Paying for Farmland: Loans, Funds and Safe Payments
Banks treat farmland very differently from a flat. Here is what can actually fund a farmhouse plot near Noida, and how to pay each rupee so it counts.
Funding
Five Ways to Fund It, Ranked by How Often They Work
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Commonly Used
Your Own Funds
How most farmland is bought. Plan for the land price plus stamp duty, registration, legal work and setting up water and power.
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Commonly Used
Loan Against Property You Already Own
A loan secured on your existing home or office. Many buyers use this to fund land, because the bank's security is the property it already knows.
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Only in Some Cases
Plot Loan
Offered for residential plots in approved, authority or RERA-registered layouts. Farm plots on agricultural land usually do not qualify.
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Rarely Available
Home Loan for a Farmhouse
Home loans need residential property with approved plans. Banks rarely lend to buy agricultural land or a farmhouse on it.
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Only in Some Cases
Agricultural Land Purchase Schemes
Some banks run land-purchase schemes for small and marginal farmers. They are not meant for weekend or investment buyers.
Paying, Step by Step
How to Pay at Each Stage, From Token to Mutation
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1
Token
PayBank transfer to the owner named on the latest record, against a signed receipt naming the khasra.
Watch ForA token paid to a broker or a company not on the record.
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2
Agreement to Sell
PayBank transfer or cheque, with the agreed payment schedule written into the agreement.
Watch ForLarge advances before you have seen the encumbrance search.
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3
Stamp Duty & Registration
PayPaid to the state (e-stamp or online), on the higher of deal value and circle-rate value.
Watch ForAny suggestion to show a lower price on paper.
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4
Balance at Registry
PayBank transfer or demand draft to each owner, recorded in the sale deed.
Watch ForCash, or payments split to people who are not sellers.
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5
Mutation
PayGovernment fees only, paid through the official channel.
Watch ForBeing asked for "speed money" - mutation follows from a registered deed.
Income-tax law bars accepting ₹20,000 or more in cash as an advance for land, and receiving ₹2 lakh or more in cash in a transaction. Pay by banking channels.
A buyer usually deducts 1% TDS when buying property worth ₹50 lakh or more. Rural agricultural land is outside this rule - your CA will confirm which applies.
Money should go to the owners named on the khatauni or jamabandi, in the shares they own.
General information in our own words, reviewed October 2026. Bank policies and tax rules change - confirm with your bank and chartered accountant before you commit.
Rarely. Home loans are for residential property with approved plans. Farmhouses on agricultural land usually do not qualify. Buyers typically use their own funds or a loan against property they already own.
You should not. Income-tax rules restrict large cash payments for land, the registry records the payment, and cash leaves you with no proof of what you paid.
TDS at 1% generally applies to property worth ₹50 lakh or more, but rural agricultural land is excluded. Whether your plot counts as rural agricultural land depends on its location - ask your CA.
Buyer Resources