Home Construction Loan

Apply for Home Construction Loan

✓ Home Loan from ₹2 Lakhs To ₹15 Cr ✓ Multiple Lending Partners ✓ Interest Rates Starting @ 8.50%

A home construction loan is secured by mortgaging the property on which the renovation or restoration or additional construction is planned. For example, if you want to increase the size of your home and add another room, storey, or backyard to your existing property, you can utilise a home construction loan to fund the project.

Home Construction Loan Interest Rates

The starting interest rates at which top Indian lenders are willing to provide a home construction loan are as follows:

Lender Name

Starting Interest Rates (per annum)

PNB Housing Finance






Home First Finance


State Bank of India






Canara Bank


Aditya Birla Capital


Bank of Baroda


Federal Bank


Disclaimer: The interest rates mentioned above are subject to change owing to forces internal or external to the lender. You must always check the current interest rates with the lender of your choice before applying for a home construction loan.

Top Banks for Home Construction Loan

Here are some of India's major banking institutions that provide home construction loans:


  • ICICI Bank: ICICI Bank offers home construction loans with interest rates starting at 7.60% per annum for a 30-year term. There are no prepayment penalties on house loans with a floating rate of interest. With an ICICI Bank home construction loan, you can also acquire overdraft and top-up loans.

  • PNB Housing Finance: PNB Housing Finance offers a construction loan with an interest rate ranging from 6.99% to 10.15% and a 30-year term. PNB Housing Finance levies a processing fee of 1% on a house construction loan. The PNB loan is available to both Indian residents and non-resident Indians. Prepayment of house construction loans from PNB Housing Finance is also free of charge and penalty.

Home Construction Loan Features and Benefits

Any borrower who wants to build a house on his plot or an additional floor on his property might profit from a home construction loan.


  • Long tenure: The home construction loan is available for extended periods of time, ranging from 5 to 30 years, implying that the EMI burden on the borrower is low and the loan is cheap.

  • Taxation benefits: Construction loans, like home loans, are eligible for a tax deduction on the principle and interest paid under Sections 80C and 24B. Sections allow for a tax benefit of up to two lakh rupees on interest and Rs. 1.50 Lakhs in principal. Sec 80 EE allows first-time buyers to claim an extra tax advantage of up to Rs. 50,000.

  • Balance transfer service: Most banks offer housing loan balance transfer options for house construction loans, just as they do for home loans. If a borrower discovers that his current rate of interest on a loan is greater than the market rate, he can transfer the outstanding balance of his loans to another bank by paying balance transfer processing fees of up to 1%.

  • Refinancing a mortgage: You can also acquire a top-up loan as a home construction loan on your existing home loan. Banks look at your repayment history to see if you're eligible for a construction loan to supplement your current loan. Banks may impose processing costs for offering home loan top-up in some situations.

  • Loan Amount: The amount of a home construction loan you can acquire is determined by your income and repayment eligibility. Construction loans are available up to 90% of the property's value. You must add a co-applicant for the loan to improve your loan amount eligibility.

Home Construction Loan Eligibility Criteria

The home construction loan eligibility criteria you must satisfy as a salaried or a self-employed professional are as follows:

Eligibility Criteria

Salaried Professional

Self Employed Professional/Non-Professional


18-65 years of age

18-65 years of age

Citizenship Type

Resident Indian or a Non-Resident Indian (NRI)

Resident Indian or a Non-Resident Indian (NRI)

Work Experience

You must have worked with your current employer for at least 1 year

You must be a self-employed professional or non-professional with a business experience of at least 5 years

Residence Type

You must have a permanent residence or must be living in a rented house for at least 1 year

You must have a permanent residence or must be living in a rented house for at least 1 year

Credit Score Criteria

750 or more

750 or more

Disclaimer: Please check with the lender before applying.

Documents Required for Home Construction Loan

If you are a salaried/self-employed applicant who is applying for a home construction loan, you will need the following documents:

1. Documents for Salaried Employees 

  • Proof of Identity: Aadhar Card and a valid passport

  • Proof of Residence: Valid passport and a Voter ID card

  • Proof of Income: Income Tax Returns and latest Form 16

  • Property Related Documents: Encumbrance Certificate and the title deeds of the plot

2. Documents for Self-Employed

  • Proof of Identity: Voter ID card and a valid driving licence

  • Proof of Residence: Aadhaar card and utility bills

  • Proof of Income: Income Tax Returns, as well as the applicant's and business entity's income computations for the previous three assessment years.

  • Property Related Documents: Title deeds of the plot and estimate for construction assessed by a civil engineer.

How to Apply for a Home Construction Loan

To apply for a home construction loan, you will have to:


  • Step 1: Click on the ‘Apply Now’ button on the application page of the lending institution.

  • Step 2: Select the type of applicant that you are (Salaried/Self-Employed). Post which, enter your mobile number and date of birth. To complete this step. Click on the ‘Check Your Offer’ button.

  • Step 3: On the next page, you will need to fill in your basic professional details along with your monthly income. Click on the ‘Enter Personal Details’ after you do the needful to proceed.

  • Step 4: On the following page, feed in details such as your Gender, Marital Status, PAN Number and Personal e-mail ID.

  • Step 5: Choose your loan amount and repayment tenure. Finally, submit the application.

Once you submit the application, all you will need to do is wait for an executive representing the lender to call you to take things further.

Is a Home Construction Loan Different from a Regular Home Loan

Yes, a home construction loan is different from your regular house loan in many ways. The differences are as follows:


Home Construction Loans

Regular Home Loans

Interest rates

Higher in comparison to regular home loans as sanctioning such loans means that banks are taking a greater risk, given that they are offering a loan for a house that does not exist yet.

Housing Loan interest rates are lower in comparison to home construction loans as banks are offering financing for pre-built homes.

Repayment tenor

Shorter in comparison to regular home loans because when banks sanction construction loans, they are exposing themselves to more risk.

Can be up to 30 years.

Disbursal pattern

Money is credit in a phase-wise manner based on the stage of construction the house is in.

The entirety of the regular home loan amount is given to the borrower in one go.

Down payment 

Minimum 25%.

Minimum 10-15%.

Documents required

More in comparison to regular home loans. To avail the home construction loan, the borrower will need to get a builder on board, submit approved construction plans and get the requisite construction-related permits.

Lesser than what the borrower would have to submit while applying for a construction loan. All that the borrower will need to submit are his/her income proof, identity proof and property-related documents.

Disclaimer : The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort. The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products.

Home Construction Loan FAQs

  • ✔️How much loan can I get for home construction?

    You can receive a home loan to build a house on a plot in addition to buying a ready-to-move-in house or booking an under-construction property. Construction loans are often referred to as such loans, and they are offered by all of India's major financial institutions.

  • ✔️What is required for a home construction loan?

    You'll need a solid credit score, a low debt-to-income ratio, and proof of sufficient income to repay the loan to qualify for a construction loan. When you apply for the loan, you must also make a down payment. The amount will be determined by the lender you select and the amount you're attempting to borrow for the building.

  • ✔️Where can I get a home construction loan?

    Home construction loans are available from major banks. Based on the interest rates, processing costs, lending process, and papers necessary for the loan, you can choose the best bank for a home building loan.

  • ✔️Which bank is the best for construction loans?

    ICICI is the best bank for construction loans since it offers the lowest interest rate on house construction loans, at 7.60% percent.

  • ✔️What are the current construction loan rates?

    Construction loan rates start at 6.90 percent interest and go up to 20.00 percent interest as of December 4, 2021. For the latest interest rates update check Bajaj Markets frequently.

  • ✔️What is the Best Loan for Building a Home?

    A home construction loan is unarguably the best loan option you can go for if you want to build your home from the ground up. A house construction loan is the only kind of financing you can get from a formal lending institution for building a home.

  • ✔️How is a home construction loan disbursed in phases?

    The loan disbursal of a home construction loan is done in phases/ parts. The lender releases the money in line with the progress of construction. 

  • ✔️How long does it take to get a home construction loan sanctioned?

    While loan disbursal is often subject to various factors and conditions, most lenders initiate the disbursal within 72 hours of verification of the applicant’s information and documents.