Looking to buy land? A plot loan (also called a land loan) lets you finance residential, recreational, or investment plots with competitive interest rates, flexible repayment tenures, and tailored EMI options.
Learn about plot loan eligibility, required documentation, plot loan interest rates, and how to compare lenders—so you can secure the best deal and confidently fund your land purchase.
Plot Loan Highlights: Interest Rate, Tenure, Eligibility etc.
Below is a comprehensive table summarizing the key highlights and criteria required for plot loans from major Indian lenders. This table covers eligibility, loan amount, tenure, interest rates, and documentation requirements.
| Criteria | Typical Requirement/Range | Notes |
|---|---|---|
| Eligible Applicants | Salaried, Self-Employed Professionals, Business Owners | Indian Residents and NRIs |
| Age Limit | 18–70 years | At loan maturity, not exceeding 70 years |
| Loan Amount (LTV) | Up to 70–80% of plot value | LTV = Loan-to-Value ratio; varies by lender and applicant profile |
| Interest Rate | 8.15% – 9.60% p.a. (floating) | Slightly higher than home loans; varies by lender and applicant type |
| Tenure | 5–20 years | Most lenders offer up to 15 years; some up to 20 years |
| Minimum Income | Regular source of income required | Minimum annual income may apply (e.g., ₹1.8–3.6 lakh) |
| Credit Score | 650–750+ | Higher credit score improves eligibility and rates |
| Down Payment | 20–30% of plot value | Due to LTV cap, borrower must fund the rest |
Plot Loan Interest Rates
Here’s a snapshot of 2025 plot loan interest rates from leading Indian banks:
| Lender | Interest Rate (p.a.) |
|---|---|
| State Bank of India | 9.50% onwards |
| HDFC Bank | 8.75% onwards |
| Federal Bank | 8.80% onwards |
| ICICI Bank | 8.50% onwards |
| IDFC First Bank | 8.85% onwards |
| Kotak Mahindra Bank | 8.75% onwards |
| Bank of Maharashtra | 8.35% onwards |
Here’s a comparison of land-loan processing fees across ten major Indian banks, expressed as a percentage of the loan amount:
| Banks | Processing Fees |
|---|---|
| State Bank of India (SBI) | 0.35% |
| HDFC Bank | 0.50% |
| ICICI Bank | 0.75% or ₹11,000 (whichever is higher) |
| Axis Bank | 1.0% or ₹10,000 (whichever is higher) |
| Kotak Mahindra Bank | Up to 2.0% + GST |
| Yes Bank | 1.5% or ₹10,000 (whichever is higher) |
| Union Bank of India | 0.50% (up to ₹15,000 + GST) |
| Bank of Baroda | 0.35% of loan amount (max ₹15,000 + tax) |
| IndusInd Bank | 1.0% of loan amount or ₹10,000 (whichever is higher) |
| Bank of India | Nil |
What is a Plot Loan?
A plot loan—also called a land loan—is a specialized financing option designed exclusively for purchasing undeveloped or “raw” land. Unlike traditional home loans, which bundle land acquisition and building costs into one package, a plot loan covers only the cost of the land itself. Borrowers typically need to provide a 20–30% down payment, reflecting the higher risk lenders take on when there’s no existing structure to secure the loan.
Key Features of Plot Loans
Key features of a plot loan include:
- Loan Tenure & Interest Rates: Terms usually range from 5 to 15 years, with interest rates slightly higher than standard home loans due to the undeveloped nature of the collateral.
- Eligibility Criteria: Lenders assess your credit score, income stability, and existing debt obligations, plus the land’s legal status—requiring clear title deeds, zoning approvals, and No Objection Certificates (NOCs) from local authorities.
- Disbursement & Repayment: Funds are released in a lump sum to purchase the plot, and you repay via equated monthly installments (EMIs) covering principal and interest.
- Separate Construction Financing: When you’re ready to build, you must apply for a construction loan or builder’s loan, which will reassess the land’s value and may require updated legal clearances.
What are the types of Plot Loans?
Residential plot loans: These loans are designed for purchasing land for residential purposes. Including building primary residences or investment properties like rental homes or vacation cottages.
Commercial plot loans: These loans are tailored for acquiring land for commercial purposes. Such as developing retail spaces, office buildings, industrial facilities, or mixed-use developments.
Agricultural plot loans: These loans are for buying land for farming or other agricultural activities. They come with features and terms designed specifically for agricultural needs.
Industrial plot loans: These loans are for acquiring land for industrial facilities, factories, manufacturing units, or warehouses.
Institutional plot loans: Institutional plot loans target purchasing land for educational institutions, hospitals, research centers, or other institutional purposes.
Special economic zone (SEZ) plot loans: These loans are specifically for acquiring land within designated SEZs. For setting up businesses or industrial operations benefiting from SEZ incentives and regulations.
Recreational plot loans: Recreational plot loans are designed for purchasing land for recreational purposes. Such as resorts, amusement parks, golf courses, or leisure facilities.
What are the Advantages of Plot Loans?
Land acquisition: Plot loans provide the necessary funds to purchase land, fulfilling real estate aspirations. And investment goals for residential, commercial, agricultural, or investment purposes.
Investment opportunity: Land acquisition through plot loans offers potential for long-term returns through capital appreciation or rental income, making it a lucrative investment strategy.
Diversification of portfolio: Investing in land diversifies investment portfolios, spreading risk across different asset classes and mitigating market fluctuations or economic downturns.
Control over development: Borrowers gain control over the development process, allowing customization of properties to suit their vision, lifestyle needs, and budget constraints.
Potential for appreciation: Land values have the potential to appreciate significantly over time due to factors like population growth, urbanization, and infrastructure development, benefiting borrowers in the long term.
What is the Eligibility Criteria for Plot Loans?
Here is a detailed overview of the Eligibility Criteria for Plot/Land Loan:
| Eligibility Criteria | Details |
|---|---|
| Age Requirement | Typically, applicants must be at least 21 years old at the time of applying for the loan, with some lenders having upper age limits. |
| Stable Income | Lenders usually require applicants to have a steady source of income, whether from employment, self-employment, or business ownership, to ensure repayment capability. |
| Good Credit History | A positive credit history and a high credit score are often necessary to qualify for favorable loan terms and interest rates. |
| Property Appraisal | The land intended for purchase must undergo a professional appraisal to determine its current market value and suitability as collateral. |
| Loan-to-value ratio (LTV | Lenders may impose a maximum LTV ratio, requiring borrowers to make a down payment to cover a portion of the land’s purchase price. |
| Legal Verification | Lenders conduct legal due diligence on the land to confirm ownership, check for any encumbrances, and ensure clear title. |
| Documentation | Applicants must provide various documents, including proof of identity, address, income, employment/business details, property documents, and financial statements, as part of the application process. |
How to Apply for Plot Loans?
Steps to Apply for Plot Loans:
- Research lenders
Explore different lenders offering plot loans and compare their loan products, interest rates, terms, and eligibility criteria to find the best fit for your needs.
- Check eligibility
Ensure you meet the lender’s eligibility criteria regarding age, income, credit score, property type, and loan-to-value ratio before applying for a plot loan.
- Gather documents
Collect necessary documents such as proof of identity, address, income, employment/business details, property documents, and financial statements required for the loan application.
- Pre-approval
Consider getting pre-approved for a plot loan to understand your borrowing capacity and receive a preliminary loan offer based on your financial situation before searching for land.
- Choose the right plot
Select a suitable plot of land based on factors like location, size, zoning regulations, accessibility, amenities, and potential for appreciation.
- Negotiate terms
Negotiate the purchase price and terms of the land sale with the seller. Considering payment schedule, down payment, closing costs, and any contingencies or conditions.
- Complete loan application
Fill out the plot loan application form accurately. And submit it along with the required documents to the lender.
- Property valuation
Allow the lender to conduct a professional appraisal of the land. To determine its market value and suitability as collateral for the loan.
- Loan approval
Wait for the lender to review your application, documents, and property valuation report to make a decision on loan approval.
- Closing the loan
Review the formal loan offer from the lender, sign the loan agreement if you accept the terms, pay any required down payment and closing costs, and complete the purchase of the land with the disbursed loan funds.
Tips for Maximizing Plot Loans
Research market trends: Stay updated on real estate market trends, including property values, demand-supply dynamics, infrastructure developments, and regulatory changes.
Invest in prime locations: Focus on purchasing land in well-located areas with strong growth potential, good infrastructure, and high demand.
Consider future development: Evaluate the land’s potential for future development and consider zoning regulations, land use restrictions, and infrastructure plans.
Budget wisely: Develop a realistic budget that accounts for the purchase price, loan amount, down payment, closing costs, and other expenses associated with land acquisition.
Plan for development costs: Factor in the costs of development and improvements, including site preparation, infrastructure, permits, utilities, and landscaping.
Seek professional advice: Seeking professional advice is crucial when considering a plot loan. You should evaluate your financial situation carefully to determine a responsible borrowing amount. Also, keep open communication with your lender throughout the plot loan journey.
To make the process easier for you, consult real estate professionals, financial advisors, and legal experts for guidance throughout the land acquisition process. If you need assistance, consider reaching out to Credit Dharma for expert help.
Tax Benefits on Plot Loans
Tax benefits on a plot loan are only available if you construct a house on the plot; no tax benefits apply if you purchase the plot solely as an investment without building. The main provisions are as follows:
Section 80C (Principal Repayment)
- You can claim a deduction of up to ₹1.5 lakh per year on the principal component of your EMI, but only after the construction of the house is completed. This limit includes other eligible investments and expenses under Section 80C, such as stamp duty and registration fees (these can be claimed only in the year of purchase).
- If the plot is jointly owned and the loan is in both names, each owner can claim this deduction, subject to the overall limit.
Section 24 (Interest Payment)
- You can claim a deduction of up to ₹2 lakh per year on the interest paid, but again, only after the construction is completed and the plot loan is converted to a home loan.
- For self-occupied property, the maximum deduction is ₹2 lakh; for let-out property, there is no upper limit on the interest deduction.
- Pre-construction interest can be claimed in five equal installments after the completion of construction, subject to the above limit.
No Tax Benefit Without Construction
- If you do not construct a house on the plot, no tax benefit is available on either the principal or interest paid towards the plot loan.
- Composite Loans:
- If you take a composite loan (for both plot purchase and construction), you can claim tax benefits as above, but only after construction is completed
Plot Loan vs Home Loan: What’s the Difference?
Key Differences at a Glance :
| Feature | Plot Loan (Land Loan) | Home Loan |
|---|---|---|
| Purpose | Purchase of a plot of land (usually for future residential construction) | Purchase of a ready, under-construction, or self-constructed house |
| Property Location | Only for plots within municipal/corporation limits; not for agricultural land | Any residential property (ready, under-construction, or to be built) |
| Loan-to-Value (LTV) | Up to 70–80% of plot value | Up to 75–90% of property value |
| Tenure | Up to 15 years | Up to 30 years |
| Interest Rate | Slightly higher than home loans | Generally lower |
| Tax Benefits | No tax benefits unless house is constructed; then only after completion | Tax benefits on both principal (Sec 80C) and interest (Sec 24) |
| Down Payment | Minimum 20–30% of plot value | Minimum 10–25% of property value |
| Eligibility | Stricter; plot must be for residential use, within approved limits | Broader; for any residential property |
| Construction Mandate | Some lenders require construction within 2–3 years | Not applicable |
Important Considerations Before Taking a Plot Loan
These scenarios must be considered before taking a home loan :
- Clear Title & Legal Checks: Verify marketable title, NOCs, and absence of liens or disputes.
- Zoning & Approvals: Ensure land-use classification matches your plans and review local building bylaws.
- Location & Infrastructure: Confirm access to roads, transport, schools, hospitals, and basic utilities.
- Down Payment & Costs: Budget 20–30% down; compare interest rates, fees, and prepayment charges.
- Repayment Capacity: Choose a 5–15 year tenure that fits your cash flow; account for rate fluctuations.
- Appreciation & Exit Strategy: Research price trends and plan to build, sell, or develop based on market demand.
- Site Conditions: Check soil quality, drainage, flood risk, and terrain stability.
- Taxes & Charges: Factor in stamp duty, registration, GST/cess, and any municipal or development fees.
Top Banks Offering Plot Loans in India
Top Banks Offering Plot Loans in India (2025)
| Banks | Offers |
|---|---|
| HDFC Bank | Interest Rate: 8.70% – 9.95% Maximum Tenure: 15 years Processing Fee: Up to 1.50% of the loan amount |
| State Bank of India (SBI) | Interest Rate: 9.45% – 9.85% Maximum Tenure: 10 years Processing Fee: Up to 0.35% of the loan amount |
| ICICI Bank | Interest Rate: 8.50% – 9.25% Maximum Tenure: 15 years Processing Fee: Up to 1% of the loan amount |
| Axis Bank | Interest Rate: 8.75% – 9.19% Maximum Tenure: 20 years Processing Fee: Up to 1% of the loan amount |
| PNB Housing Finance | Interest Rate: 9.00% – 9.50% Maximum Tenure: 20 years Processing Fee: Up to 1.25% of the loan amount |
| LIC Housing Finance | Interest Rate: 8.60% – 10.75% |
| Tata Capital | Interest Rate: 9.15% onwards |
| Bajaj Housing Finance | Interest Rate: 8.70% onwards |
| IDFC First Bank | IR for Salaried: 8.85% p.a. onwards IR for Self-employed: 9.00% p.a. onwards |
| Kotak Mahindra Bank | Interest Rate: 8.85% onwards |
These banks are recognized for their competitive rates, flexible repayment options, and efficient loan processing for plot loans in India.
Conclusion
A plot loan helps you buy land for future home construction but comes with stricter eligibility, higher down payment, and no tax benefits unless you build a house. Always check the plot’s legal status and your repayment ability before applying.
Are you looking for Plot Loans?
Frequently Asked Questions
While a home loan is used to purchase a constructed property or a ready-to-move-in house, a plot loan is specifically for buying undeveloped land. Plot loans may have different eligibility criteria, interest rates, and repayment terms compared to home loans.
You can use a plot loan to purchase land for various purposes, including building your dream home, investing in real estate, or constructing a commercial property. Some lenders may have restrictions on the type of land or its location, so you should check the loan terms.
Lenders consider factors such as the location and size of the plot, its market value, your creditworthiness, income stability, employment history, and the purpose of the land purchase when approving a plot loan.
Tenures range from 5 to 15 years. Some lenders allow up to 20 years, but longer terms may attract higher rates.
– Purpose: Plot loan for land purchase; home loan for construction or ready‐built property
– LTV: Plot loans generally have lower LTV ratios (60–75%) vs. home loans (up to 90%)
– Interest rates: Plot-loan rates tend to be 0.25–0.50% higher than home-loan rates.
Yes, but under stricter conditions: the land must be zoned residential, the NRI must route funds through an NRE/NRO account, and additional compliance (FEMA) paperwork is required. Lenders often cap LTV at 50–60% for foreign nationals.
Banks typically require a clear, marketable title. If the title is in dispute or shows multiple claimants, you may need a court “No-Objection” decree or a title indemnity insurance policy before disbursement.