September 18, 2021

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Buying a House? Learn about the PMAY Credit-Linked Subsidy Scheme First

4 min read

The Pradhan Mantri Awas Yojana is a flagship housing scheme launched by the Government of India in 2015. Its aim is to provide ‘affordable housing for all’ by 2022. PMAY caters to both rural and urban areas and the branch of the scheme that works for the urban poor is called PMAY Urban (PMAY-U). PMAY-U addresses the housing needs of urban dwellers through 4 main verticals, one of which is the promotion of affordable housing through credit-linked subsidy. The Credit-linked subsidy scheme (CLSS) gives you a home loan subsidy of up to Rs.2.67 lakh. 

To know the facts about the CLSS component of PMAY, read on.

What is the Credit Linked Subsidy Scheme (CLSS)?

PMAY CLSS is a Central Sector Scheme that makes home loan repayment more affordable by providing a subsidy on the interest component of the loan. A direct impact of the housing loan subsidy is a reduction in the home loan EMI.

 

What are the income categories for PMAY CLSS?

There are 4 household income categories for PMAY CLSS. They are defined as follows:

  • Economically Weaker Section (EWS): Household annual income not exceeding Rs.3 lakh
  • Lower Income Group (LIG): Household annual income of more than Rs.3 lakh but not exceeding Rs.6 lakh
  • Middle Income Group I (MIG-I): Household annual income of more than Rs.6 lakh but not exceeding Rs.12 lakh
  • Middle Income Group II (MIG-II): Household annual income of more than Rs.12 lakh but not exceeding Rs.18 lakh

What are the home loan subsidy details for the eligible income groups?

 

Detail EWS LIG MIG-I MIG-II
Purpose Acquisition/ construction/ Enhancement to existing dwelling as incremental housing Acquisition/ construction/ Enhancement to existing dwelling as incremental housing Acquisition/ construction (including repurchase) Acquisition/ construction (including repurchase)
Maximum carpet area 30 sq.m 60 sq.m 160 sq.m 200 sq.m
Interest subsidy rate 6.5% 6.5% 4% 3%
Maximum subsidy Rs.2,67,280 Rs.2,67,280 Rs.2,35,068 Rs.2,30,156
Subsidy applicable on loan amount of up to Rs.6 lakh Rs.6 lakh Rs.9 lakh Rs.12 lakh

 

How does the home loan subsidy of PM Awas Yojana work?

Consider that you are from MIG-II category and take a loan of Rs.12 lakh for 20 years at a 9% rate. 

Your:

  • EMI = Rs.10,797
  • Total interest = Rs.13,91,210

With PMAY CLSS you get a subsidy of up to Rs.2,30,156. 

  • Reduced loan = Rs. 9,69,844
  • New EMI = Rs.8,726
  • Total Interest = Rs.11,24,381

The subsidy is released by the applicable Central Nodal Agency (CNA) to the Primary Lending Institute (PLI). This home loan subsidy is credited to your account upfront. As in the above example, you then pay interest on the balance principal amount.

Limit on the loan amount you can avail?

There is no limit on the ticket-size of the loan. However, the home loan subsidy is applicable only up to the limits described above for the respective income groups. Beyond the limit, the loan will have to be repaid at a non-subsidised rate. 

What is the meaning of carpet area?

Carpet area refers to the usable floor area of the house, the area over which you can lay a carpet. It excludes the area covered by walls and balconies. 

What are the eligibility criteria for PMAY CLSS?

To qualify for PM Awas Yojana, the beneficiary family must not own a pucca house in any part of India or have availed assistance through another housing scheme from the Centre. The beneficiary family comprises the husband, wife, unmarried sons and/or unmarried daughters. In the case of a married couple, a single home loan subsidy can be availed by either spouse or both together. In the MIG category, any adult earning member can be treated as a separate household.

Further, you must belong to one of the eligible income groups and adhere to the carpet area restrictions. You can use the eligibility calculator to better understand your eligibility.

Does Pradhan Mantri Awas Yojana promote women ownership?

Yes, however, women ownership is not mandatory for the MIG category. Moreover, for the EWS/LIG category, the requirement for women ownership/co-ownership is not there if there is no woman beneficiary in the household or if the funds are used for construction on an existing plot or renovation of a kuccha house.

How to benefit from PMAY CLSS?

To benefit from PMAY CLSS you must avail a home loan from a primary lending institution, such as a scheduled commercial bank or housing finance company. For instance, you can avail of an interest subsidy with the Bajaj Housing Finance Limited Home Loan. Here, you get up to Rs.3.5 crore at an attractive interest rate and for a tenor that stretches up to 30 years. If you are eligible for a home loan subsidy, submit your CLSS subsidy application to Bajaj Housing Finance Limited and await the amount to be credited to your loan account.

Having learnt how Pradhan Mantri Awas Yojana makes housing more affordable, apply online for a home loan and make your dreams a reality soon.

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