Navigating through the myriad of home loan options can be daunting. However, the Indian government’s initiatives to make housing affordable for all income groups can lighten this load significantly. Credit Dharma is here to help you understand how you can benefit from home loan subsidies under various schemes.
What is a Home Loan Subsidy?
A home loan subsidy is a financial benefit provided by the government to reduce the burden of loan repayment for eligible homebuyers. This subsidy is typically a part of broader social housing schemes aimed at promoting affordable housing.
Key Government Schemes Offering Home Loan Subsidies
- Pradhan Mantri Awas Yojana (PMAY) – Credit Linked Subsidy Scheme (CLSS)
- Rajiv Awas Yojana
- Affordable Housing in Partnership (AHP)
1. Pradhan Mantri Awas Yojana (PMAY) – Credit Linked Subsidy Scheme (CLSS)
Objective: PMAY-CLSS aims to provide affordable housing to the urban poor by 2022. This is part of the broader mission to ensure that everyone has access to pucca (permanent) homes with basic amenities.
Eligibility for PMAY ( Pradhan Mantri Awas Yojana ):
- Economically Weaker Sections (EWS): Families with an annual income up to INR 3 lakh.
- Lower Income Groups (LIG): Families with an annual income between INR 3 lakh and INR 6 lakh.
- Middle Income Groups (MIG-I and MIG-II): Families with annual incomes between INR 6 lakh and INR 18 lakh.
Subsidy Details Based on User Persona
| Criteria | EWS/LIG | Revised EWS/LIG | MIG – I | MIG – II |
|---|---|---|---|---|
| Woman Ownership Required | Yes | Yes | N/A | N/A |
| Yearly 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 Eligible for Subsidy | Up to Rs.6 lakh | Up to Rs.6 lakh | Up to Rs.9 lakh | Up to Rs.12 lakh |
| Subsidy Percentage | 6.50% | 6.50% | 4% | 3% |
| Maximum Subsidy Amount Available | Rs.2.20 lakh | Rs.2.67 lakh | Rs.2.35 lakh | Rs.2.30 lakh |
| Net Present Value (NPV) | 9% | 9% | 9% | 9% |
| Maximum Loan Term for Subsidy Calculation | 15 years | 20 years | 20 years | 20 years |
| Allowable Carpet Area | EWS – 30 sqm LIG – 60 sqm | EWS – 30 sqm LIG – 60 sqm | 160 sqm | 200 sqm |
| Scheme Validity | 2022 | 2022 | 31/3/2020 | 31/3/2020 |
| Scheme 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 |
| Applicable Locations | 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 Ownership Condition | Family’s 1st home | Family’s 1st home | Family’s 1st home | Family’s 1st home |
Subsidy Details for PMAY ( Pradhan Mantri Awas Yojana ):
- EWS and LIG beneficiaries can avail of an interest subsidy of 6.5% on a principal amount up to INR 6 lakh.
- MIG-I beneficiaries receive a subsidy of 4% on a loan up to INR 9 lakh.
- MIG-II beneficiaries get a 3% subsidy on a loan up to INR 12 lakh.
- The subsidy is credited upfront to the loan account of beneficiaries, reducing the total loan liability.
Duration: The subsidy is available for a maximum tenure of 20 years or the tenure of the loan, whichever is lower.
| Scheme | Objective | Intended Beneficiaries | Documentation Requirements |
|---|---|---|---|
| PMAY-G (Gramin) | Monetary support for building houses in villages and hamlets. | People residing in rural regions | – Aadhar card – MGNREGA job card – Proof of income |
| PMAY-U (Urban) | Aids in acquiring housing through subsidized interest rates on loans in cities. | Urban residents, particularly those in the economically disadvantaged segments | – Aadhar card – Income verification – Voter identification card |
| CLSS | Provides interest subsidies on home loans for economically weaker sections. | – Economically Weaker Section (EWS) – Low Income Group (LIG) – Middle Income Group (MIG) | – Aadhar card – Income proof – Voter ID |
| ARHCs | Extends affordable rental accommodations for the urban underprivileged and migratory population in urban areas. | – Economically disadvantaged city dwellers – Migrant workers | – Aadhar card – Income certificate – Ration card |
2. Rajiv Awas Yojana
Objective: Originally aimed at making India slum-free by replacing slum dwellings with organized housing for slum dwellers, this scheme was subsumed under PMAY to consolidate efforts towards affordable housing.
Eligibility for Rajiv Awas Yojana:
- Slum dwellers with squalid and unhygienic conditions, requiring proper infrastructure and planning.
Benefits from Rajiv Awas Yojana:
- Provides subsidies for slum rehabilitation.
- Promotes the formalization of slum dwellings into lawful housing.
- Encourages the participation of private sectors in the development of low-cost housing.
3. Affordable Housing in Partnership (AHP)
Objective: To promote public-private partnerships to increase affordable housing stock for EWS/LIG.
Eligibility for Affordable Housing in Partnership (AHP):
- EWS/LIG families eligible under PMAY.
- State government, Central government, local bodies, or any other public sector undertaking may be the primary stakeholders alongside private developers.
Benefits from Affordable Housing in Partnership (AHP):
- Financial assistance of INR 1.5 lakh per EWS house is provided by the Central Government.
- Encourages private sector participation by lowering risks and increasing incentives.
- Promotes the use of cost-effective construction technology.
Step-by-step Guide for for Subsidies for homeloan
- To apply for any of these subsidies
To apply for any of these subsidies, prospective homebuyers should first consult with a home loan advisor at Credit Dharma. The advisor will guide you through the eligibility checks, necessary documentation, and the application process.
- Giving all the details
Ensuring all details are meticulously followed can significantly increase your chances of obtaining financial benefits, which can make your dream of owning a home more achievable.
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
Benefits of Home Loan Subsidies
- Reduced EMI: Interest subsidies ensure that your monthly outgo towards the home loan is significantly reduced.
- Increased affordability: Subsidies make it financially easier for lower and middle-income families to own a home.
- Encouragement to first-time homebuyers: These subsidies aim to make ‘Housing for All’ a reality by 2022.
Conclusion
At Credit Dharma, we believe that understanding these subsidies can significantly ease your home-buying journey. Our dedicated team of experts is here to guide you through each step, ensuring you make the best out of the available financial aids. Embrace the dream of owning your home with a little help from your friends at Credit Dharma.
For more details, visit our website or contact a Credit Dharma advisor today. Let us help you find your perfect home with the perfect financial plan.
Frequently Asked Questions on Home Loan Subsidies
Savings on home loan interest through the CLSS under PMAY depend on your income category and the principal amount. EWS and LIG beneficiaries can get an interest subsidy of 6.5% on a principal amount up to INR 6 lakh. MIG-I beneficiaries receive a 4% subsidy on a principal amount up to INR 9 lakh, while MIG-II beneficiaries can avail of a 3% subsidy on a principal amount up to INR 12 lakh. This subsidy is credited upfront, reducing the principal loan amount and effectively decreasing the interest burden and EMI.
No, one of the key eligibility criteria for home loan subsidies, especially under the PMAY scheme, is that the applicant or any family member should not already own a pucca house anywhere in India. The subsidy aims to help first-time homebuyers achieve their dream of homeownership.
The time taken to process a subsidy claim under PMAY can vary. Once your home loan has been sanctioned and disbursed, and all necessary documentation has been submitted, the subsidy claim is forwarded to the National Housing Bank (NHB) or the Housing and Urban Development Corporation (HUDCO). Processing typically takes about 3 to 6 months, after which the subsidy amount is credited directly to the loan account, reducing the total loan liability.