Is it Possible to get a Loan Against Property Without ITR?

Getting a loan is one of the most common ways to meet urgent financial needs in India. Whether it’s for your child’s education, medical bills, or expanding your business, a Loan Against Property (LAP) is often a reliable option. But there’s one question that keeps popping up – is it possible to get a Loan Against Property without ITR?

Let’s break this down in a simple, practical, and real-world way, especially from an Indian perspective. Many individuals in India don’t have a regular ITR (Income Tax Return) filing history. This is especially true for small business owners, farmers, homemakers, and people working in the informal sector. So, can they still apply for a loan? The answer is yes, but with a few conditions.

What is a Loan Against Property?

A Loan Against Property is a type of secured loan where you use your residential, commercial, or even rented property as security. The amount you can borrow depends on the property's current market value, usually up to 60–70%. Since it's backed by an asset, the interest rates are generally lower compared to unsecured loans like personal loans.

People usually take such loans for business purposes, medical emergencies, or big-ticket expenses. The best part is that you still own the property while using its value to raise funds.

Also Read: What is Loan Against Property? - Features, Eligibility, Documents, and more.

Why Lenders Prefer ITR for LAP Approval

Most lenders in India ask for ITR documents because they want to see if you have a steady source of income. ITR helps them evaluate your repayment capacity. It also gives them a clear picture of your financial habits and income patterns over the years.

If you’re salaried or run a registered business, showing ITRs for the past two or three years is usually standard practice. However, not everyone falls under this bracket, especially in India, where many earn in cash or through informal channels.

Is it Really Possible to get a LAP Without ITR?

Yes, it is absolutely possible to get a Loan Against Property without ITR. Many lenders understand the nature of the Indian economy, where a significant portion of the population earns informally. People like shop owners, auto drivers, freelancers, or even those running home-based businesses might not always file income tax returns, but they still earn regularly.

Applying for a loan against property without income tax returns can be challenging, as lenders typically require ITR to assess your repayment capacity. However, some alternatives and factors can improve your chances of approval. By providing strong financial evidence and leveraging other options, you can still qualify for a mortgage loan without ITR.

Bank Statements

Providing 6–12 months of bank statements can act as proof of your income and cash flow. Lenders check for regular deposits, stable balances, and repayment history to gauge your repayment ability in the absence of ITR.

Alternative Income Proof

If you don’t have an ITR, you can submit salary slips, rental income receipts, business invoices, or audited financial statements. These documents help establish your earnings and financial stability.

Good Credit Score

A strong credit score (usually 700+) assures lenders that you have a good repayment track record. Even without ITR, a healthy credit profile improves your chances of getting a loan against property.

Co-Applicant or Guarantor

Adding a co-applicant (such as a spouse or family member with ITRs) or a loan guarantor reduces the lender’s risk. This support can significantly increase the chances of loan approval.

Secured Loans

Since a loan against property is a secured loan, lenders are often more flexible. The property itself acts as collateral, giving lenders confidence even if you cannot produce an ITR.

NBFCs and Fintech Lenders

Non-Banking Financial Companies (NBFCs) and fintech lenders generally have less stringent documentation requirements compared to traditional banks. They may approve loans based on property value, bank statements, and alternative income proofs.

Government-Backed Schemes

Certain government-backed loan schemes provide funding support with relaxed documentation. Exploring these options may help you secure a mortgage loan without ITR, especially if you fall under priority sectors.

Lower Loan Amounts

Applying for a smaller loan amount increases the chances of approval. Lenders are more willing to approve lower-risk loans, even without ITR, if your repayment ability can be justified through other documents.

For example, if you’ve been depositing regular amounts in your bank account or receiving steady rent from a property, these can act as alternate proofs of income. Some lenders might also consider utility bills, GST filings (if applicable), or income certificates issued by local authorities.

Who Can Get a LAP Without ITR?

People who are self-employed or have unorganised income sources are usually the ones who apply for a Loan Against Property without ITR. These include small traders, farmers, street vendors, or even retirees. As long as they have a property in their name and some form of regular income, they are eligible.

While most lenders prefer income tax returns to assess repayment ability, certain applicants may still be eligible for a mortgage loan without ITR if they meet other criteria. Here are some categories of individuals who can qualify:

Self-Employed Individuals

Many self-employed professionals such as shop owners, small traders, freelancers, or service providers may not always file regular ITRs. Lenders may consider their business receipts, invoices, bank statements, or audited financials as alternative proof of income.

Individuals with Informal Income

People earning through cash-based or informal channels (such as artisans, small contractors, or rural entrepreneurs) may still apply for LAP. In such cases, savings patterns, repayment history, and property value play an important role in loan approval.

Individuals with Alternative Income Sources

Applicants who earn through rentals, agriculture, investments, or pension income can secure a loan even without ITR. By submitting proper documentation for these sources, they can prove repayment ability to the lender.

Individuals with High-Value Property

If the applicant owns a high-value residential, commercial, or agricultural property, lenders are more flexible. The property acts as strong collateral, reducing the lender’s risk and making approval easier despite the absence of ITR.

Individuals with a Strong Credit Score

Applicants who maintain a good credit score (700+) and a clean repayment record on existing loans or credit cards are seen as low-risk. A strong credit profile can offset the lack of ITR in a loan application.

Applicants with a Co-applicant

Adding a co-applicant who has a stable income and files ITRs improves eligibility. For example, salaried spouses, family members, or business partners with proper documentation can strengthen the loan application and reduce the lender’s risk.

A Few Things to Keep in Mind

It’s not all smooth sailing, though. Taking a loan without ITR comes with its own set of challenges. For starters, the process may be slower. Since you’re not submitting ITRs, lenders might take extra time to verify your other documents. You might also face slightly higher interest rates since the perceived risk is higher.

There is also a higher chance that the lender will ask for a guarantor or insist on a co-applicant who has an ITR. This helps reduce their risk.

Still, if you own a property that has a good market value, and if you’re able to show some form of steady income, you stand a fair chance.

Downsides of Applying for a Loan Against Property Without ITR

While it is possible to apply for a loan against property without income tax returns, there are certain challenges and risks involved. Lenders rely on ITRs to evaluate repayment capacity, and without them, applicants may face stricter terms. Understanding the loan without ITR risks can help you make an informed decision before applying.

1. Higher Interest Rates

In the absence of ITR, lenders perceive applicants as higher risk. To offset this, they often charge higher interest rates, which increases the overall cost of the loan.

2. Stringent Eligibility Criteria and Lower Loan-to-Value (LTV) Ratio

Lenders may impose stricter eligibility checks and offer a reduced LTV ratio (the percentage of property value you can borrow against). For instance, instead of 70–75% LTV, you may only get 50–60%.

3. Potential for Lower Loan Amounts

Since income proof is limited, lenders may sanction a smaller loan amount compared to what you could have received with ITR documentation.

4. More Thorough Property Evaluation and Slower Process

Without ITR, lenders rely heavily on the property’s value and documents, which can lead to detailed verification, field checks, and longer processing times.

5. Potential Need for Additional Security or Co-Applicant

Some lenders may require you to provide a co-applicant or guarantor, or even pledge additional assets, to reduce their risk exposure.

6. Limited Lender Options

Not all banks are willing to offer a mortgage loan without ITR. This limits your choices, often leaving you with NBFCs or private lenders, who may have higher costs.

Also Read: Everything you should know about ITR filing

The Bottom Line

To wrap it up, yes - it is very much possible to get a Loan Against Property without ITR. But you need to be ready with strong alternate income proofs and a clean credit history. Keep your property documents in order and maintain a consistent bank record.

With the right approach and a trustworthy lender, your property can help you unlock the funds you need, even if you don’t have an ITR.

Apply for a Loan Against Property now and materialize your dreams today itself!

Moreover, if you’re looking to determine your EMIs accurately and plan your financial goals according to them, an LAP EMI calculator can be just what you need! It will accurately calculate your EMIs for you without any hassles.

FAQs

Q.1. What are the tax benefits of a LAP?

A. Under the tax benefit of Section 24(B) of the Income Tax Act of India, salaried individuals can avail of the Loan Against Property income tax benefits of up to INR 2 lakh on a LAP. This is applicable only if the loan amount is used for the purchase or construction of a new residential property.

Q.2. Who is exempted from filing ITR?

A. Senior citizens should be more than 75 years of age. Senior citizens should have been residents of India in previous years. He earns income from interest and pension only.

Q.3. What are the tax benefits of self-occupied property?

A. The tax benefits for self-occupied properties and let-out properties differ. For self-occupied properties, you can claim a tax deduction on the interest paid towards your home loan up to INR 2 lakh each year under section 24b. This limit of INR 2 lakh is aggregate for both self-occupied properties.

Q.4. Can property tax be claimed in ITR?

A. Yes, property tax can be claimed in the ITR if the property is let out. It's deductible from rental income but not applicable for self-occupied properties. Payment proof is essential.

Q.5. Who is exempt from property tax in India?

A. In India, property tax offers an exemption depending on the area. Exemptions include those for senior citizens, charitable foundations, and specific unoccupied buildings, houses or land located within a specific locality as per the city municipality’s act and order.

Disclaimer:

The contents of this article are for information purposes only and not a financial advisory. The information is subject to update, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any decisions, financial or otherwise based on the contents and information mentioned. For more information, please visit www.godrejcapital.com