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  • Home Loan Subsidy by the Government

    The government launched the ‘Pradhan Mantri Awas Yojana – Housing for All’ scheme with the aim that every Indian household should have a pucca house by 2022. Under the scheme, home loan interest subsidy can be availed by individuals if they meet the necessary criteria. The interest subsidy is provided under the Credit Linked Subsidy Scheme (CLSS).

    What is Credit Linked Subsidy Scheme (CLSS)?

    Credit Linked Subsidy Scheme is one of the components under the Pradhan Mantri Awas Yojana (PMAY). Under it, the central government offers interest subsidy on home loans availed by applicants who fall under:

    • EWS (Economically Weaker Section)/LIG (Low Income Group)
    • Revised EWS (Economically Weaker Section)/LIG (Low Income Group)
    • MIG – I (Middle Income Group 1)
    • MIG – II (Middle Income Group 2)

    Affordable Housing through Credit Linked Subsidy

    • EWS /LIG
    • Under the Economically Weaker Sections (EWS) or Low Income Group (LIG) scheme, interest subsidy is offered at a rate of 6.50%. The interest subsidy is offered during the tenure of the loan or for 15 years depending on whichever is lower. The interest subsidy is provided for loans up to Rs.6 lakh with the maximum subsidy amount being Rs.2.20 lakh.

    • Revised EWS/LIG
    • Interest subsidy under revised EWS/LIG is offered at 6.50%. The subsidy is offered for the actual tenure of the home loan or for a period of 20 years. The maximum subsidy amount is Rs.2.67 lakh. Subsidy can be availed on home loans that were approved on or after 1 January 2017.

    • MIG – I
    • Applicants who fall under MIG – I category can avail subsidy at the rate of 4% with the maximum loan amount being Rs.9 lakh. The maximum loan term taken into consideration for calculation of subsidy is 20 years. Under the scheme, the maximum subsidy amount is Rs.2.35 lakh.

    • MIG – II
    • Under MIG – II, the maximum loan amount for subsidy is Rs.12 lakh and beneficiaries can avail an interest subsidy of 3%. Under the category, the maximum subsidy amount that can be availed is Rs.2.30 lakh The maximum term of loan on which subsidy will be calculated is 20 years.

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

    Criteria EWS/LIG Revised EWS/LIG MIG - I MIG - II
    Woman Ownership Yes Yes N/A N/A
    Annual Household Income EWS - Up to Rs.3 lakh LIG – Rs.3 lakh to Rs.6 lakh EWS - Up to Rs.3 lakh LIG – Rs.3 lakh to Rs.6 lakh Rs.6.0 lakh – Rs.12 lakh Rs.12.0 lakh to Rs.18 lakh
    Maximum loan amount for Subsidy Up to Rs.6 lakh Up to Rs.6 lakh Up to Rs.9 lakh Up to Rs.12 lakh
    Subsidy % 6.50% 6.50% 4% 3%
    Maximum Subsidy Amount Rs.2.20 lakh Rs.2.67 lakh Rs.2.35 lakh Rs.2.30 lakh
    NPV 9% 9% 9% 9%
    Maximum term of loan on which subsidy will be calculated 15 years 20 years 20 years 20 years
    Carpet area EWS - 30 sqm LIG – 60 sqm EWS - 30 sqm LIG – 60 sqm 160 sqm 200 sqm
    Validity 2022 2022 31/3/2020 31/3/2020
    Applicability Loans approved on or after 17/6/2015 Loans approved on or after 01/01/2017 Loans approved on or after 01/01/2017 Loans approved on or after 01/01/2017
    Location All statutory towns as per 2011 census and the towns added subsequently All statutory towns as per 2011 census and the towns added subsequently All statutory towns as per 2011 census and the towns added subsequently All statutory towns as per 2011 census and the towns added subsequently
    Property should be Family’s 1st home 1st home 1st home 1st home

    Are You Eligible to Avail the Benefits Under PMAY?

    In order to avail the benefits under PMAY, you need to make sure that that the eligibility criteria mentioned below are fulfilled:

    • Should not own a pucca house in your name or in the name of any other member of the family.
    • The ownership of the house should either be in the name of the female member of a household or in joint ownership with your wife (applicable to EWS/LIG and revised EWS/LIG schemes only).
    • Should meet the income criteria as per various categories under the scheme.
    • The carpet area of the house should be 30 sqm for EWS beneficiaries, 60 sqm for LIG beneficiaries, 160 sqm for MIG – I beneficiaries, and 200 sqm for MIG – II beneficiaries
    • Should not have taken a home loan or availed interest subvention benefit under the scheme.

    Maximum Subsidy That Can Be Claimed

    Under CLSS, the maximum subsidy you can claim is Rs.2.67 lakh. The amount can be availed under revised EWS/LIG scheme. The subsidy is offered at the rate of 6.50%.

    Credit Linked Subsidy Scheme Helpline Number

    The toll-free helpline numbers for the Credit Linked Subsidy Scheme are listed below:

    • National Housing Bank (NHB): 1800-11-3377, 1800-11-3388
    • State Bank of India (SBI): 1800-11-2018
    • Housing and Urban Development Corporation (HUDCO): 1800-11-6163

    FAQs on Home Loan Subsidy by the Government

    1. Are you Eligible to get a Home Loan Subsidy?

      The Economically Weaker Section or Low Income Group is eligible for the greatest subsidy under CLSS, which is Rs. 2.67 lakhs. For a maximum loan amount of Rs. 6 lakhs, a 6.50% subsidy rate is being granted.

    2. When did the government launch the PMAY scheme for MIG?

      The Indian government began implementing CLSS as a part of the Pradhan Mantri Awas Yojana-Urban for Middle Income Groups on 1 January 2017.

    3. Which central nodal agencies are operating the disbursal of subsidy under CLSS?

      National Housing Bank (NHB) and Housing and Urban Development Corporation Limited (HUDCO) are the central nodal agencies which are operating the disbursal of subsidy under CLSS.

    4. How is the subsidy disbursed to the central nodal agencies?

      First an advance subsidy is disbursed at the start of the scheme by the central government. The remaining subsidy will be released after 70% of the earlier amounts are utilised on a quarterly basis or based on claims raised by the CNA.

    5. Do Primary Lending Institutions (PLIs) have to enter into MOUs with the central nodal agencies for claiming subsidies?

      Yes, they will be required to enter into an MOU with one of the central nodal agencies if they want to claim benefit under CLSS.

    6. Can I avail the subsidy if I purchase a newly constructed house that is being resold?

      Yes, you can avail the subsidy as under the definition of a new construction, the resale of a new construction house is included.

    7. Is carrying out repairing work to the existing house covered under CLSS?

      Yes, it is covered. However, repairing work can be undertaken only in kutcha and semi-pucca houses. In case it is a semi-pucca house the benefit can be availed only if extensive renovation needs to be carried out to make it a pucca house.

    8. Are beneficiaries of the Credit Linked Subsidy Scheme for Affordable Housing to receive any special treatment?

      Yes, under the CLSS, preference will be offered to manual scavengers, women (with a preference for widows), minorities, people with disabilities, transgenders, and people from Scheduled Castes and Tribes and Other Backward Classes, provided that the beneficiaries fall under the EWS, LIG, and MIG-I & II segments.

    9. Can a CLSS beneficiary obtain a 30-year home loan?

      Yes, depending on the due diligence requirements of the PLIs concerned, the beneficiary may obtain a 30-year home loan. However, in these circumstances, the interest subsidy will be limited to the maximum amounts permitted for the relevant income categories for a maximum tenure of 20 years for home loans.

    10. What happens if the subsidy has already been paid out, but the house's construction does not proceed forward for some reason?

      The subsidy is to be retrieved by the PLI and returned to the CNA who issued it in instances where the construction of the house has not been finished within 36 months of the date of releasing the first disbursement.

    11. Where can I find a list of the approved towns where the scheme is functioning?

      The list of Statutory Towns, as well as any additional towns notified later, is provided by CNAs and is available on the CNAs and PMAY(U) websites.

    12. Is reselling from (builder/seller) permitted under CLSS?

      Resale cases are permitted, but banks must implement their due diligence and banking mechanisms in order to restrict speculative cases in this situation.

    13. Are NRIs eligible for this scheme?

      NRIs may be considered if they meet the Scheme Guidelines and are in accordance with any other GoI/RBI rules that apply to NRIs.

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