What is the interest rate for a home construction loan?

The interest rate applicable to home construction loans in India can vary from one lending institution to another. Unlike home loans with more standardised rates, construction loan interest rates are specific to each loan provider’s policies. Generally, interest rates on home construction loans are higher than home loans, as the former is not widely availed of by individuals.

Both large banks as well as non-banking financial companies provide construction finance options. However, the interest rates can differ depending on factors like the borrower's income, credit profile, loan amount, collateral type and location of property.

Generally, financial institutions evaluate the borrower's repayment capacity based on income, credit score and existing debt obligations, among other eligibility criteria. Higher creditworthy customers may get better interest rates.

The loan amount and tenure also play a role in determining the applicable interest rate. Additionally, property-related aspects like the type of construction, residential or commercial, can impact the rate offered. You can use the home construction loan calculator to understand the interest payable and the monthly EMI to make an informed decision.