RBI sets no LTV cap on a loan against property. And your interest may not be deductible at all.
Two things almost every LAP page gets wrong. There is no 75%/65% RBI rule — that number is fabricated. And whether you can deduct the interest depends entirely on what you spend the money on.
There is no RBI LTV cap for LAP
You will read that RBI caps LAP at “75% up to ₹75 lakh and 65% above”. That rule does not exist. It is a garble of the housing loan table — it borrows the real ₹75 lakh threshold and the 75% figure, shifts the tiers, and invents the 65%.
RBI's own definition puts LAP outside the housing-finance regime entirely. Its HFC Directions say a loan against mortgage of property “for any purpose other than buying/construction of a new dwelling unit/s or renovation of the existing dwelling unit/s … will be treated as non-housing loans and will not be falling under the definition of ‘Housing Finance’.”
The 90/80/75 tiers are housing loans only. For LAP, RBI sets neither an LTV cap nor an LTV-linked risk weight. Your LTV is your lender's policy — which is why it is an input above, and why we do not publish bank-by-bank numbers we have not verified.
Your tax treatment depends on the money, not the mortgage
“LAP” is not a tax category. The law asks what the borrowed capital was used for — the security is irrelevant.
| You spend it on | Interest deductible? | Under |
|---|---|---|
| Buying or constructing a house | Yes | 1961 s.24(b) → 2025 s.22(1)(b), capped at ₹2L self-occupied |
| Business | Yes | 1961 s.36(1)(iii) → 2025 s.32(b), no cap |
| Wedding, medical, consumption | No — nothing | — |
The principal is never deductible. Section 80C (now s.123 read with Schedule XV) is scoped to “purchase or construction of a residential house property”. A LAP taken for consumption gets nothing on the principal, ever.
A common trap: sites cite s.37 for the business case. That is the wrong section — s.37 (now s.34(1)) is residual and expressly excludes what s.36 already covers. Interest on capital borrowed for business is s.36(1)(iii), now s.32(b).
Keep the money trail. Because the deduction follows the end use, you need to be able to show it: disbursement to purchase, invoices, bank statements. Without that trail the deduction is denied at scrutiny, however the loan was labelled.
Sources: RBI (Housing Finance Companies) Directions, 2025, para 10(8) · Income-tax Act, 1961 s.24(b) / s.36(1)(iii) · Income-tax Act, 2025 s.22 / s.32(b) · verified July 2026. Not tax advice — the end-use position is fact-specific; confirm with a CA.
Sources & standards
Every regulated figure on this page, what it is, and the primary source it comes from. Two Acts are live: the Income-tax Act, 1961 governs FY 2025-26 — the return being filed now — while the Income-tax Act, 2025 governs FY 2026-27 onward. The amounts are unchanged; only the section numbers moved.
| What | Current value | Source | Verified |
|---|---|---|---|
| Interest deduction cap — self-occupied property | ₹2,00,000/yr | Income-tax Act, 1961 — s.24(b) (FY 2025-26 & earlier) Income-tax Act, 2025 — s.22(1)(b) & (c); cap in s.22(2) (in force 1 Apr 2026) | 2026-07 |
| Principal repayment deduction cap (shared with EPF, PPF, ELSS, insurance) | ₹1,50,000/yr | Income-tax Act, 1961 — s.80C (FY 2025-26 & earlier) Income-tax Act, 2025 — s.123, read with Schedule XV (in force 1 Apr 2026) | 2026-07 |
| Loan-to-Value ceilings — individual housing loans | 90% — up to ₹30,00,000 80% — up to ₹75,00,000 75% — above ₹75,00,000 | RBI (Commercial Banks — Credit Facilities) Directions, 2025, para 111 | 2026-07 |
| Loan against property — RBI LTV cap | no RBI cap | None. RBI prescribes no LTV cap for LAP. | 2026-07 |
| Loan against property — interest deductibility by END USE | depends on end use | 2026-07 |
Not tax or legal advice. See every standard this site uses →