Pradhan Mantri Awas Yojana

The government has come out with guidelines on interest rate subsidy scheme under Pradhan Mantri Awas Yojana (Urban) for middle-income groups. The scheme was earlier announced by Prime Minister Narendra Modi in his New Year’s Eve address to the nation.

Middle income groups (MIG) with annual incomes of above Rs. 6 lakh and up to Rs. 18 lakh per year are eligible for interest subsidy on buying their first home under Pradhan Mantri Awas Yojana (Urban). The scheme has been named as Credit Linked Subsidy Scheme for Middle Income Groups – CLSS (MIG).

Prime Minister Narendra Modi had announced interest subsidy of 4 per cent on housing loans of up to Rs.9 lakh for those with an income of Rs12 lakh per year and of 3 per cent subsidy on housing loans of up to Rs.12 lakh for those earning Rs. 18 lakh per year. Additional loans beyond the specified limit, if any, will be at non-subsidized rate. This home loan interest subsidy scheme is part of the government’s ‘Housing for All’ initiative.

We dive in deep into PMAY so that you get to know what’s in there for you. If you have a question about PMAY, there’s a good chance you’ll find your answer here… and maybe the key to your first home! Can’t find your question in the list? Just Tweet or Comment asap – we’ll not only answer it but also add it to our FAQs for the benefit of others Home Wishers.

FAQs on Pradhan Mantri Awas Yojana

  • What is Pradhan Mantri Awas Yojana?

Stands for Pradhan Mantri Awas Yojana, a scheme designed to enable housing for all, including the middle class.

  • What is CLSS, MIG, LIG, EWS etc.?

Stands for Credit Linked Subsidy Scheme where the government chips in to reduce your Home Loan Burden.

  • MIG 1: Middle Income Group (Income – 6 lac to 12 lac per annum)
  • MIG 2: Middle Income Group (Income – 12 lac to 18 lac per annum)
  • EWS: Economically Weaker Sections (Income – up to 3 lac)
  • LIG: Low Income Group (Income – up to 6 lac)


  • What are the benefits of CLSS under Pradhan Mantri Awas Yojana?

Simply put, huge Savings on your Home Loan Interest Rates! If you’re out to buy your first home,

  • You can SAVE an amazing 4% in terms of interest for a loan of up to 9 lacs if your income is up to INR 12,00,000 per annum (you will fall under the CLSS MIG 1 Category)
  • You can SAVE a cool 3% interest for a loan up to 12 lac if your income is from INR 12,00,000 to INR 18,00,000 per annum (you will fall under the CLSS MIG 2 Category)
  • Income lower than INR 6,00,000? Then the Savings are even more substantial! A massive 6.50% interest concession awaits on loans up to 6 lac. (You will fall under the CLSS EWS/LIG Category)


  • How will the savings get transferred to me? What happens to my EMIs?

Here’s the best part: The bank servicing the loan will claim on your behalf and will credit it upfront to your Loan Account! And you will pay EMIs on your effectively reduced loan amount.


  • Am I eligible?

You will be if:

  • You or your immediate family (spouse and unmarried children) do not own a ‘pucca’ home anywhere in India. (you qualify, even if your parents own a home and you stay with them)
  • Your income is up to INR 6,00,000 per annum [to avail CLSS: EWS (Economically Weaker Sections) or CLSS: LIG (Low Income Group)]
  • Your income is from INR 6,00,000 to INR 12,00,000 per annum [to avail CLSS: MIG 1 (Middle Income Group 1)]
  • Your income is from INR 12,00,000 to INR 18,00,000 per annum [to avail CLSS: MIG 2 (Middle Income Group 1)]


  • What’s the tenure of a home loan under CLSS?

A maximum of 20 years.


  • Is there a limit on the Loan Amount under Pradhan Mantri Awas Yojana?

There is no limit on the loan amount (amount eligibility will be determined by the bank based on a variety of criteria). However, the subsidy benefit will be limited to a specific loan amount depending on the income category you fall under.


  • Is there any size restriction for Houses availed under Pradhan Mantri Awas Yojana CLSS?

Well, you can build or buy as large a house as you wish, but the PMAY will only cover you for a carpet area of 30 sq. m. for the EWS Category and 60 sq. m. for the LIG Category.


  • Is there a processing fee?

Not at all! There is a zero processing fee for Home Buyers availing a Home Loan under PMAY CLSS.


  • Do I have to wait long to get a CLSS Home Loan approved?

The good news is that if you match the eligibility criteria and have all the required documents, you can expect a quick approval from the lender.


  • Are there any specific documents I need for CLSS?

You just need a document declaring that you do not own a pucca house. This is, of course, in addition to all other documentation typically required while applying for a Home Loan.


  • I already have a home loan for my first home. Can I avail of the PMAY CLSS benefit?

Unfortunately, not. The scheme is designed to encourage first-timers to buy their first house.


  • If I take a home loan under Pradhan Mantri Awas Yojana from a bank, Can I balance transfer it to another bank?

You cannot Balance Transfer it to another bank without losing the PMAY benefit. Well, one can’t have everything.


  • Where can I avail the Pradhan Mantri Awas Yojana? How do I get started?

70 Financial Institutions in partnership with NHB (National Housing Bank) are PMAY-ready. And how do you choose between these? is a great way to compare and get started!


  • What does Vaneet Infra have to offer under Pradhan Mantri Awas Yojana?

Vaneet Infra has a host of options under Pradhan Mantri Awas Yojana, starting from plots and built up units. For more details call our PMAY Expert at 96464-70099.


Here are 10 highlights of the interest rate subsidy scheme under Pradhan Mantri Awas Yojana (Urban):

1) Home loans sanctioned or applications are under consideration since January 1, 2017, are eligible for interest subsidy under the Credit Linked Subsidy Scheme for Middle Income Groups. The beneficiary earlier should not have own a house in his/her name.

2) Interest subsidy will be provided on loans for construction/acquisition of house with carpet area of up to 90 sq metres for those with income of up to Rs. 12 lakh per year and of up to 110 square metres for those earning between Rs. 12 lakh and Rs. 18.00 lakh per year.

3) Under the scheme, the tenure of loan has been stipulated to be 20 years or that preferred by the beneficiary, whichever is lower.

4) Sriram Kalyanaraman, MD and CEO of National Housing Bank, said that interest subsidy of 4 per cent will bring down EMIs of beneficiaries by Rs. 2,062 per month on a housing loan of Rs. 9 lakh and interest subsidy of 3 per cent will bring down EMIs by Rs.2,019 on a loan of Rs.12 lakh, taking normal housing loan interest rate as 8.65 per cent.

5) The total interest subsidy accruing on these loan amounts will be paid to the beneficiaries up front in one go, thus reducing the burden of Equated Monthly Instalment (EMI).

6) The total interest subsidy for middle-income people over 20 years on Rs. 9 lakh loan and Rs. 12 lakh loan comes to around Rs. 2.30 lakh per beneficiary (the present value of interest subsidy provided to beneficiaries over the tenure of 20 year loan at a discounting rate of 9 per cent.)

7) Beneficiaries eligible for interest subsidy under the CLSS scheme have to apply to their lenders for availing the subsidy benefit.

8) National Housing Bank (NHB) and Housing and Urban Development Corporation (HUDCO) will reimburse interest subsidy to the lenders. No extra processing fee will be charged by the lenders from borrowers.

9) Besides commercial banks, housing finance companies, regional rural banks, state and urban cooperative banks, other financial institutions like small finance banks and non-banking finance company-micro finance institutions can also lend under this scheme.

10) 70 lending institutions including 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 on Wednesday signed an agreement with National Housing Bank (NHB) for implementation of the scheme. Kotak Institutional Equities in a note said that the scheme will give a boost to the housing sector provided real estate players offer compact products at lower ticket sizes. This scheme will help bring down overall interest cost for home loan borrowers, the brokerage added.


For more details on the scheme, please refer to the official govt. source


Happy Living!