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  • Home loan eligibility for a self-constructed property

    Availing a home loan is a very good option to consider if you wish to book a ready-to-move-in house or buy an under-construction property. The home loan help you pay the booking and registering charges, and also provide various tax benefits if you are looking to construct a house of your own on a plot of self-owned land.

    Before you avail a home loan in order to construct a house of your own, you must make sure whether you meet the eligibility criteria or not. Generally, the lenders are less willing to offer a loan for a self-constructed property due to difficulties pertaining to monitoring and evaluating the cost of the land.

    Hence, it is extremely important to make sure you meet the eligibility criteria before applying for a home loan for a self-constructed house. The eligibility criteria are given below:

    • Generally, the eligibility age ranges from 21 years to 65 years.
    • You should either be a salaried individual or a self-employed individual.
    • The property on which you are constructing your house should be in your name.
    • You must have a functioning bank account.
    • If you are the owner of the land, then make sure that you are the loan applicant.
    • You can avail a home loan individually as well on a joint basis if you are married.

    Documents required

    Given below is the list of documents you will have to provide if you wish to apply for a home loan for a self-constructed property:

    Proof of address Passport, Aadhaar Card, Voter ID, etc.
    Proof of identity PAN Card, Aadhaar Card, Passport, etc.
    Proof of income
    • Self-employed individuals will have to produce bank statement for the transactions for the past three months.
    • If you are a salaried individual, then you will have to produce salary slips for the past three months along with Form 16 or records showing your income tax returns.
    Other documents Documents proving that you are the rightful owner of the land on which you plan to construct a property.

    Sections under which you will enjoy home loan tax benefits

    • Section 24: Under Section 24 of the Income Tax Act, you can claim a deduction of up to Rs.2 lakh if you have availed a home loan for a self-constructed property. However, you must note that you can claim this deduction only if your property has been constructed within 5 years of the date on which you availed the loan. In case your property took more than 5 years to be constructed, then you can avail a deduction of up to Rs.30,000 provided you do not occupy the property.
    • Section 80C: You can claim a deduction of up to Rs.1.5 lakh under Section 80CX of the Income Tax Act if you avail a home loan for self-constructed property. However, this benefit can be availed by you only after the property has been fully constructed. If you decide to sell the property within 5 years of possession, the benefit will be reversed, and the amount claimed by you will be added back to your total income for the year in which you sell your property.
    • Section 80EE: If you are a home buyer who is availing a home loan for the first time, then you can claim an additional tax deduction of up to Rs.50,000 per financial year towards the payment of interest of your loan under Section 80EE of the Income Tax Act. However, you must note that the value of your property should be below Rs.50 lakh and you must not have availed a loan of more than Rs.35 lakh in order to enjoy the tax benefits under Section 80EE.


    It is important you thoroughly compare the various home loan schemes available and check the tax benefits that come with it. Make sure you meet all the eligibility criteria before deciding to apply for a home loan scheme which you feel will be suitable for you.

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