{"id":4042,"date":"2026-01-23T19:30:00","date_gmt":"2026-01-23T14:00:00","guid":{"rendered":"https:\/\/tradebrains.in\/money\/?p=4042"},"modified":"2026-01-23T16:46:04","modified_gmt":"2026-01-23T11:16:04","slug":"planning-to-build-a-house-know-these-home-loan-and-tax-rules-that-can-save-you-lakhs","status":"publish","type":"post","link":"https:\/\/tradebrains.in\/money\/planning-to-build-a-house-know-these-home-loan-and-tax-rules-that-can-save-you-lakhs\/","title":{"rendered":"Planning to Build a House? Know These Home Loan and Tax Rules That Can Save You Lakhs"},"content":{"rendered":"\n
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Synopsis<\/strong>: This article lists down the kinds of home loans, EMI rules and other tax benefits one can avail if you are planning to own a house.<\/em>\u00a0<\/p>\n<\/blockquote>\n\n\n\n

According to the reports issued by the Reserve Bank of India, in its 2023 Financial Stability Report, the share of residential home loans has increased from 8.6% to 14.2% in the past 11 years. Owning a home is still a dream and a financial commitment for many Indians. This deep-rooted desire fuels the housing market of our nation to this date and will keep fueling it in the coming decades too.<\/p>

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Can You Take a Loan to Build a House?<\/strong><\/h2>\n\n\n\n
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  1. Loan to Buy a House: <\/strong>As the property already exists and is ready to move in, valuation and other legal formalities will be simpler. Therefore, loan disbursement is usually on time, and full EMI starts shortly after the loan is disbursed.<\/li>\n\n\n\n
  2. Loan to Construct a House:<\/strong> These loans are provided for the self-construction of a house, and money is released in stages as the construction progresses. On hitting milestones like foundation, plinth, brickwork, etc., the money will be disbursed. Borrowers can start paying pre-EMI, which is interest on the amount disbursed, while the construction is ongoing. Or they can opt for full EMI.<\/li>\n\n\n\n
  3. Loan to Buy Land and Construct a House:<\/strong> These loans cover the purchase of a plot as well as the construction of a house on the plot. They are known as composite loans. Here, the lender would pay first for the land and later for construction in stages, depending on the progress of work. Often, many lenders urge to start the construction as soon as the land is purchased, and also have a time limit within which the work should be completed.<\/li>\n<\/ol>\n\n\n\n

    Eligibility Criteria for a Home Loan<\/strong><\/h2>\n\n\n\n
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    1. Age and Employment Status: Lenders prefer salaried employees with stable jobs, consistent salary, good credit history or self-employed applicants with a steady business and predictable cash flow in the past 2-3 years. Age preferences varies but generally, applicants falling in the working age brackets are preferred.<\/li>\n\n\n\n
    2. Income & Repayment Capacity: Lenders use the Fixed Obligation to Income Ratio (FOIR) or EMI- to- income ratio to calculate how much money an applicant can comfortably pay back. These tools focus on monthly income after deductions, pending EMIs, and dependents.<\/li>\n\n\n\n
    3. Credit Score & Credit Behaviour: Credit score shows your creditworthiness. Banks and other lenders use an applicant\u2019s credit score as the standard to determine whether providing the loan is a good business decision or not. A credit score of 750 and above is considered to be strong. Often, lenders also check other factors such as credit history, credit card utilisation ratio and number of loans taken.<\/li>\n\n\n\n
    4. Loan-to-Value (LTV) & Down Payment Expectations: Loan-to-Value (LTV) is calculated by dividing the loan amount by the project value. For self-construction loans, lenders usually fund a portion of the project and sometimes the whole project. Lenders might insist that applicants contribute their own money as a down payment and use the loan amount for later stages.<\/li>\n<\/ol>\n\n\n\n
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      Also read: Here\u2019s How You Can Save Up to \u20b936,000 in Tax on Gold and Silver Investments\u00a0<\/a><\/strong><\/h4>\n<\/blockquote>\n\n\n\n

      Tax Benefits You Should Know<\/strong><\/h2>\n\n\n\n

      Old Tax Regime:<\/strong><\/h3>\n\n\n\n

      Section 80C<\/strong>: Under this section, a deduction of up to 1.5 lakh can be claimed on the principal portion of the EMI in a financial year. However, this claim can only be claimed after the construction of the house is complete and possession is obtained. Also, if the house is sold within 5 years of getting possession, the deductions claimed under Section 80C can be added back to income in the year of sale.\u00a0<\/p>\n\n\n\n

      Section 24(b)<\/strong>: For a self-occupied house, under the old tax regime, a deduction of up to 2 lakh per year can be claimed for a home loan interest.\u00a0For let-out property, interest deduction is not capped. However, the loss that can be set off against other income is limited to \u20b92 lakh per year, and the remaining loss can be carried forward for up to 8 years.<\/p>