Agricultural Loan for Land Purchase in 2025

For farmers, their agricultural land is their biggest asset and the source of their livelihood. The bigger the area, the better the income prospects. But expanding land requires money, and not every individual has the necessary funds to purchase land. This is where agricultural loans come in, and act as a vehicle in a farmer’s quest to obtain a piece of land for the purpose of farming.

Let’s explore the different types of agricultural loan for land purchase, how they work, their benefits, and more.

What is an Agricultural Loan for Land Purchase?

An agricultural loan for land purchase is available with the intention of using the funds for acquiring a piece of land for farming and agriculture-related activities. This can include expanding the current farming area by acquiring additional land or acquiring a new piece of land with the intention of using it as a farm. 

How Does It Work?

The process of availing such loans is broadly similar to getting instant business loan. Farmers and eligible applicants can take an agricultural land loan to buy farmland near their existing residence. Lenders typically finance 70–80% of the land’s value, while the rest must be provided as a down payment.

You must own or have rights to the land and provide income proof and clear title documents. Interest rates generally range from 7% to 12% per annum, with longer tenures up to 15 years to match crop cycles. Repayment schedules are often flexible and aligned with harvest timelines. These types of loans are offered by both private and public sector banks, NBFCs, and central and state governments via schemes and programs.

Benefits of an Agricultural Loan for Land Purchase

Availing an agricultural loan for land purchase can bring the following benefits:

• Lower interest rates compared to other loans
• Flexible repayment options linked to crop cycles
• Funding available for the purchase of farmland and allied activities
• Moderate documentation requirements
• Longer tenure options 
• Top Agricultural Loan for Land Purchase Schemes in 2025

Here are some of the popular agricultural loans for land purchase in India in 2025: 

1. Purchase of Land for Agri Purpose - Union Bank of India

This loan is provided by UBI, with the purpose of purchasing agricultural land or to purchase fallow and waste land for cultivation. It offers flexible repayment tenure and no penal interest. Further, the interest rates are dependent on the amount being borrowed.

2. Scheme for Purchase of Agriculture Land - Bank of Baroda

Bank of Baroda provides this scheme for farmers to purchase, develop, and cultivate agricultural and fallow/waste land. This loan is available to marginal farmers, tenant farmers, and women having ownership rights of the land. For processing and inspection charges, slabs are provided.

3. Scheme for Financing Farmers For Purchase of Land For Agricultural Purpose - Canara Bank

This scheme targets small and marginal farmers (up to 5 acres of dry land or 2.5 acres of irrigated land). It offers loans up to ₹10 lakh based on valuation or circle rate plus stamp duty. The margin is 20%, and security includes crop hypothecation and land mortgage. Repayment is in 7–10 years, with up to a 2-year moratorium. 

4. Scheme for Financing Farmers for Purchase of Land by Small and Marginal Farmers - Bank of Maharashtra

Available to marginal and tenant farmers (holding up to 5 acres unirrigated or 2.5 acres irrigated, including new land), this scheme provides loans up to ₹20 lakh. Margin is 20%, repayment spans 7–10 years, with a moratorium of up to 2 years. 

Interest Rates on Agricultural Loan for Land Purchase

Here is the list of the latest interest rates charged by different banking institutions on agricultural loans for land purchase

Eligibility Criteria for Agricultural Loan for Land Purchase

The following are some of the common criteria for availing such loans:

• Small and Marginal farmers
• Share croppers/Tenant farmers
• Entrepreneurs with an agricultural background

My Mudra Tip

With My Mudra, not only can you find the right loan, but we also help you understand which add-ons are truly worth it. This helps you make informed choices while keeping your financial well-being intact.

Summing Up

Agricultural loans are one of the easiest loans to repay, with highly attractive features and various alternatives available, making them an ideal source of funds for agriculture-related activities. At My Mudra, we aim not just to help you get the right loan, but also the right protection. Speak to our team today. Secure your loan. Secure your future.