PMAY - The Concept

Pradhan Mantri Awas Yojana is an ambitious project designed by the Central Government. The aim is to ensure that every Indian has a home by the end of the year 2022. Pradhan Mantri Awas Yojana (PMAY) has two components, PMAY (G) for the rural population, and PMAY (U) to cater to the needs of the urban clientele.

The eligibility criteria for PMAY (G) are different from that of PMAY (U).  

PMAY - Eligibility Criteria

PMAY (G)

PMAY (G) dispenses with the BPL list and identifies the needy people in the economically weak sections by conducting surveys in villages. The base for the data is the survey conducted for the Indira Awas Yojana in 2011. The priority is for people who do not have any home, followed by those who live in dilapidated conditions in one-room or two-room houses.

  • Households drawing an annual income of 3 Lakhs or less constitute the Economically Weaker Section.
  • The Low Income Group comprises of households with annual income higher than 3 Lakhs but not more than 6 Lakhs.

The procedure involves preparation of individual beneficiary lists that have to be confirmed by the Gram Panchayats. This procedure ensures that people need not apply for assistance. The households will receive the grant/subsidy depending on their wait-listed number.

PMAY (U)

PMAY (U) is strictly for people living in urban areas. It comprises of four groups depending on the annual income levels.

  • Economically Weaker Section: Annual household income up to 3 Lakhs
  • Low Income Group: Annual income higher than 3 Lakhs and up to 6 Lakhs
  • Middle Income Group - I: Household income more than 6 Lakhs and up to 12 Lakhs per annum.
  • Middle Income Group - II: Annual income of the household higher than 12 Lakhs and up to 18 Lakhs.

PMAY - Subsidy

PMAY (G)

  • The families coming under EWS will receive financial assistance up to 1.20 Lakhs under PMAY (G) for constructing permanent homes.
  • PMAY (G) beneficiaries in the LIG category will receive an interest subsidy @6.50% for a maximum of 15 years on loan amounts up to 6 Lakhs.
  • The subsidy available on loan is an upfront subsidy, whereby the beneficiary does not pay any interest on the subsidy amount. The EMI reduces accordingly.

PMAY (U)

  • The households belonging to EWS and LIG categories have to apply for the PMAY loan through the dedicated Government website.
  • Those coming under the MIG-I and MIG-II can apply through their respective banks
  • There are two components for the EWS and LIG applicants under PMAY (U)
    • Slum Dwellers
    • Non Slum Dwellers
  • Slum-dwellers can apply through the Insitu Slum Redevelopment Programme from the PMAY website.
  • Non-slum dwellers have three further options:
    • Credit Linked Subsidy Scheme: Interest subsidy is available up to 6.5% on loans up to 6 Lakhs. It is an upfront subsidy that gets credited to the loan account. The loan component more than 6 Lakhs is not eligible for any subsidy.
    • Affordable Housing in Partnership: The condition is that the project should have a minimum of 250 homes, of which at least 35% should cater to homes for EWS.
    • Beneficiary Led Individual House Construction: People having land in their names get financial assistance up to 1.50 Lakhs for constructing homes.
  • People belonging to MIG-I and MIG-II can apply for loans under the Credit Linked Subsidy Scheme.
    • MIG-I: 4% interest subsidy on loans up to 9 Lakhs
    • MIG-II: 3% interest subsidy on loans up to 12 Lakhs

PMAY - Method of Availing Subsidy

PMAY (G)

  • EWS households that do not apply for loans: Financial assistance up to 1.20 Lakhs is available as a direct credit to the beneficiary account. The release of the aid will be on a pro-rata basis depending on the stages of construction.
  • EWS and LIG households that approach banks for financial assistance: The maximum loan amount eligible for subsidy is 6 Lakhs. Subsidy is available on an upfront basis @6.5%. On the sanction of the loan, the bank disburses the entire amount and claims the grant. It is credited to the loan account, thereby reducing the interest burden on the household.

PMAY (U)

  • The subsidy procedure is the same for EWS and LIG for loans up to 6 Lakhs
  • The subsidy calculation for MIG-I and MIG-II on loans above 6 Lakhs are as follows:

(Note - MIG comprises of all people having an annual household income up to 18 Lakhs. Hence, any person falling under the above category is eligible for PMAY-CLSS loan.)

The subsidy is available on loan amounts up to 9 Lakhs in the case of MIG-I and up to 12 Lakhs for those belonging to MIG-II.

The loan amount depends on your eligibility. However, the loan amount for calculation of subsidy is restricted to a maximum of 9 Lakhs in the case of MIG-I and 12 Lakhs for MIG-II beneficiaries.

Particulars MIG-I (PMAY-U) MIG-II (PMAY-U)

Annual household income

Between 6 Lakhs and 12 Lakhs

12 Lakhs to 18 Lakhs

Loan amount eligible for a subsidy

9 Lakhs

12 Lakhs

Interest subsidy

4%

3%

Area of the house

160 sqm

200 sqm

Maximum loan tenure

20 years

20 years

Net present value of subsidy

2.35 Lakhs

2.30 Lakhs

PMAY - NPV Calculation

MIG-I under PMAY (U) 

Income Category Loans up to 12 Lakhs

Loan Amount (A) @8.50% for 20 years

9 Lakhs

EMI at the contracted rate

7,810

Total Interest Payment after 20 years

9,74,498

Net Present Value of Subsidy @4% (B)

2,35,000

Effective loan for calculation of EMI (A-B) @9% for 20 years

6,65,000

Re-calculated EMI after accounting for subsidy

5,771

Total Interest payable for 20 years after accounting for subsidy

7,20,045

Amount save due to reduction of EMI

2,039

Interest Saved

2,54,453

Government Subsidy

2,35,000

MIG-II under PMAY (U)

Income Category Loans up to 18 Lakhs

Loan Amount (A) @8.50% for 20 years

12 Lakhs

EMI at the contracted rate

10,414

Total Interest Payment after 20 years

12,99,331

Net Present Value of Subsidy @4% (B)

2,30,000

Effective loan for calculation of EMI (A-B) @9% for 20 years

9,70,000

Re-calculated EMI after accounting for subsidy

8,418

Total Interest payable for 20 years after accounting for subsidy

10,50,292

Amount save due to reduction of EMI

1,996

Interest Saved

2,49,039

Government Subsidy

2,30,000

Note that this is an upfront subsidy. Banks have to claim the amount after disbursing the loan. The amount is a credit to the loan account of the beneficiary, thereby reducing the effective EMI.

PMAY - From Where Can You Avail Subsidised Loans?

All scheduled commercial banks, RRBs, HFCs, NBFCs, Urban Cooperative Banks and State Cooperative Banks can sanction loans under PMAY. There are no processing fees for housing loans under PMAY.

PMAY - Frequently Asked Questions

Can I avail a loan for higher amounts under PMAY?

The loan eligibility depends on your income. You can avail a loan for higher amounts. However, for calculation of subsidy, the maximum amount is 6 Lakhs for EWS and LIG, 9 Lakhs for MIG-I and 12 Lakhs for MIG-II.

What is meant by upfront subsidy?

Upfront subsidy means that it is a credit to the loan account immediately on its receipt. No interest is payable on this subsidy amount. Hence, your EMI gets reduced considerably.

What is the prime requisite for applying for PMAY loan?

Among all eligibility criteria, the most significant one is that the applicant/beneficiary should not own a house in his/her name anywhere in India.

Can a person belonging to MIG-I or MIG-II apply for PMAY loan through the Government website?

No, those households drawing monthly income more than 50,000 cannot apply for PMAY loan through the Government website. They have to approach the individual banks directly for applying for a loan under PMAY.

Can I opt for the bank of my choice when applying through the Government website?

Yes, you can choose your preferred bank. You need to provide details of the bank name, the branch, and the account number at the time of application.

How do you calculate the subsidy amount?

The subsidy amount is calculated on the Net Present Value Method. The maximum amount of subsidy is 2.35 Lakhs @4% for loans up to 9 Lakhs, and 2.30 Lakhs @3% for loans up to 12 Lakhs.

If I am eligible for a loan of 40 Lakhs, how is the subsidy calculated?

The subsidy amount does not depend on the eligibility criteria. If you apply for the home loan under PMAY MIG-II, your subsidy amount is a maximum of 2.30 Lakhs on 12 Lakhs. There is no subsidy on the loan amount exceeding 12 Lakhs.

What is the maximum amount of subsidy under the EWS and LIG category?

The rate of subsidy on loans up to 6 lakhs is 6.50%. Hence, the NPV of subsidy comes to a maximum of 2.67 Lakhs.

Is there any ceiling on the size of the house when applying for a loan under PMAY?

Yes, there is a maximum ceiling on the size of the house. It depends on the category to which you belong:

  • EWS: 30 square metres
  • LIG: 60 square metres
  • MIG-I: 160 square metres
  • MIG-II: 200 square metres

Can I purchase two houses under PMAY, one in my name, and the other in the name of my spouse?

No, you cannot purchase two houses in such a manner because the spouse and dependent children form a part of the family. PMAY envisages one home for every family.

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