A home loan funds a built home or its construction. A plot loan funds buying land to build a home on, usually within a time the lender sets. Plot loans usually fund a smaller share of the price, and the tax benefits for home loans do not apply to land alone.
Side by side
Factor
Home loan
Plot loan
Funds
A built or under-construction home
A residential plot
Share of value funded
Up to RBI loan-to-value caps
Usually lower, set by the lender
Land eligibility
Approved project or property
Residential plot in an approved layout, usually within municipal or authority limits
Construction condition
Not applicable
Often must start building within a period
Tenure
Often up to 30 years
Usually shorter
Tax benefits
Possible, depending on the tax regime
Not on land alone
Combined option
Plot plus construction loans exist
Can be combined with a construction loan
When Home loan matters
If the home already exists or is being built by a developer, use a home loan.
When Plot loan matters
If you are buying a plot in an approved layout to build on, a plot loan or a combined plot-and-construction loan applies.
In more detail
Lenders generally do not fund agricultural land or plots in unapproved layouts. Check layout approval and land-use conversion before applying.
Under a combined plot-and-construction loan, tax benefits for the construction part are generally available only once the house is complete, subject to the rules of your tax regime. Confirm with a chartered accountant.