🔑 Key Features of Home Construction Loans
| Feature | Details |
|---|---|
| Purpose | To finance the construction of a house on owned or purchased land |
| Loan Amount | Up to 80%–90% of construction cost (excluding land cost in most cases) |
| Disbursal Method | In installments (linked to construction stages) |
| Interest Rate | 8% – 11.5% p.a. (fixed or floating) |
| Tenure | Up to 30 years |
| Collateral | The land and the house under construction (mortgaged to the lender) |
| Tax Benefits | Under Sections 80C & 24(b) after construction is completed |
👷♂️ Construction Loan Disbursement Process
Disbursal happens in phases, not as a lump sum:
Initial disbursal – For foundation & initial materials
Second stage – After plinth or base structure
Third stage – Walling and roofing
Final stage – Finishing (electrical, paint, interiors)
The lender verifies progress through site inspections or construction reports before each release.
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🧾 Eligibility Criteria
| Criteria | Requirement |
|---|---|
| Ownership of Land | Land must be registered in your name or co-applicant’s |
| Age | Typically 21 to 65 years |
| Employment Type | Salaried or self-employed |
| Credit Score | Minimum 700 preferred |
| Permits | Must have municipal approvals, plan sanctions |
📄 Documents Required
Land ownership documents (sale deed, registration)
Approved building plan & estimate from architect/engineer
Title clearance and non-encumbrance certificate
Identity & address proof (PAN, Aadhaar, etc.)
Income proof (salary slips, ITR, bank statements)
Employment proof or business details
Construction agreement (if using contractor/builder)