Owning a home is a dream for many, but rising property prices and hefty interest rates can turn that dream into a distant reality. Thankfully, the Indian government offers various home loan subsidy programs to make homeownership more accessible. These programs can significantly reduce your interest burden, making monthly equated installments (EMIs) more manageable.
Things we covered for you
+
A government subsidy for a home loan can significantly reduce the interest rate, making homeownership more affordable for many individuals and families. Let’s explore the different home loan subsidy options available and how you can leverage them to save big on your mortgage!
Pradhan Mantri Awas Yojana Home Loan
The Pradhan Mantri Awas Yojana (PMAY), specifically the PMAY-U (Urban) program, offers a credit-linked subsidy (CLSS) to help eligible urban households achieve homeownership. Let’s break it down:
What is PMAY-U?
- Launched in 2015, PMAY-U aims to provide affordable housing for economically weaker sections (EWS), low-income groups (LIG), and middle-income groups (MIG I & II) in urban areas.
Types of PMAY Scheme
There are two sub-sections of the PMAY scheme which are divided based on the area on which they focus:
- Pradhan Mantri Awas Yojana Gramin – The Pradhan Mantri Awas Yojana – Gramin (PMAY-G) was previously known as the Indira Awas Yojana and was christened as PMAY-G in 2016. The scheme is aimed at the provision of affordable and accessible housing units to eligible beneficiaries in rural regions of India (excluding Chandigarh and Delhi).
Under this scheme, the Government of India and the respective state governments share the cost of development of housing units in the ratio of 60:40 for plain regions and 90:10 for northeastern and hilly regions.
- Pradhan Mantri Awas Yojana Urban – The Pradhan Mantri Awas Yojana – Urban (PMAYU), as the name suggests, is focused towards the urban areas in India. At present, there are 4,331 towns and cities which are enlisted under this scheme.
The scheme is set to function under three different phases:
Phase 1: Under Phase 1, the government targeted to cover 100 cities in different states and UTs across the country from April 2015 to March 2017.
Phase 2: Under Phase 2, the government targeted to cover 200 more cities in different states and UTs across the country from April 2017 to March 2019.
Phase 3: Under Phase 3, the government targeted to cover the cities which have been left out in Phase 1 and Phase 2 and attain the target by the end of December 2024.
How does the Home Loan Subsidy Work?
- PMAY-U provides an interest rate subsidy on home loans availed through lending institutions like banks.
- The subsidy amount varies depending on your income category and loan amount.
- Beneficiaries can enjoy a subsidised interest rate of up to 6.5% for a tenure of 20 years or the loan term, whichever is lower.
Who is Eligible for PMAY Home Loan Subsidy?
To be eligible for the PMAY home loan subsidy under the Credit Linked Subsidy Scheme (CLSS), you need to meet a few key criteria:
- Should be the citizen of India.
- Beneficiaries of Economically Weaker Section (EWS)/Low Income Group (LIG), Middle Income Group (MIG)-I and Middle Income Group (MIG)-II seeking housing loans from Banks.
- Each income category has a specific annual household income limit. These limits can vary slightly depending on your location.
Eligibility Criteria for Economically Weaker Section (EWS):
Annual Household Income up to ₹3,00,000 and house sizes up to 30 sq.m.
Eligibility Criteria for Low Income Group (LIG)
LIG households are defined as households having an annual income from ₹3,00,001 up to ₹6,00,000. States/UTs shall have the flexibility to redefine the annual income criteria as per local conditions in consultation with MoHUA.
Eligibility Criteria for Middle Income Group (MIG)
- Middle Income Group – MIG – I households are defined as households having an annual income from ₹6,00,001 up to ₹12,00,000.
- MIG-II households are defined as households having an annual income from ₹12,00,001 up to ₹18,00,000.
2.67 Lakh Subsidy on Home Loan
The maximum subsidy amount you can avail of under the Pradhan Mantri Awas Yojana (PMAY) home loan subsidy is indeed Rs. 2.67 lakh. This applies specifically to the Economically Weaker Section (EWS) and Low-Income Group (LIG) categories.
Here’s a breakdown of why the maximum subsidy is Rs. 2.67 lakh for these groups:
- Subsidy Rate: Both EWS and LIG categories qualify for an interest rate subsidy of 6.50% per annum.
- Maximum Loan Amount: The subsidy is applicable for a loan amount of up to Rs. 6 lakh for both EWS and LIG.
PMAY Interest Subsidy
| Income Group | Interest Subsidy | Maximum Loan for Subsidy | Household Income (₹ p.a) | Dwelling Unit Carpet Area |
| EWS | 6.50% | ₹6 lakh | Upto 3,00,000/- | Upto 30 Sq.m |
| LIG | 6.50% | ₹6 lakh | 3,00,001/- to 6,00,000/- | Upto 60 Sq.m |
| MIG-1 | 4.00% | ₹9 lakh | 6,00,001/- to 12,00,000/- | Upto 160 sq.m |
| MIG-2 | 3.00% | ₹12 lakh | 12,00,001/- to 18,00,000/- | Upto 200 sq.m |
Benefits of PMAY Home Loan Subsidy
- Lowers your Equated Monthly Instalment (EMI) making homeownership more affordable.
- Reduces the overall interest burden on your home loan.
How to Apply for the PM Awas Yojana Online?
You can Apply for the PM Awas Yojana (PMAY) through the PMAY portal. The PMAY application process is straightforward to use. All you need to do is enter your Aadhaar number. Follow the on-screen instructions and complete and submit the PMAY application form.
Read: LTV Ratio for Home Loan: What is It and How to Calculate
Book Best Packers & Movers with Best Price, Free Cancellation, Dedicated Move Manager
This is third
This is third
This is fourth
This is fourth
This is fifth
This is fifth
This is six
This is six
This is seven
This is seven
This is eight
This is eight
Urban PMAY
Step 1 – Visit the official PMAY portal.
Step 2 – Click on the ‘Citizen Assessment’ option or the ‘Apply Online’ option.
Step 3 – Depending on your income group choose EWS/LIG/MIG.
Step 4 – Enter all the requested details such as your personal information, Aadhaar number, income details, etc.
Step 5 – Submit your application.
Your application will be verified by the concerned authority. You can visit the PMAY portal to track the status of your application.
Rural PMAY
Step 1 – Visit the official website of PMAY Gramin.
Step 2 – On the main page, click on the ‘IAY/PMAYG’ option.
Step 3 – Enter all the requested details such as your personal information, Aadhaar number, and bank account details.
Step 4 – Submit your application.
Your application will be verified by the concerned authority. You can visit the PMAY portal to track the status of your application.
How NoBroker Can Help
Home loan subsidy can significantly ease the financial burden of achieving homeownership. By lowering interest rates, these schemes make monthly payments more manageable, particularly for those in the economically weaker sections and lower-income groups. This government support paves the way for more citizens to realise the dream of owning a home.
Struggling with home loan subsidy? NoBroker simplifies your home loan journey. They offer loan comparisons from various lenders, handle document verification, and provide expert assistance throughout the process. Get a head start on your dream home – visit NoBroker today.
Frequently Asked Questions
Q. Are there home loan subsidies specifically for women?
Ans: Yes, some government schemes, like the Pradhan Mantri Awas Yojana (PMAY), prioritise giving homeownership subsidies to families when the house is owned by the woman or jointly owned by the woman. This aims to empower women.
Q. What are some home ownership subsidy schemes available?
Ans: The main home ownership subsidy scheme in India is the PMAY. This scheme offers credit-linked subsidies (CLSS) that reduce interest rates on home loans for Economically Weaker Sections (EWS), Low-Income Groups (LIG), and Middle-Income Groups (MIG).
Q. Is there a home loan subsidy for army personnel?
Ans: Yes, several banks offer special home loan schemes for army personnel. These schemes typically come with lower interest rates, processing fee waivers, and longer repayment terms compared to regular home loans. An example is the SBI Shaurya Home Loan.
Read: Indiabulls Home Loan Interest Rates – Updated in May 2024
Q. How do I know if I am eligible for a housing loan interest subsidy scheme?
Ans: Eligibility for housing loan interest subsidy schemes depends on factors like income, category (EWS, LIG, MIG), and the specific scheme. You can find details and eligibility criteria on the websites of the Ministry of Housing and Urban Affairs (https://pmay-urban.gov.in/) and the lending institutions.
Q. Where can I find more information about home loan subsidies?
Ans: You can find information about home loan subsidies on the websites of the Ministry of Housing and Urban Affairs (https://pmay-urban.gov.in/), National Housing Bank (https://www.nhb.org.in/), and lending institutions like banks and housing finance companies.
