Housing is one of the basic needs of human beings, and to meet the shortage of housing, the central government launched the Pradhan Mantri Awas Yojana (PMAY) in June 2015.
There are two components of this flagship housing mission. For the urban housing shortage, one is called Pradhan Mantri Awas Yojana – Urban (PMAY-U) and Pradhan Mantri Awas Yojana – Gramin (PMAY-G).
As part of PMAY-U, the government offers interest subsidies on housing loans of first-time homebuyers who meet the eligibility criteria.
PMAY-U: Eligibility criteria
PMAY-U is a central government scheme, and it is applicable all over the country.
Therefore, people in any part of the country can seek interest subsidies on housing loans under PMAY-U.
It is available to first-time homeowners. However, it is offered on a household basis, meaning the benefits of this scheme will not be available if anyone in the family already owns a pucca home.
By family, it means wife, husband, and unmarried children. Adult children having their income are considered separate families.
PMAY-U encourages women to seek home loans and owns a house.
Under this scheme, it is mandatory to register the house in a woman’s name in the family. However, for loans taken for a home extension, this condition is not applicable.
All homes under PMAY-U should be made under RERA guidelines. This means the material and technology used in building the house should be eco-friendly.
Eligibility criteria for interest subsidy on housing loan under PMAY-U scheme
| Particulars | EWS | LIG | MIG-I | MIG-II |
| Household annual income | Up to Rs 3 lakh | From Rs 3 lakh to Rs 6 lakh | From Rs 6 lakh to Rs 12 lakh | From Rs 12 lakh to Rs 18 lakh |
| Max loan amount for subsidy | Rs 6 lakh | Rs 6 lakh | Rs 9 lakh | Rs 12 lakh |
| Subsidy interest per annum | 6.5% | 6.5% | 4% | 3% |
| Max carpet area | 30 sq. m. | 60 sq. m. | 160 sq. m. | 200 sq. m. |
| Max loan tenure | 20 years | 20 years | 20 years | 20 years |
PMAY-U: Benefits
Under the Pradhan Mantri Awas Yojana (PMAY), home loan aspirants looking to benefit from PMAY-U are divided into four income groups.
These groups are EWS, LIG, MIG-I, MIG-II or Economically Weaker Section, Low Income Group, Middle Income Group – I-, and Middle-Income Group-II.
Families under EWS and LIG, which constitute incomes up to Rs. 3 lakh and Rs 6 lakh per annum, respectively, can benefit from the PMAY-U credit-linked subsidy scheme (CLSS). Under this scheme, they receive a subsidy of 6.5% on a loan amount of Rs 6 lakh for a tenor of 20 years. However, their maximum benefit is capped at Rs 2.67 lakh.
Families under MIG-I and MIG-II, which cover income groups between Rs 6 lakh to Rs 12 lakh and Rs 12 lakh to Rs 18 lakh per annum, respectively, get a housing loan subsidy of 4% and 3% or a maximum of Rs 2.35 lakh and Rs 2.30 lakh, respectively.
In addition, they get a subsidy on a loan amount up to Rs 9 lakh and Rs 12 for 20 years.
For home loans under the Pradhan Mantri Awas Yojana (PMAY), the government has reduced the GST from 12% to 8%.
**Home loan aspirants can take loans above the subsidized amount, but those above the subsidized amount will not receive any subsidy.
How is the subsidy paid?
The subsidy amount is credited upfront to the beneficiary’s loan account. This reduces the loan amount, resulting in lower EMIs.
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