or self-employed with stable income
Minimum monthly income: ₹25,000–₹30,000
CIBIL score: 700+ preferred
Clear land title with no legal disputes
How Loan Disbursement Works
The total loan is not disbursed at once. It is released in phases, typically in 3 to 5 tranches, depending on:
Foundation completion
Ground floor and roofing
Plastering, fittings, and finishing
Each stage is verified by the lender before releasing the next installment.
Benefits of a Home Construction Loan
Custom build your dream home your way
Lower interest rates than unsecured loans
Get tax benefits under Sec 80C and Sec 24
Flexible tenure and EMI options
Land + house can be used for higher eligibility
Limitations to Consider
Loan amount is tied to construction progress
Delays in construction may affect disbursement
Requires more documentation and approvals
EMI starts even if house isn't ready yet
Why Choose Vizzve for Your Construction Loan?
🏡 Fast-track approval process
💡 Transparent stage-wise disbursement
🛠️ Expert support from application to completion
📲 Real-time tracking of disbursement
🧾 Personalized repayment plan to suit your income flow
Tax Benefits on Construction Loan
| Section | Benefit | Max Limit |
|---|---|---|
| 80C | Principal repayment | ₹1.5 lakh/year |
| 24(b) | Interest on loan (after construction) | ₹2 lakh/year |
Note: Interest benefit under Sec 24 is available only after construction is complete.
FAQs
Q1. Can I apply for a home construction loan without land?
No, land ownership is mandatory.
Q2. How long should construction take to keep the loan valid?
Typically within 2–3 years from disbursal, depending on lender terms.
Q3. Can I add home interiors or furniture in the loan?
Generally no, only structural construction is covered.
Q4. Do I need municipal approvals before applying?
Yes, an approved plan and cost estimate are mandatory.
Published on : 23rd July
Published by : SMITA
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RBI-Registered Loan Partner | 10 Lakh+ Customers | ₹600 Cr+ Disbursed