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    Home Loan Subsidy by the Government

    The home loan interest subsidy can be availed under the Pradhan Mantri Awas Yojana Scheme. The Government of India has launched the ‘Housing For All by 2022’ mission under which it aims at offering houses to various categories of the society. These categories include EWS (Economically Weaker Section), LIG (Low Income Group), and MIG 1 and 2 (Middle Income Group 1 and 2).

    Under this mission, central assistance will be provided to the people by setting up PMAY Units across all the states and union territories in India.

    Affordable Housing via Credit Linked Subsidy Scheme (CLSS)

    In order to support the people residing in the urban areas and catering to their housing needs, the Pradhan Mantri Awas Yojana provides a Credit Linked Subsidy. Credit Linked Subsidy will be offered on the housing loans taken by the eligible individuals under EWS, LIG, or MIG category. The subsidy can be availed for construction of the house, buying a ready to move in property, renovation of the house, etc. The four schemes under the affordable housing via Credit Linked Subsidy are mentioned below.

    • CLSS – LIG/EWS
    • Revised CLSS – LIG/EWS
    • CLSS (MIG 2)
    • CLSS (MIG 1)

    Credit Linked Subsidy Scheme for Low Income Group and Economically Weaker Section:

    Under this particular scheme, the credit linked interest subsidy is offered at a rate of 6.50% for a period of 15 years or the actual tenure of the loan, whichever is lower. It will be offered to all the beneficiaries who fall under the LIG or EWS categories formed by the Indian Government.

    The applicants belonging to EWS (Economically Weaker Section) and LIG (Low Income Group) are defined as follows:

    • The applicants under the EWS category must have an annual income of up to Rs.3 lakh.
    • The applicants under the LIG category must have an annual income ranging between Rs.3 lakh and Rs.6 lakh.
    • Approximately Rs. 2.2 lakh is the maximum subsidy that can be availed.

    Eligibility and Coverage for CLSS – LIG/EWS

    • The house should be owned either solely by a female member or jointly with a woman co-owner. However, the condition will not stand mandatory, if the house is being constructed on a plot of land that is already existing or for renovation and extension of a kuccha house or a semi-pucca house.
    • He beneficiary family must not own any pucca house either in his/her on name or in any of his/her family members’ name in any part of this country.
    • The carpet area of the house under this particular scheme must be up to 30 sq meters for the beneficiaries under the EWS category. In case of the beneficiaries under the low income group, the carpet area of the house must be up to 60 sq metres.
    • The Credit linked Subsidy can be availed for all the housing loans taken for acquisition of the property, repair of the house, construction of the house, extension of kuccha house or a semi-pucca house.
    • Maximum loan tenure on which the interest subsidy will be calculated stands at 15 years.

    Revised Credit Linked Subsidy for Low Income Group and Economically Weaker Section

    Under this particular scheme, the credit linked interest subsidy is offered at a rate of 6.50% for a period of 15 years or the actual tenure of the loan, whichever is lower. It will be offered to all the beneficiaries who fall under the LIG or EWS categories formed by the Indian Government.

    The applicants belonging to EWS (Economically Weaker Section) and LIG (Low Income Group) are defined as follows:

    • The applicants under the EWS category must have an annual income of up to Rs.3 lakh.
    • The applicants under the LIG category must have an annual income ranging between Rs.3 lakh and Rs.6 lakh.
    • Approximately Rs. 2.67 lakh is the maximum subsidy that can be availed.

    Eligibility and Coverage Revised CLSS – LIG/EWS

    • The house should be owned either solely by a female member or jointly with a woman co-owner. However, the condition will not stand mandatory, if the house is being constructed on a plot of land that is already existing or for renovation and extension of a kuccha house or a semi-pucca house.
    • He beneficiary family must not own any pucca house either in his/her on name or in any of his/her family members’ name in any part of this country.
    • The carpet area of the house under this particular scheme must be up to 30 sq meters for the beneficiaries under the EWS category. In case of the beneficiaries under the low income group, the carpet area of the house must be up to 60 sq metres.
    • The Credit Linked Subsidy can be availed for all the housing loans taken for acquisition of the property, repair of the house, construction of the house, extension of kuccha house or a semi-pucca house.
    • Maximum loan tenure on which the interest subsidy will be calculated stands at 20 years.

    Scope and Coverage for MIG 1 and 2 under PMAY CLSS

    All the statutory towns according to 2011 sensors and the towns notified subsequently stand eligible for CLSS coverage for the middle income group. Under this scheme, the statutory tons nd the surrounding municipal areas will be covered for providing home loan interest subsidy to the beneficiaries listed under MIG.

    • For a loan amount of up to Rs.9 lakh, the beneficiaries listed under MIG 1 can avail a credit link interest subsidy of 4%. For a loan amount of up to Rs.12 lakh, the beneficiaries listed under MIG 2 can avail a credit linked interest subsidy of 3%. However, lenders can sanction housing loans above Rs.9 lakh or Rs.12 lakh but the interest subsidy will be restricted to the mentioned amount.
    • Under the Credit Linked Subsidy Scheme (CLSS), the subsidy can be availed for a tenure of 20 years or the actual tenure, whichever is lower. However, the banks can sanction home loans for a maximum tenure of 30 years, but the loan must be repaid before the borrower reaches 70 years of age.
    • The NPV or the Net Present Value of the subsidy is calculated at a discounted rate of 9% and it is credited to a borrower's loan account.
    • Under MIG 2, the maximum subsidy that can be availed stands at approximately Rs.2.30 lakh. Under MIG 1, the maximum subsidy that can be availed stands at approximately Rs.2.35 lakh.

    Eligibility for MIG 1 and MIG 2

    • For MIG 1, the beneficiary household must have an annual income ranging between Rs.6 lakh and Rs.12 lakh.
    • For MIG 2, the beneficiary household must have an annual income ranging between Rs.12 lakh and Rs.18 lakh.
    • The beneficiaries are defined as family including wife, husband, and unmarried children. Any adult earning member of the family, irrespective of his/her martial status an be considered as a separate household and can also independently avail the subsidy.
    • In case the applicant is married, both spouses or either of them stand eligible for subsidy on a single house. It is subject to their income eligibility under this scheme.
    • The beneficiary family must not own any pucca house either in his/her on name or in any of his/her family members’ name in any part of this country.
    • The carpet area of the houses for MIG 1 beneficiaries must be up to 120 sq metres. The carpet area of the houses for MIG 2 beneficiaries must be up to 150 sq metres.

    Pradhan Mantri Awas Yojana - Credit Linked Subsidy Scheme (PMAY-CLSS)

    Criteria Existing Instructions (CLSS – EWS +LIG) Revised Instructions (CLSS – EWS +LIG) CLSS (MIG-I) CLSS (MIG-II)
    Applicability Loans approved on/after 17/06/2015 Loans approved on/after 01/01/2017 Loans approved on/after 01/01/2017 Loans approved on/after 01/01/2017
    Validity 2022 2022 31/03/2019 31/03/2019
    Property should be Family’s 1st home 1st home 1st home 1st home
    Max term of loan (on which subsidy will be calculated) 15 yrs 20 yrs 20 yrs 20 yrs
    NPV 9% 9% 9% 9%
    Subsidy Amount Rs.2.20 lakh Rs.2.67 lakh Rs.2.35 lakh Rs.2.30 lakh
    Subsidy% 6.50% 6.50% 4% 3%
    Max Loan Amt for Subsidy Up to 6 lakh Up to 6 lakh Up to 9 lakh Up to 12 lakh
    Woman Ownership Yes (except for construction) Yes (except for construction) NA NA
    Location 4487 towns 4487 towns Urban -2011 Urban -2011
    Property Area (Carpet Area) 30/60 sqm 30/60 sqm 120 sqm 150 sqm
    Household/ Annual Income (Rs) Up to Rs. 6 lakh Up to Rs. 6 lakh Rs.6.01-12.00 lakh Rs.12.01-18.00 lakh

    How to Avail Pradhan Mantri Awas Yojana Subsidy

    • The aim of the Pradhan Mantri Awas Yojana is to offer houses for all the citizens of India within a specific time frame.
    • The subsidy amount that can be availed under the Pradhan Mantri Awas Yojana is directly credited to the beneficiary’s loan account. As the subsidy amount is credited in the loan account, the principal outstanding loan comes down in turn reducing the monthly instalments for the borrower.
    • Once the equated monthly instalment comes down, it becomes easier for the borrower to repay the loan. If the borrower chooses to pay the original EMI amount, the tenure of the loan will come down. If he/he chooses to keep the same tenure, then the monthly outgo towards the instalment payment will be reduced.
    • One of the primary condition of the Pradhan Mantri Awas Yojana – Credit Linked Subsidy Scheme is that the beneficiary family must not own any pucca house either in his name or in his/her family member’s name (family includes husband, wife, and unmarried children).
    • Under this scheme, MIG beneficiaries with a yearly income ranging between Rs.6 lakh and Rs.12 lakh can enjoy an interest subsidy of 4% for 20 years on a loan of Rs.9 lakh.
    • 3% subsidy can be availed by MIG beneficiaries with a yearly income ranging between Rs.12 lakh and Rs.18 lakh.

    Frequently Asked Questions on Home Loan Subsidy

    1. Who can enjoy interest subsidy under the CLSS (Credit Linked Subsidy Scheme)?
    2. A beneficiary family with no pucca house in any part of this country stands eligible for subsidy under Credit Linked Subsidy Scheme. The beneficiary family must meet the income criteria to qualify for the subsidy.

    3. What is meant by beneficiary family?
    4. By definition, the beneficiary family includes unmarried children, husband, and wife. Any adult member who earns can be considered as a separate household under the MIG category, irrespective of his/her marital status.

    5. What are the income criteria for MIG, LIG, and EWS categories?
    6. Income criteria for Middle Income Group 1 and 2:

      For MIG 1, the beneficiary household must have an annual income ranging between Rs.6 lakh and Rs.12 lakh.

      For MIG 2, the beneficiary household must have an annual income ranging between Rs.12 lakh and Rs.18 lakh.

      Income criteria for Low Income Group: The applicants under the LIG category must have an annual income ranging between Rs.3 lakh and Rs.6 lakh.

      Income criteria for Economically Weaker Section: The applicants under the EWS category must have an annual income of up to Rs.3 lakh.

    7. Is woman ownership of property mandatory for availing subsidy?
    8. Under the Pradhan Mantri Awas Yojana Subsidy scheme, co-ownership or sole ownership is mandatory for Low Income Group and Economically Weaker Section. However, the condition is not mandatory for the extension or construction of properties.

    9. How can I claim interest subsidy under PMAY?
    10. After the loan amount has been disbursed, the details are sent by your bank to NHB for data validation and other necessary checks. Post that the National Housing Bank approves the subsidy to the eligible borrowers and sends the amount directly to the loan account of the borrowers.

    11. Can any beneficiary family avail a loan term for more than 20 years?
    12. The bank may give the loan to the applicant for a tenure more than 20 years, but the subsidy will be available only up to 20 years.

    13. How does interest subsidy work in case of home loan balance transfer?
    14. If the borrower has already availed interest subsidy on a housing loan from a particular bank, he/she will not be able to claim the subsidy again if he/she goes for a home loan balance transfer for availing better rates.

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