Pradhan Mantri Awas Yojna – Loan Subsidy Clear for Middle-Class Home Buyers

Pradhan Mantri Awas Yojna – Loan Subsidy

Union minister for housing Venkiah Naidu on Wednesday released the guidelines for the implementation of the scheme. Giving clarity on the government’s credit linked subsidy scheme (CLSS) for home buyers in the middle-income group (MIG) segment.


The objective of the scheme is to bring down the monthly equated monthly installment (EMI) for the middle class by over Rs 2,000.

Who can avail the benefits of the scheme?

  • All middle-class homebuyers with annual incomes of above Rs 6 lakh and up to Rs 18 lakh per year will be eligible for receiving interest subsidy on housing loans taken in 2017
  • Not only poor, but the middle class is also on top of our PM’s agenda. Middle-income groups make substantial contribution to the economic growth of the country besides paying taxes and deserved support to fulfill the dream of owning a house which is a basic and genuine aspiration
  • The CLSS component of PMAY(Urban), launched in June 2015, was already applicable for the economically weaker sections (EWS) and low-income group (LIG) with income of Rs 3 lakh and Rs 6 lakh per year, respectively. People in this group are getting interest subsidy of 6.5% on a home loan of up to Rs 6 lakh.
  • The scheme gives preference to women with overriding preference to widows, single working women, people from scheduled castes and scheduled tribes, backward classes, differently abled and transgender people.

Benefits of the scheme:

  • Interest subsidy will be provided on home loans for construction or purchase of the house with the carpet area of 90 square meters by those earning up to Rs 12 lakh per annum and of 110 sqm by those earning up to Rs 18 lakh per year.
  • Offering interest subsidy of 4% on housing loans of up to Rs 9 lakh of those with an income of Rs 12 lakh per year and of 3% on home loans of up to Rs 12 lakh of those earning Rs 18 lakh per year.
  • Housing loans above Rs 9 lakh and Rs 12 lakh will be at non-subsidised rates.
  • The interest subsidy of 4% under the scheme will bring down EMI by Rs 2,062 per month on a housing loan of Rs 9 lakh and interest subsidy of 3% will reduce the monthly outgo by Rs 2,019 on Rs 12 lakh loan, considering normal housing loan interest rate of 8.65%.


No processing fee will be charged by banks or housing finance companies from the applicants under CLSS.

Tenure of Loan:

The tenure of loan can be a maximum of 20 years or that preferred by the home buyer, whichever is lower.The scheme will be applicable just for one year starting January 1, 2017 and the government has allocated Rs 1,000 crore in Union Budget this year for the same.

Features of National Housing Bank:

  1. National Housing Bank (NHB) on Wednesday also signed memoranda of understanding with 45 housing finance companies, 15 scheduled banks, 2 regional rural banks, 1 cooperative bank, 4 small finance banks and 3 non-banking finance companies-micro finance institutions for implementation of CLSS(MIG) component of PMAY(Urban).
  1. NHB and Housing and Urban Development Corporation (HUDCO) have been designated as central nodal agencies for implementation of CLSS for both MIG and EWS/LIG who would reimburse interest subsidy to primary lending institutions.


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