A Guide for Home Loan Subsidy Under PMAY

When the Pradhan Mantri Awas Yojana (PMAY) was introduced in 2015, it was hailed as a revolutionary step towards uplifting the economically weaker sections of the society. With the primary aim of providing ‘Housing for All’ by 2022, PMAY promised affordable houses with basic facilities like water, electricity and sanitation.

Already, 1.53 crore houses have been built under the scheme as of 1 February 2019, and in the recently concluded Union Budget, the government has proposed further monetary and legal support to strengthen PMAY’s reach. With home loan subsidies too allotted under PMAY owning a home can now stop being a dream and turn into reality.

We give you the lowdown on the factors to consider while applying for a home loan under PMAY and how to be eligible for all its benefits.

Who is PMAY meant for?

PMAY is divided into urban and rural schemes with different criteria of eligibility for each. PMAY-Gramin (PMAY-G) targets the homeless, and families who are living in dilapidated and broken houses and have no money for repairs.

PMAY-Urban (PMAY-U) is targeted at the urban population who are classified into the Economically Weaker Section (EWS), Lower Income Group (LIG), the Middle Income Group I (MIG-I) and Middle Income Group II (MIG-II).

Home loans under PMAY

The home loan subsidy scheme under PMAY is a Credit Linked Subsidy Scheme (CLSS) that enables an applicant to enjoy subsidies on the interest rate on the home loan based on eligibility. The basic eligibility criteria are

• The applicant should not already own a house
• One cannot apply if one has already benefited from a government housing scheme before
• The carpet area of the house in question is limited to a range of 645 sq ft to 2150 sq ft depending on the income slab one falls under

Every applicant under PMAY must fall under the following income slabs to be qualified for a home loan subsidy.

• EWS – up to Rs 3 lakhs
• LIG – between Rs 3 lakhs and Rs 6 lakhs
• MIG-I – between Rs 6 lakhs and Rs 12 lakhs
• MIG-II – between Rs 12 lakhs and Rs 18 lakhs

Every income slab has a different rate of subsidy as well as carpet area allotment.

EWS and LIG category

Applicants under both categories receive almost the same benefits except allotted carpet area. Both are allowed an interest subsidy of 6.50% on a loan of up to Rs 6 lakhs. While the earlier tenure for repayment was 15 years, the government has now increased it to 20 years to encourage more people to apply for the scheme. The carpet area allotted for people under EWS is 322 sq ft while for LIG it is 645 sq ft.

MIG-I

Applicants under MIG-I can avail of a home loan interest subsidy of 4% on a loan up to Rs 9 lakhs. The tenure is a maximum of 20 years and the carpet area allowed is 1722 sq ft.

MIG-II

Under MIG-II applicants are eligible for a subsidy of 3% on a loan of up to Rs 12 lakhs and tenure of maximum 20 years. The carpet area allotted is 2152 sq ft.

High priorities

Widows, single working women, and women who are the sole breadwinners of the family get a high priority under this scheme as do senior citizens and differently-abled people.

Processing fees are also waived, and applicants only need to pay the 4% concessional GST charges as opposed to the full 12%.