Here is a Checklist for Home Loan Subsidy 2021

25 Jan 2021 // 26 min read // Home Loans
Author :(560 posts)

With the rising prices of residential properties across India, the dream of becoming a homeowner seemed like a distant reality for a common man. This is why the government of India took the initiative and incorporated several measures to make purchasing a residential property affordable for everyone.

One of the biggest steps in this direction was the introduction of the Home Loan Subsidy in the form of Pradhan Mantri Awas Yojana 2021.

About Pradhan Mantri Awas Yojana

Pradhan Mantri Awas Yojana (PMAY) is a scheme launched by the Government of India to bring about positive disruption in the real estate sector by improving the affordability of houses. The aim of this scheme is to achieve the goal of “Housing for All” by March 31st, 2022. The government plans to fulfil this target by constructing 20 million houses across our country, thereby achieving many sustainable development goals and empowering all Indians financially.

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The scheme has four components- In-situ slum redevelopment with private sector participation, affordable housing through credit-linked subsidy scheme, affordable housing in partnership with the private and public sector, beneficiary led house construction/ enhancement. The central government promises assistance of Rs. 1,00,000 to Rs. 2,30,000 for the same.

1. Pradhan Mantri Awas Yojana Urban (PMAY-U)

This scheme covers about 431 towns and cities. It houses the urban development authority, special area development authority, notified planning, industrial development authority etc. and the other authorities who are responsible for urban planning.

It has been following a three-phase process:

  1. Covering 100 cities between April 2015 and March 2017
  2. Covering 200 additional cities between April 2017 and March 2019
  3. Covering the remaining cities between April 2019 and March 2022

2. Pradhan Mantri Awas Yojana Gramin (PMAY-G)

It was originally known as the Indira Awas Yojana. It is aimed at promoting accessibility and affordability of housing for all people in rural areas. The objective is to provide financial assistance to the homeless and those residing in unfit houses.

In an attempt to boost the purchases in the real estate sector, the Government launched PMAY, and this cost of this housing development will be shared between the Central and State Government.

According to the Pradhan Mantri Awas Yojana, middle-class individuals are eligible for a subsidy on the interest of 3 percent to 4 percent on the Home Loan EMIs.

Now you must be wondering how you can avail this Housing Loan subsidy. Will you be eligible for the subsidy? How can you apply for the scheme and get a Home Loan? Read on to know more.

Eligibility Criteria

These Home Loan subsidies fall under the Credit Linked Subsidy Scheme (CLSS) and allow the applicant to use the benefit of the subsidies on the Home Loan Interest Rates basis the applicant’s eligibility. The conditions for the same are:

  1. This should be the applicant’s first house.
  2. The applicant shouldn’t have already used a government housing scheme before.
  3. The carpet area should be between 645 sq. feet and 2150 sq. feet depending on the income.
  4. The applicant must fall under one of the following annual income ranges:
  • Economically Weaker Sections (EWS)- up to Rs. 3 Lakh
  • Low Income Groups (LIG)- between Rs 3 Lakh and Rs 6 Lakh
  • Middle Income Groups-I (MIG)- between Rs 6 Lakh and Rs 12 Lakh
  • Middle Income Groups-II- between Rs 12 Lakh and Rs 18 Lakh

Economically Weaker Sections and Low Income Groups

Applicants who come under EWS & LIG categories are given an interest subsidy of 6.5 per cent on a Home Loan up to Rs. 6 Lakh. The government has increased the time for repayment from 15 years to 20 years for these segments. The carpet area for people under EWS is allotted as 322 sq. feet while for LIG it is 645 sq. feet. 

Middle Income Groups-I

Applicants under the category MIG-I can avail a Home Loan interest subsidy of 4%, on loans up to Rs. 9 Lakh. The time of repayment is a maximum of 20 years. The carpet area allotted is 1722 sq. feet. 

Middle Income Groups-II

Applicants under the category MIG-II can avail a Home Loan interest subsidy of 3%, on loans up to Rs. 12 Lakh. The time of repayment is a maximum of 20 years. The carpet area allotted is 2152 sq. feet. 


Some categories are given special preferences under this scheme.

  1. Single working women
  2. Widows
  3. Differently-abled persons
  4. Transgenders
  5. Scheduled Castes and Scheduled tribes
  6. Senior Citizens

How to apply?

The application process is simple and easily accessible. It is user-friendly.

Step 1: Apply for a Home Loan with an eligible financial institution for your requirement with a subsidy.

Step 2: Go to the official website of the Pradhan Mantri Awas Yojana and download the subsidy scheme application form.

Step 3: Take a printout and fill the details with correct information.

Step 4: Submit the duly filled form and the required documents to an office accepting them nearby.

Step 5: If you are deemed eligible, your application will be sent to CAN, and they will send the subsidy amount to the lender.

Step 6: This subsidy amount will be added to your Home Loan account. This will reduce the loan amount required by you, thereby making the EMIs more affordable.

The existing beneficiaries of this Yojana will get the money in their Bank Accounts directly because of the Direct Benefit Transfer (DBT) program. It will be transferred in instalments, and this eliminates the need of going to banks to receive money.

The key features of the Pradhan Mantri Awas Yojana are:

  • Home Loans will be offered at rates of 6.5% p.a with repayment tenure of 20 years
  • As a benefit, senior citizens and differently-abled persons will be provided with houses on the ground floor for convenience.
  • Eco-friendly and technology that focuses on sustainability will be used for construction.

With this handy information you can apply for a Home Loan subsidy in a hassle-free and convenient manner and realise your dream of becoming a homeowner soon.

Also Read: Is Home Loan Balance Transfer Eligible for PMAY Subsidy?

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